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Coastal Energy Announces Third Quarter 2012 Financial Results & Operations Update

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HOUSTON, Nov. 12, 2012 (GLOBE NEWSWIRE) -- Coastal Energy Company (the "Company" or "Coastal Energy") (TSX:CEN) (AIM:CEO), an independent exploration and production company with assets in Thailand, announces the financial results for the three and nine months ended September 30, 2012. The functional and reporting currency of the Company is the United States dollar.

Third Quarter 2012 Highlights

  • Total Company production increased to 21,798 boe/d in the third quarter from 12,028 boe/d in the same period last year. The Company's offshore production was 19,626 bbl/d compared to 10,191 bbl/d in Q3 2011, with the increase due to the inclusion of production from both platforms at Bua Ban North. Offshore production was impacted by downtime at Bua Ban North and Songkhla during rig moves as well as the MOPU replacement at Bua Ban North. Onshore production of 2,172 boe/d increased from Q3 2011 levels of 1,837 boe/d as natural gas demand continued to recover following the flooding in Thailand in late 2011.
  • EBITDAX for Q3 2012 was $114.6 million, 157% higher than the $44.7 million recorded in Q3 2011. Revenue and EBITDAX were driven higher by increased oil liftings and commodity prices. Crude oil inventory was 577,863 barrels at September 30, 2012, the revenue from which will be recognized in the fourth quarter. The Company saw closing inventory increase by 121,445 barrels (approximately 27%) during Q3 2012.
  • The Company announced successful drilling results in the Songkhla A field. The A-10 well, drilled in the eastern most fault block of the field, encountered a record amount of net pay for the basin and exhibited very favorable reservoir characteristics in the Lower Oligocene interval. In late September 2012, the well was brought on production at approximately 4,000 bbl/d. Subsequently, the Company drilled the A-13 well in the previously untested northeast fault block and encountered 67 feet of net pay in the Lower Oligocene. Successful results from the A-13 provide the opportunity for an additional well (Songkhla A-19) higher up structure to add additional pay thickness.
  • The Company completed the conversion of the Richmond mobile offshore production unit (MOPU). Subsequently, in October 2012, the Richmond was installed at the Bua Ban North B field, increasing production capabilities to 55,000 bbl/d. The previous MOPU in the Bua Ban North B field was purchased by the Company and reinstalled at Bua Ban South.
  • The Company signed a contract with a subsidiary of Atwood Oceanics, Inc. for the Manta jackup drilling rig. The rig is scheduled to be delivered by late November and will conduct drilling operations for the Company in the Gulf of Thailand and offshore Malaysia.
  • The Company upsized and amended its senior secured revolving credit facility with BNP Paribas and Commonwealth Bank of Australia. The facility has been increased from $100 million to $200 million and includes two additional banks, Standard Bank and Standard Chartered Bank.
  • The Company is approximately 60% complete with the acquisition of new 3D seismic data being shot over the entire Songkhla basin. Current expectations are for delivery of the processed data in Q1 2013.

The following financial statements for the Company are abbreviated versions. The Company's complete financial statements for the three and nine months ended September 30, 2012 with the notes thereto and the related Management Discussion and Analysis can be found either on Coastal's website at www.CoastalEnergy.com or on SEDAR at www.sedar.com. All amounts are in US$ thousands, except share and per share amounts.

Three months ended Nine months ended
September 30, September 30,
2012 2011 2012 2011
Revenues and Other Income
Oil sales 170,894 81,670 554,612 218,854
Royalties (18,305) (6,295) (59,062) (17,158)
Oil sales, net of royalties 152,589 75,375 495,550 201,696
Other income (Note 11) (5,122) 10,717 (5,515) (12,394)
147,467 86,092 490,035 189,302
Expenses
Production 32,718 27,148 110,092 66,490
Depreciation and depletion (Note 6) 14,778 13,308 53,412 38,292
Net profits interest (Note 12) 39 -- 908 --
General and administrative 9,125 7,802 24,509 19,522
Exploration (Note 5) 7,191 345 7,477 6,829
Debt financing fees 501 258 1,133 523
Finance expenses 1,940 913 3,141 3,276
Gains on disposal, property, plant and equipment (252) (873) (252) (873)
66,040 48,901 200,420 134,059
Net income before income taxes and share of
net income from Apico LLC 81,427 37,191 289,615 55,243
Share of net income from Apico LLC (Note 7) 4,537 4,436 14,041 11,964
Net income before income taxes 85,964 41,627 303,656 67,207
Income taxes (Note 14)
Current 42,135 135 124,032 135
Deferred 2,778 22,493 46,576 37,681
44,913 22,628 170,608 37,816
Net income and comprehensive income 41,051 18,999 133,048 29,391
Net income and total comprehensive income attributable to:
Shareholders of Coastal Energy 40,100 19,013 130,385 28,467
Non-controlling interest 951 (14) 2,663 924
41,051 18,999 133,048 29,391
Net income per share:
Basic (Note 13) 0.35 0.17 1.15 0.25
Diluted (Note 13) 0.34 0.16 1.10 0.25
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
September 30 December 31,
As at 2012 2011
$ $
Assets
Current Assets
Cash 29,267 22,995
Restricted cash (Note 3) 6,413 28,447
Accounts receivable (Note 4) 77,236 16,939
Derivative asset (Note 10) 167 59
Crude oil inventory 12,962 11,304
Marine fuel inventory 4,416 2,857
Prepaids and other current assets 950 1,094
Total current assets 131,411 83,695
Non-Current Assets
Exploration and evaluation assets (Note 5) 82,711 31,881
Property, plant and equipment (Note 6) 511,736 355,052
Investment in and advances to Apico LLC (Note 7) 61,046 47,698
Deposits and other assets 6,274 405
Total non-current assets 661,767 435,036
Total Assets 793,178 518,731
Liabilities
Current Liabilities
Accounts payable and accrued liabilities (Note 8) 157,513 59,471
Current portion of long-term debt (Note 10) 342 55,662
Current portion of derivative liabilities (Note 10) 3,910 14,557
Derivative liability - Warrants (Note 9) 3,486 2,853
Total current liabilities 165,251 132,543
Non-Current Liabilities
Long-term debt (Note 10) 94,714 22,156
Non-current portion of derivative liabilities (Note 10) 506 1,274
Deferred tax liabilities 116,343 69,767
Decommissioning liabilities 46,915 42,124
Total Non-Current Liabilities 258,478 135,321
Shareholders' Equity (Note 13)
Common shares 212,500 211,554
Contributed surplus 20,116 16,401
Retained earnings 131,754 17,630
Total Shareholders' Equity 364,370 245,585
Non-controlling interest 5,079 5,282
Total equity 369,449 250,867
Total liabilities and equity 793,178 518,731
Commitments and contingencies (Note 16)
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
Three months ended Nine months ended
September 30, September 30,
2012 2011 2012 2011
Operating activities
Net income 41,051 18,999 133,048 29,391
Adjustments:
Share of net income from Apico LLC (4,537) (4,436) (14,041) (11,964)
Unrealized (gain) loss on derivative instruments 362 (15,019) (11,523) (4,506)
Depletion and depreciation 14,778 13,308 53,412 38,292
Finance expenses 1,940 913 3,141 3,276
Amortisation of debt financing fees 147 248 779 513
Share-based compensation 5,531 1,941 10,167 7,687
Deferred income taxes 2,778 22,493 46,576 37,681
Unrealized foreign exchange (gain) loss 17 (577) (49) (120)
Exploration expense 7,191 345 7,477 6,829
Gains on property, plant and equipment (252) (873) (252) (873)
Income taxes paid (63,527) (86) (63,656) (86)
Interest received 2 2 5 4
Interest paid (318) (405) (1,570) (2,699)
Earnings Distributions from Apico LLC 9,943 7,588 9,943 9,756
Change in non-cash working capital:
Accounts receivable (49,066) (4,802) (60,297) (6,595)
Inventory (1,325) 840 (3,217) (3,472)
Prepaids and other current assets 106 96 144 576
Accounts payable and accrued liabilities 6,348 5,421 (1,885) 6,311
Current income taxes payable 45,520 -- 127,288 --
Cash flow provided by operating activities 16,689 45,996 235,490 110,001
Financing Activities
Issuance of common shares, net of issuance costs 727 666 2,753 6,108
Repurchase of shares (3,712) -- (18,745) --
Borrowings under long-term debt 50,000 -- 50,000 6,275
Repayment of long-term debt -- -- (30,000) --
Loan arrangement fees (2,915) (71) (3,883) (419)
Distributions to non-controlling interest (1,074) (450) (2,866) --
Other -- (131) -- (506)
Cash flow (used in) provided by financing activities 43,026 14 (2,741) 11,458
Investing Activities
Decrease (increase) in restricted cash (20) 6,347 22,034 1,844
Expenditure on property, plant and equipment (140,551) (45,576) (231,478) (115,468)
Acquisition of increased ownership interest in Apico LLC -- -- -- (1,446)
Advances to Apico LLC -- -- (9,250) 250
Proceeds from disposal of property, plant and equipment 352 250 352 (125)
Deposits and other assets - Payments (6,000) (122) (6,000) (606)
Deposits and other assets - Refunds -- -- 131 --
Cash flow used in investing activities (146,219) (39,101) (224,211) (115,551)
Effect of exchange rate changes on cash (875) (501) (2,266) (1,198)
Increase (decrease) in cash (87,379) 6,408 6,272 4,710
Cash - Beginning of period 116,646 2,186 22,995 3,884
Cash - End of period 29,267 8,594 29,267 8,594
The accompanying notes are an integral part of these condensed interim consolidated financial statements.

Additional information, including the Company's complete competent person's report may be found on the Company's website at www.CoastalEnergy.com or may be found in documents filed on SEDAR at www.sedar.com.

This statement contains 'forward-looking statements' as defined by the applicable securities legislation. Statements relating to current and future drilling results, existence and recoverability of potential hydrocarbon reserves, production amounts or revenues, forward capital expenditures, operation costs, oil and gas price forecasts and similar matters are based on current data and information and should be viewed as forward-looking statements. Such statements are not guarantees of future results and are subject to risks and uncertainties beyond Coastal Energy's control. Actual results may differ substantially from the forward-looking statements.

The Coastal Energy Company logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=10062

CONTACT: Enquiries: Coastal Energy Company Email: investor@CoastalEnergy.com +1 (713) 877-6793 Strand Hanson Limited (Nominated Adviser) +44 (0) 20 7409 3494 Rory Murphy / Scott McGregor Macquarie Capital (Europe) Limited (Broker) +44 (0) 20 3037 2000 Paul Connolly / Jeffrey Auld FirstEnergy Capital LLP (Broker) Hugh Sanderson / Travis Inlow +44 (0) 20 7448 0200 Buchanan Tim Thompson / Ben Romney +44 (0) 20 7466 5000

Source:Coastal Energy Company