- Revenue increased to $19.9 million or 99% higher than year-ago quarter
- Operating loss of $63.7 million primarily due to asset impairment and other non-cash charges
- Production increased to 237 thousand barrels of oil equivalent or 30% higher than second quarter of 2007
- EBITDAX(a) for the second quarter increases to $7.9 million from $4.4 million in 2007 and first half improves to $14.0 million from $6.4 million a year ago
- Cash position improves to $16.6 million from $12.9 million at end of first quarter 2008
Toreador announced second quarter 2008 revenues almost doubled to approximately $19.9 million from $10.0 million in the same period last year primarily due to higher realized prices for oil and gas and increased natural gas production offshore Turkey. For the quarter ended June 30, 2008, Toreador reported earnings before interest, taxes, depreciation, amortization, and exploration expense (EBITDAX, a non-GAAP measure(a)) of $7.9 million compared to $4.4 million for the same period last year.
Toreador recorded an operating loss in the second quarter of 2008 of $63.7 million, compared to an operating loss of $10.2 million in the same period last year. The expenses largely contributing to the operating loss were an asset impairment charge of $53.5 million which is a result of entering into a letter of intent to sell 26.75% out of our 36.75% interest in the Turkish Black Sea assets. Management made the determination that the aggregate net book value of those assets was in excess of the fair value of those assets, based on the announced selling price of $80.25 million. Also contributing to the loss was the high depreciation, depletion and amortization (DD&A) expenses associated with Turkish natural gas production, as well as separation and legal expenses associated with the previously disclosed resignation of certain members of the exploration staff.
For the three months ended June 30, 2008, the company reported a loss available to common shares of $65.8 million, or $3.33 per share, compared to a loss available to common shares of $25.1 million in the second quarter of 2007, or $1.32 per share.
Diluted weighted average shares outstanding in the second quarter of 2008 were 19.7 million, compared to 19.0 million diluted weighted average shares outstanding in the second quarter of 2007.
For the six months ended June 30, 2008 Toreador recorded revenues of $33.8 million, more than doubling revenues of $16.8 million for the first six months of 2007. EBITDAX (a non-GAAP measure(a)) for the first half of 2008 improved to $14.0 million from $6.4 million in the same period last year.
Toreador recorded an operating loss of $66.2 million in the first half of 2008, primarily due to asset impairment charges and high DD&A expenses associated with Turkish natural gas production. A loss available to common shares of $70.2 million, or $3.56 a share, was recorded in the first half of 2008 compared to a loss of $33.9 million, or $1.93 a share, in the first half of 2007.
Diluted weighted average shares outstanding in the first half of 2008 were 19.7 million compared to 17.5 million in the first half of 2007.
OPERATIONAL UPDATE
Hungarian joint venture updates
In Toreador's Szolnok block, joint venture partner Rohol Aufuchungs Aktiengesellschaft ("RAG," a public Austrian exploration and production company) has increased its working interest from 16.25% to 59.5% by purchasing interests from the other joint venture partners, including Toreador. Toreador has retained a 15% working interest in the joint venture. Current plans call for a new 3D seismic program to be shot in the southern portion of the Szolnok block and two firm wells and two optional wells to be drilled to test Pannonian targets, all anticipated to be completed before the end of March 2009. Toreador intends to contribute materials in its equipment and tubulars inventory to satisfy its financial commitment to the well costs.
In the Tompa block, a preliminary schedule for the previously announced unconventional deep gas test has been developed, with drilling scheduled to begin in December and long-term testing expected to begin in March. The well is currently planned to be drilled to 3,800 meters depth to evaluate in excess of 1,000 meters of overpressured, gas-charged sands, shales and conglomerates up-dip of two wells drilled in the 1980's by the U.S. Geological Survey and the predecessor of MOL. A pre-drill estimate for the prospect, which covers approximately 2,400 acres in the northwest corner of the Tompa block, is approximately 244 Bcf of gas in place. Any production during the testing phase is planned to be sold to a near-by gas storage facility pursuant to a sales contract currently under negotiation.
Turkish joint venture updates
Toreador has entered into a joint venture agreement with AKSA Enerji Uretim A.S., a division of the Kazanci Group of Companies, to evaluate the hydrocarbon potential in the company's 95,287-acre Bakuk exploration permit, located in southeast Turkey on the Syrian border. According to the terms of the agreement, AKSA will pay for the first $500,000 of a $1.4 million 2D seismic program (due to start in late August 2008) and the first $1.2 million of a $2.1 million well expected to be drilled during the first half of 2009 in return for a 50% working interest in the permit area. The area is on trend with oil fields in Turkey and Syria and is prospective for both natural gas and oil.
In the South Akcakoca Sub-basin project in the Black Sea offshore Turkey, the operator TPAO (the Turkish national oil company) recently reduced production rates to levels approximating 18 million cubic feet per day to obtain more consistent production rates and pressures. Work is planned next week to perforate six meters in the Dogu Ayazli-2 well to maintain or raise the current production rate. The wellhead gas price (at present exchange rates) increased to approximately $13.66 per thousand cubic feet (Mcf) in August, which represents the third price increase this year up from approximately $10.30 per Mcf in January.
Romanian joint venture announced
In Toreador's Moinesti block, a joint venture agreement has been executed with Stratum Energy Company Limited, a private Texas-based exploration and production company. The terms of the agreement call for Stratum to either re-enter a well and drill two new wells or drill three new wells to earn a 70% interest and operatorship in the Moinesti block. Toreador will be carried for the three well program and will retain a 30% working interest.
(a)Explanation and Reconciliation of Non-GAAP Financial Measures