Addax Petroleum announces Second Quarter 2007 results



    /NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED
    STATES, AUSTRALIA OR JAPAN/

    
    -   Funds Flow From Operations increased by 46 per cent and net income
        increased by 74 per cent
    -   Working interest gross oil production increased by 54 per cent, to an
        average of 123,000 barrels per day
    -   Continued exploration success offshore Nigeria and step-out appraisal
        success at Taq Taq
    

    CALGARY, Aug. 7 /CNW/ - Addax Petroleum Corporation ("Addax Petroleum" or
the "Corporation") (TSX:AXC and LSE:  AXC) today announced its financial and
operational results for the quarter ended June 30, 2007. The financial results
are prepared in accordance with Canadian GAAP and the reporting currency is
US dollars.
    This announcement coincides with the filing with the Canadian and UK
securities regulatory authorities of Addax Petroleum's Financial Statements
for the quarter ended June 30, 2007 and related Management's Discussion and
Analysis. Copies of these documents may be obtained via www.sedar.com,
www.londonstockexchange.com and the Corporation's website,
www.addaxpetroleum.com.
    A conference call will be held for analysts and investors at 11:00 a.m.
Eastern Time / 4:00 p.m. London, U.K. time today, Tuesday August, 7. Full
details can be found at the end of this announcement.

    CEO's Comment

    Commenting today, Addax Petroleum's President and Chief Executive
Officer, Jean Claude Gandur, said: "Once again we have delivered strong and
solid quarterly results. I am delighted to report further production growth
which, together with good cost discipline, enables us to continue delivering
strong financial and operational performance. We believe that we have
excellent reinvestment opportunities, demonstrated in the quarter by our
exploration successes offshore Nigeria and step-out appraisal success at Taq
Taq. We continue to build a platform for growth for Addax Petroleum. During
the quarter, we increased our capital base through a well-received convertible
bond issue and completed our secondary listing on the London Stock Exchange
which I expect to be an important contributor to our objective of maximising
shareholder value."

    
    Selected Financial Highlights

    -   Petroleum sales before royalties in the second quarter of 2007
        amounted to $753 million, an increase of 44 per cent over petroleum
        sales before royalties of $523 million in the second quarter of 2006.
        The growth in petroleum sales before royalties arose predominantly
        from increased petroleum sales volumes as the average crude oil sales
        price increased slightly by 1 per cent to $68.21 per barrel (/bbl) as
        compared to $67.85/bbl realized in the corresponding period in 2006.

    -   Net income in the second quarter of 2007 was $101 million, an
        increase of 74 per cent over net income of $58 million in the second
        quarter of 2006. Net income per share increased by 59 per cent to
        $0.65 per share (basic) in the second quarter of 2007 compared to
        $0.41 per share (basic) in the corresponding period in 2006.

    -   Funds Flow From Operations for the second quarter of 2007 increased
        46 per cent to $287 million compared to $196 million for the
        corresponding period in 2006. Funds Flow From Operations per share
        increased by 32 per cent to $1.85 per share (basic) in the second
        quarter of 2007 compared to $1.40 per share (basic) in the
        corresponding quarter in 2006.

    -   In May, the Corporation successfully issued $300 million of senior
        unsecured convertible bonds due in 2012.

    -   Also in May, the Corporation was introduced to the Official List and
        to trading on the Main Market of the London Stock Exchange.

    The following tables summarize the selected second quarter and first half
financial highlights.

    -------------------------------------------------------------------------
    Selected second quarter financial highlights       Quarter ended
                                                          June 30
                                                      ---------------
    $ million unless otherwise stated                   2007    2006  Change
    -------------------------------------------------------------------------
    Petroleum sales before royalties                     753     523     44%
    Average crude oil sales price, $/bbl               68.21   67.85      1%
    Net income                                           101      58     74%

    Earnings per share, $/share (basic)                 0.65    0.41     59%
    Average shares outstanding (basic), million          155     140     11%

    Funds Flow From Operations                           287     196     46%
    Funds Flow From Operations per share (basic),
     $/share                                            1.85    1.40     32%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    Selected first half financial highlights             Half Year
                                                       ended June 30
                                                      --------------
    $ million unless otherwise stated                   2007    2006  Change
    -------------------------------------------------------------------------
    Petroleum sales before royalties                   1,380     917     50%
    Average crude oil sales price, $/bbl               63.09   63.95     (1%)
    Net income                                           180     114     58%

    Earnings per share, $/share (basic)                 1.16    0.85     36%
    Average shares outstanding (basic), million          155     134     16%

    Funds Flow From Operations                           550     370     49%
    Funds Flow From Operations per share (basic),
     $/share                                            3.55    2.76     29%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Selected Operational Highlights

    -   Average working interest gross oil production in the second quarter
        of 2007 was 123.0 thousand barrels per day (Mbbl/d), an increase of
        54 per cent over second quarter 2006 average oil production of
        79.9 Mbbl/d. Nigeria production increased by 30 percent to
        104.1 Mbbl/d compared to 79.9 Mbbl/d in the corresponding period in
        2006. Gabon contributed 18.9 Mbbl/d in the second quarter of 2007 (no
        contribution in the second quarter of 2006). Total oil production
        during the quarter was 11.2 MMbbl, as compared to oil sales volumes
        of 11.0 MMbbl during the quarter.

    -   Continued exploration success in OML137 offshore Nigeria, where oil
        and gas discoveries were made at Ofrima North and, at the start of
        the third quarter, Udele West, and step-out appraisal success at the
        Taq Taq field in the Kurdistan Region of Iraq.

    -   Capital expenditures, excluding new business acquisition
        considerations, farm-in fees and license signature fees, increased by
        52 per cent to $261 million in the second quarter of 2007, up from
        $172 million in the second quarter of 2006. Development capital
        expenditures totaled $174 million in the second quarter of 2007, an
        increase of 28 per cent over second quarter 2006 development capital
        expenditure of $136 million. Exploration and appraisal capital
        expenditures increased to $87 million in the second quarter of 2007
        from $36 million in the second quarter of 2006.

    -   Throughout the second quarter of 2007, the Corporation directly
        operated six drilling rigs: three offshore Nigeria, one onshore
        Nigeria and two onshore Gabon, and through its joint venture company,
        Taq Taq Operating Company, one further drilling rig in the Kurdistan
        Region of Iraq.

    -   Development project highlights in the second quarter of 2007 include:

        Nigeria

        -  four new development wells were drilled, all on OML123 and all
           four new wells were placed on production during the quarter;
        -  surface facilities development was ongoing at the Oron and Adanga
           fields on OML123.

        Gabon

        -  two development wells were drilled on the Corporation's onshore
           license areas;
        -  a total of three new wells were placed on production, all onshore,
           comprising the two development wells drilled in the quarter and
           one previously drilled well;
        -  surface facilities development was ongoing at the onshore Maghena
           and offshore Etame license areas.

    -   Exploration and appraisal activity and highlights in the second
        quarter of 2007 include:

        Gulf of Guinea Shallow Water (Nigeria and Cameroon)

        -  two exploration wells were drilled offshore Nigeria in the
           quarter, both on OML137 resulting in the two discoveries, Ofrima
           North and Udele West, the latter at the start of the third
           quarter;
        -  as reported on July 12, 2007, the Ofrima-2 exploration well,
           drilled on the Ofrima North structure, discovered a 140 feet gross
           oil bearing interval which, based on static pressure data
           measurements, is anticipated to be a light oil of approximately
           39 degrees API, and three gas bearing intervals with individual
           gross gas columns of 29, 43 and 158 feet. A second exploration
           well, Udele-2, discovered seven gas bearing intervals with
           individual gross gas columns of between 41 and 113 feet, 542 feet
           in aggregate. Both discovery wells were suspended and the
           Corporation intends to re-enter each well to carry out flow tests
           over selected intervals later in the year.
        -  in Cameroon, the Corporation recently contracted for a drilling
           rig to start exploration drilling on the Ngosso license area later
           in 2007.

        Gabon

        -  the Corporation has started a 3D development and appraisal seismic
           survey over the southern portion of the Maghena license area. The
           Corporation is working to extend seismic acquisition to cover the
           southern portion of the adjacent Awoun license area, operated by
           Shell Gabon and in which the Corporation has a 40 per cent working
           interest. The Corporation anticipates that the 3D survey, once
           acquired, processed and interpreted, will provide valuable
           information in the further development, appraisal and exploration
           of this area which contains the Obangue, Koula and Damier fields;
        -  as reported on April 10, 2007, the Corporation acquired a 50 per
           cent interest in and operatorship of the Epaemeno exploration
           license area, which lies immediately north of the Corporation's
           Maghena and Awoun license areas onshore Gabon. The Epaemeno
           acquisition is subject to the consent of the government of Gabon.

        Gulf of Guinea Deep Water (Nigeria and JDZ)

        -  technical studies are ongoing to evaluate exploration prospect
           drilling locations.

        Kurdistan Region of Iraq

        -  as reported on June 4, 2007, a successful step-out appraisal well,
           TT-06, was drilled and tested at an aggregate rate of 18.9 Mbbl/d
           from three separate intervals. The TT-06 well was drilled
           approximately 3.6 kilometres north-northwest of the crestally-
           located TT-05 well;
        -  during the second quarter, the TT-07 well was spudded
           approximately 2.2 kilometres southeast of the TT-05 well location.
           Presently, the TT-07 well is being prepared for flow testing, the
           results of which will be announced following the completion of
           testing;
        -  recently, the TT-08 well was spudded approximately 1.1 kilometers
           north of the TT-05 well location with the objective of appraising
           the flank of the field;
        -  a 2D seismic survey commenced over the Kewa Chermila area and was
           recently concluded, following which a 3D seismic survey was
           started over the Taq Taq field.

    -   Operating netbacks in the second quarter of 2007 increased by 4 per
        cent to $51.17/bbl compared to $49.17/bbl in the second quarter of
        2006. Unit operating expenses in the second quarter of 2007 decreased
        by 18 per cent to $5.75/bbl compared to the second quarter 2006 level
        of $6.99/bbl, reflecting unit cost improvements on the upgraded
        replacement FPSO on OML123 offshore Nigeria.

    The following tables summarize the selected second quarter and first half
operational information.


    -------------------------------------------------------------------------
    Selected second quarter operational highlights     Quarter ended
                                                          June 30
                                                      ---------------
                                                        2007    2006  Change
    -------------------------------------------------------------------------
    Annual average working interest gross
     oil production (Mbbl/d)
    Nigeria (offshore)                                  96.6    76.1     27%
    Nigeria (onshore)                                    7.5     3.8     97%
    Nigeria sub-total                                  104.1    79.9     30%
    Gabon (offshore)                                     6.4       -       -
    Gabon (onshore)                                     12.5       -       -
    Gabon sub-total                                     18.9       -       -

    Total                                              123.0    79.9     54%

    Prices, expenses and netbacks ($/bbl)

    Average realized price                             68.21   67.85      1%
    Operating expense                                   5.75    6.99    (18%)
    Operating netback                                  51.17   49.17      4%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    Selected first half operational highlights           Half year
                                                       ended June 30
                                                      ---------------
                                                        2007    2006  Change
    -------------------------------------------------------------------------
    Annual average working interest
     gross oil production (Mbbl/d)
    Nigeria (offshore)                                  94.4    76.6     23%
    Nigeria (onshore)                                    6.6     3.5     89%
    Nigeria sub-total                                  101.0    80.1     26%
    Gabon (offshore)                                     6.4       -       -
    Gabon (onshore)                                     12.2       -       -
    Gabon sub-total                                     18.6       -       -
    Total                                              119.6    80.1     49%

    Prices, expenses and netbacks ($/bbl)

    Average realized price                             63.09   63.95     (1%)
    Operating expense                                   6.72    7.05     (5%)
    Operating netback                                  46.75   45.51      3%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Dividend

    The Board of Directors of the Corporation has declared a dividend of
CDN$0.05 per share for the second quarter of 2007. The dividend is payable on
September 13, 2007 to shareholders of record on August 30, 2007. A dividend of
CDN$0.05 per share was declared and paid in the second quarter of 2007
relating to the first quarter of 2007. In accordance with Canada Revenue
Agency Guidelines, dividends paid by the Corporation during the period are
eligible dividends.

    AOG Shareholding in Addax Petroleum Corporation

    As reported on July 20 and July 31 last, the Corporation's largest
shareholder, the Addax & Oryx Group Ltd. ("AOG"), has reduced its shareholding
in Addax Petroleum to approximately 55.5 million shares, representing
approximately 36 per cent of the Corporation's issued shares. The reduction in
AOG's shareholding in the Corporation took place when some shareholders in AOG
exchanged their shares in AOG for shares in the Corporation already held by
AOG. The beneficial interests of the Corporation's executive management in
Addax Petroleum remain unaltered as a result of the reduction of AOG's
shareholding.

    Outlook

    The Corporation's outlook for 2007 is in line with guidance provided to
date. Addax Petroleum expects average working interest gross oil production to
approximate 127 to 133 Mbbl/d from its Nigeria and Gabon operations in 2007.
Capital expenditure in 2007 is forecast to total $1,150 million, a decrease
from $1,178 million, with $340 million allocated for exploration and $810
million for development expenditures. Forecast capital expenditures are
allocated as follows: $750 million is forecast to be spent on Nigerian
producing assets, $30 million to be spent on Nigerian non-producing assets,
and $240 million to be spent on Gabon producing assets, $90 million on Taq Taq
and $40 million on other assets, primarily on JDZ and Cameroon.

    Legal Notice - Forward-Looking Statements

    Certain statements in this press release constitute forward-looking
statements under applicable securities legislation. Such statements are
generally identifiable by the terminology used, such as "anticipate",
"believe", "intend", "expect", "plan", "estimate", "budget", "outlook", "may",
"will", "should", "could" or other similar wording. Forward-looking
information includes, but is not limited to, reference to business strategy
and goals, future capital and other expenditures, reserves and resources
estimates, drilling plans, construction and repair activities, the submission
of development plans, seismic activity, production levels and the sources of
growth thereof, project development schedules and results, results of
exploration activities and dates by which certain areas may be developed or
may come on-stream, royalties payable, financing and capital activities,
contingent liabilities, and environmental matters. By its very nature, such
forward-looking information requires Addax Petroleum to make assumptions that
may not materialize or that may not be accurate. This forward-looking
information is subject to known and unknown risks and uncertainties and other
factors, which may cause actual results, levels of activity and achievements
to differ materially from those expressed or implied by such information. Such
factors include, but are not limited to: imprecision of reserves and resources
estimates; ultimate recovery of reserves; prices of oil and natural gas;
general economic, market and business conditions; industry capacity;
competitive action by other companies; fluctuations in oil prices; refining
and marketing margins; the ability to produce and transport crude oil and
natural gas to markets; the ability to market and sell natural gas under its
production sharing contracts; the effects of weather and climate conditions;
the results of exploration and development drilling and related activities;
fluctuation in interest rates and foreign currency exchange rates; the ability
of suppliers to meet commitments; actions by governmental authorities,
including increases in taxes; decisions or approvals of administrative
tribunals; changes in environmental and other regulations; risks attendant
with oil and gas operations, both domestic and international; international
political events; expected rates of return; and other factors, many of which
are beyond the control of Addax Petroleum. More specifically, production may
be affected by such factors as exploration success, start-up timing and
success, facility reliability, reservoir performance and natural decline
rates, water handling, and drilling progress. Capital expenditures may be
affected by cost pressures associated with new capital projects, including
labour and material supply, project management, drilling rig rates and
availability, and seismic costs. These factors are discussed in greater detail
in filings made by Addax Petroleum with the Canadian provincial securities
commissions.
    Readers are cautioned that the foregoing list of important factors
affecting forward-looking information is not exhaustive. Furthermore, the
forward-looking information contained in this press release is made as of the
date of this press release and, except as required by applicable law, Addax
Petroleum does not undertake any obligation to update publicly or to revise
any of the included forward-looking information, whether as a result of new
information, future events or otherwise. The forward-looking information
contained in this press release is expressly qualified by this cautionary
statement.

    Non-GAAP Measures

    Addax Petroleum defines "Funds Flow From Operations" or "FFFO" as net
cash from operating activities before changes in non-cash working capital.
Management believes that in addition to net income, FFFO is a useful measure
as it demonstrates Addax Petroleum's ability to generate the cash necessary to
repay debt or fund future growth through capital investment. Addax Petroleum
also assesses its performance utilizing Operating Netbacks which it defines as
the per barrel profit margin associated with the production and sale of crude
oil and is calculated as the funds flow from operations per barrel sold, prior
to corporate charges. FFFO and Operating Netback are not recognized measures
under Canadian GAAP. Readers are cautioned that these measures should not be
construed as an alternative to net income determined in accordance with
Canadian GAAP or as an indication of Addax Petroleum's performance. Addax
Petroleum's method of calculating this measure may differ from other companies
and accordingly, it may not be comparable to measures used by other companies.

    Analyst Conference Call

    Financial analysts are invited to participate in a conference call today
Tuesday, August 7 at 11:00 a.m. Eastern Time / 4:00 p.m. London, U.K. time
with Mr. Jean Claude Gandur, President and Chief Executive Officer, Mr.
Michael Ebsary, Chief Financial Officer and Mr. James Pearce, Chief Operating
Officer. The media and shareholders may participate on a listen only basis.

    To listen to the conference call, please call one of the following:

    Toronto:                             416 644 3418
    Toll-free (Canada and the U.S):    1 800 732 6179
    Toll-free (U.K.):                00 800 0000 2288
    Toll-free (Switzerland):         00 800 0022 8228

    A replay of the call will be available at (416) 640-1917 or (877)
289-8525, passcode 21240077 followed by the number sign until Tuesday, August
21, 2007.





For further information:

For further information: Mr. Michael Ebsary, Chief Financial Officer,
Tel.: +41 (0) 22 702 94 03, michael.ebsary@addaxpetroleum.com; Mr. Patrick
Spollen, Investor Relations, Tel.: +41 (0) 22 702 95 47,
patrick.spollen@addaxpetroleum.com; Mr. Craig Kelly, Investor Relations, Tel.:
+41 (0) 22 702 95 68, craig.kelly@addaxpetroleum.com; Ms. Marie-Gabrielle,
Cajoly Press Relations, Tel.: +41(0) 22 702 94 44,
marie-gabrielle.cajoly@addaxpetroleum.com; Mr. Mac Penney, Press Relations,
Tel.: (416) 934 8011, mac.penney@cossette.com; Mr. James Henderson, Press
Relations, Tel.: +44 (0) 20 7743 6673, james.henderson@pelhampr.com; Mr.
Alisdair Haythornthwaite, Press Relations, Tel.: +44 (0) 20 7743 6676,
alisdair.haythornthwaite@pelhampr.com

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