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Pacific Announces Fourth Quarter & Year End 2016 Results and Updates Its 2016 Year-End Reserves
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PR Newswire
TORONTO, March 15, 2017
TORONTO, March 15, 2017 /PRNewswire/ - Pacific Exploration & Production Corporation (TSX: PEN) ("Pacific" or the "Company") announced today the release of its consolidated financial statements for the year and quarter ended December 31, 2016, together with its management discussion and analysis ("MD&A"), Annual Information Form ("AIF") and Form 51-101 F1 - Statement of Reserves Data and Other Oil and Gas Information for the Company (the "F1 Report") in respect of the year ended December 31, 2016. These documents, among others, will be posted on the Company's website at www.pacific.energy and SEDAR at www.sedar.com. All values in this news release and the Company's financial disclosures are in United States dollars unless otherwise stated.
Gabriel de Alba, Chairman of the Board of Directors, commented:
"The past year was one of significant change for Pacific, financially, operationally and culturally. The Company emerged from its restructuring with a new Board of Directors and management team and a plan focused on capital discipline and value maximization. We were able to deliver stable results through the end of 2016 and are now starting to see positive momentum in our core E&P efforts during the first two months of 2017. Combined with an ongoing review of assets and a targeted cost reduction program, we believe that we can continue to expand on this positive performance."
Barry Larson, Chief Executive Officer of the Company, commented:
"While 2016 results were primarily impacted by the expiration of the Rubiales and Piriri fields mid-year and lower drilling activity as a result of reduced capital expenditures during the Company's significant and successful restructuring process, I am very pleased with the amount of progress made on our plan to reduce costs, rationalize our portfolio and allow for a dedicated focus on high return opportunities on our core E&P assets in Colombia and Peru. We have a significant opportunity to create future growth and with capital discipline and operational rigor, we will take every step to create long-term value for our shareholders."
Full Year and Fourth Quarter 2016 Results
Operational Results:
- For 2016, the Company's average daily net production after royalties was 103,532 boe/d, 33% lower compared with the previous year.
- Fourth quarter 2016 average daily net production after royalties decreased to 69,432 boe/d, lower by 57% as compared to the same period of 2015.
- The decrease in production was mainly attributable to the expiration of the Rubiales-Piriri contract on June 30, 2016, and lower production in other fields due to lower drilling activity and fourth quarter operational issues related to water disposal capacity.
- During 2016, the combined oil and gas operating cost was $22.78/boe, slightly higher compared with $22.48/boe for 2015 due to higher production and transportation costs but ameliorated by lower dilution costs. Average production cost was higher due to lower volume produced, and transportation cost rose as a result of slightly higher tariffs on the main pipelines. Dilution cost was lower because of the Company's strategy to utilize alternative dilution arrangements.
- In 2016 the Company entered into several operational collaborative agreements with third parties in Colombia which resulted in savings in dilution cost and fuel cost.
Financial Results:
- Revenue decreased to $1,412 million from $2,825 million in 2015, and for the fourth quarter of 2016 to $270 million from $652 million for the same period in 2015.
- Operating EBITDA was $445 million for 2016 and $44 million for the fourth quarter of 2016, lower compared to $1,166 million in 2015 and $235 million in the fourth quarter of 2015.
- The decreases in revenue and operating EBITDA were due to the nearly 16% year-on-year decline in realized crude oil prices, the expiration of the Rubiales-Piriri contract and $138 million lower realized gains from oil hedging contracts compared with 2015.
- Total volume of oil and gas sales (including trading) for the year 2016 averaged 95,496 boe/d, 40% lower than the 159,113 boe/d in 2015 mainly due to the expiration of the Rubiales-Piriri fields in June 2016 and the lower production in other fields due to lower drilling activity as a result of reduced capital expenditures during the Company's restructuring process.
- Oil and gas operating netback for 2016 was $17.58/boe, 32% or $8.45 lower than the previous year. In 2016, combined realized price declined by $8.15 compared to the previous year indicating that 96% of the decline in combined operating netback in 2016 was attributable to the decline in global crude prices.
- The Company's average sales price per barrel of crude oil and natural gas was $40.36/boe in 2016, down from $48.51/boe in 2015. Operating netback in the fourth quarter of 2016 decreased to $13.94/boe from $19.21/boe in the same period of 2015 due to lower volumes sold.
- General and Administrative ("G&A") costs (excluding restructuring and severance expenses) decreased to $145 million in 2016 and $40 million in the fourth quarter of 2016 from $203 million in 2015 and $55 million in the fourth quarter of 2015; the Company continues to reduce G&A and all non-essential spending activities.
- Net Income for 2016 was $2,449 million, largely due to non-cash items and one-time items, including the recognition of a net gain of $3.6 billion on the cancellation of the debt held by the Affected Creditors in exchange for the issuance of new common shares and $155 million in costs related to the Restructuring Transaction.
- The Company recorded net impairment charges of $477 million for 2016, which included impairment losses of $1,114 million during the first three quarters and a reversal of impairment of $637 million in the fourth quarter of the year. Impairment tests were performed at the end of 2016 based on the reserves certified by external evaluators as of December 31, 2016.
- Total capital expenditures decreased to $161 million in 2016 compared with $726 million in 2015 as the Company focused on preserving cash through the restructuring process.
Additional Highlights:
- The Company continues to negotiate field commitments to focus on high-impact development drilling. On March 17, 2016, the Agencia Nacional de Hidrocarburos ("ANH") approved the transfer of $38 million in exploration commitments from Las Aguilas, Castor, LL-59, LL-15 and CPE-1 blocks to the Casanare Este, Mapache, Guatiquia, Guama LL-83 and Rio Ariari blocks. On November 22, 2016, the ANH approved a second investment transfer totaling $19 million from the CPO 14, Sabanero, LL-19 and Topoyaco blocks to the LL-25 Block.
- The Company successfully completed the divestment of all non-core assets in Brazil. On September 27, 2016, the Company reached an agreement with partners Karoon Gas Australia Ltd. and Karoon Petroleo e Gas Ltda. (collectively, "Karoon"), to sell the Company's 35% working interest in the joint concession agreements in Brazil for $15.5 million in cash consideration. The transaction was approved by the Brazilian regulator on January 31, 2017.
- On October 14, 2016, the Company also reached an agreement with partner Queiroz Galvão Exploração e Produção S.A. ("Queiroz") to withdraw from joint working interests; the Company will pay $10 million in exchange for release from future work commitments in the aggregate amount of $76.3 million. The Queiroz transaction was approved by the Brazilian regulator on March 13, 2017, and is expected to be fully consummated shortly subject to the amendment of the concession agreements. Also as a result of the transaction, the Company will be released from approximately $41 million of letter of credit requirements.
- On November 30, 2016 the Company and Compañía Española de Petróleos ("CEPSA") Peru entered into an agreement, whereby CEPSA agreed to acquire our 30% participating interest in the Licence Agreement for Block 131, in which CEPSA Peru is the operator. The sale price is $17.8 million with adjustment based on future cash flow from the block; the transaction is subject to Peruvian regulatory approval.
Financial Results:
| | | | | |
| Financial Summary | | | | |
| | Year Ended | Three Months | ||
| | 2016 | 2015 | 2016 | 2015 |
| Oil & Gas Sales Revenues ($ millions) | 1,411.7 | 2,824.5 | 269.8 | 652.0 |
| Operating EBITDA ($ thousands)1 | 444,637 | 1,165,758 | 44,275 | 224,911 |
| Operating EBITDA Margin (Operating EBITDA/Revenues) | 31% | 37% | 16% | 34% |
| Consolidated EBITDA ($ thousands)1 | 253,619 | 1,111,566 | (1,967) | 257,584 |
| Consolidated EBITDA Margin (Consolidated EBITDA/Revenues) | 18% | 39% | (1)% | 40% |
| Net income (Loss)3 | 2,448,523 | (5,461,859) | 4,025,194 | (3,895,908) |
| Per share – basic ($)2 | 48.97 | (1,733,923) | 80.50 | (1,236,713) |
| Net Production (boe/d) | 103,532 | 154,472 | 69,432 | 159,831 |
| Sales Volumes (boe/d) | 95,496 | 159,113 | 69,653 | 171,928 |
| (COP$ / US$) Exchange Rate4 | 3,000.71 | 3,149.47 | 3,000.71 | 3,149.47 |
| Average Shares Outstanding – basic (thousands) | 50,002.4 | 3.2 | 50,002.4 | 3.2 |
| 1 | These metrics are Non-GAAP financial measures. See below Advisories "Non-GAAP Financial Measure" and "Non-GAAP Measures on page 20" in the MD&A. |
| 2 | The basic weighted average numbers of common shares for the years ended December 31, 2016 and 2015 were 50,002,363 and 3,150, respectively. |
| 3 | Net Income (loss) attributable to equity holders of the parent. |
| 4 | COP/USD exchange rate fluctuations can have a significant impact on the Company's accounting net earnings, in the form of unrealized foreign currency translation on the Company's financial assets and liabilities and deferred tax balances that are denominated in COP. |
Production:
| | | | | |
| Net Production Summary | | | | |
| | Year Ended | Three Months Ended | ||
| | 2016 | 2015 | 2016 | 2015 |
| Oil (bbl/d) | | | | |
| Colombia | 91,663 | 139,659 | 60,150 | 138,906 |
| Peru | 3,106 | 5,586 Werbung Mehr Nachrichten zur Pacific Exploration & Production Aktie kostenlos abonnieren
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