2008 Highlights
Financial
• Fully funded with year end cash balance of $303.4 million [2007 - $68.3 million]
• Record after tax profit of $411.1 million [2007 - $32.3 million]
• Record profit of $54.4 million pre Yemen gain on disposal of $356.7 million
Operational
South East Asia
• Commenced production operations in Vietnam and Thailand
• Production from continuing operations, averaged over the period since start up, was 6,415 barrels of oil per day
• Continued Vietnam drilling success with TGT-6X and TGT-7X wells delivering strong results
• TGT Field Development plan now at final stage of Government approval
• TGD Prospect "E" discovery confirmed hydrocarbon system indicating new area for high impact appraisal
• High pressure/high temperature (HPHT) appraisal area now awaiting Government approval
Africa
• Acquired first seismic programme in the Democratic Republic of Congo (Kinshasa)
• Completed 3D seismic interpretation offshore the Republic of Congo (Brazzaville) as precursor to commencing exploration drilling in 2009
• Expanded the Africa portfolio through two additional blocks
Corporate
• Completed sale of Yemen assets for approximately $465 million
Outlook
• Ramping up production in both Vietnam and Thailand
• Expect to accelerate development programme on TGT for first oil in mid-2011
• Preparing for appraisal drilling in the HPHT area in Vietnam next year
• Commencing exploration drilling programme in Africa
Ed Story, President and Chief Executive of SOCO, commented:
"We close 2008 with the strongest balance sheet in our history and expect to ramp up to our highest production level ever during 2009. It's hard to imagine being better positioned to weather the world financial crisis. We are confident in the sustainability of our business model as we begin exploration drilling in Africa this year and progress development and appraisal programmes in Vietnam."
FINANCIAL AND OPERATING RESULTS
Three items dominate the Company's results for 2008. The completion of the sale of SOCO's Yemen interest in April contributed $356.7 million to 2008 earnings along with $36.4 million of operating profit through to April and provided $438.5 million cash inflow from the transaction. In July, the Company announced the commencement of production operations at the Ca Ngu Vang (CNV) field on Block 9-2 in Vietnam. This was followed by the commencement of production from the Bualuang development in Thailand in August. All three events underpin the Group's strong balance sheet and financial position to ensure that it can meet its future development and exploration goals. After tax profit from continuing operations was $30.6 million from just four and five months of producing operations from the Group's Thailand and Vietnam assets, respectively, representing a significant addition to earnings. Production from continuing operations, averaged over the period since start up, was 6,415 barrels of oil per day (BOPD).
2008 was an extremely active year for the Group. Continuous drilling in Vietnam; construction of development facilities on the CNV field in Vietnam and the Bualuang field in Thailand; and pre-drill exploration activity in the DRC and Congo Brazzaville meant that the Group's capital expenditures reached a record $217.6 million (2007 - $178.6 million). The Company not only funded its commitments through the funds raised on the disposal of its Yemen asset, operating cash flows of $45.1 million (2007 - $49.0 million) and with the remainder of proceeds from the convertible bonds issued in 2006, but ended the year with its highest ever cash balance of $303.4 million (2007 - $68.3 million). This ensures that the Company is well placed to progress its existing exploration and development opportunities and to consider other opportunities that may arise.
OUTLOOK
2009 is set to be another significant year on a number of fronts. The development programme at TGT will gather momentum as it progresses toward first oil targeted for mid-2011. Concurrently in Vietnam, work will commence immediately on TGD to reprocess the 3D seismic over the appraisal area in anticipation of drilling a well in 2010.
In Africa, SOCO will start a multi-well exploration and appraisal programme on Marine XI offshore Congo Brazzaville and possibly be ready to drill the first well on the onshore DRC Nganzi Block. The company also expect to conduct the largest 2D seismic survey in their history in the Cabinda North Block. Preliminary exploratory activities will commence on the new licences in Marine XIV in the first quarter of 2009 and the Albertine Graben following the award of the Presidential Decree.