Addax Petroleum announces strong cash flows in first quarter 2009 results

    High impact projects expected to yield a transformational year

    CALGARY, May 13 /CNW/ - Addax Petroleum Corporation ("Addax Petroleum" or
the "Corporation") (TSX: AXC and LSE:   AXC), today announced its results for
the quarter ended March 31, 2009. The financial results are prepared in
accordance with Canadian GAAP and the reporting currency is US dollars.
    A conference call will be held for analysts and investors today
Wednesday, May 13, 2009 at 11.00 a.m. Eastern Time / 4.00 p.m. London, U.K.
Time. 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:
    "Addax Petroleum continues to deliver strong operating cash flows and
healthy netbacks despite a significantly lower oil price environment. As part
of the Corporation's ongoing commitment to maintain liquidity and to operate
under a balanced budget approach, certain development activities were
postponed in order to maintain a concerted focus on exploration.
    The stage has been set for our high impact projects to make for an
exciting year. We are extremely pleased to have recently received a
confirmation from the Kurdistan Regional Government that crude oil exports
will commence from the Taq Taq field. In addition, with the recently
contracted Deepwater Pathfinder drillship, the Corporation has entered a new
and significant phase of exploration in the highly prospective Deepwater Gulf
of Guinea. While the original schedule had us commencing drilling in the JDZ
Block 4 in the fourth quarter, we understand that the drillship may now arrive
earlier in the second half of 2009."

    Selected Financial Highlights

    The following table summarizes the selected financial highlights:

    Selected financial highlights                       Quarter ended as at
                                                              March 31
    $ million unless otherwise stated                  2009     2008   Change
    Petroleum sales before royalties                    576    1,154     -50%
    Average crude oil sales price, $/bbl              43.98    96.03     -54%
    Sales volumes, MMbbl                               13.0     12.0       8%

    Funds Flow From Operations                          276      466     -41%
    Net income                                            5      240     -98%

    Weighted average common shares outstanding
     (basic, millions)                                  157      156       1%
    Funds Flow From Operations per share
     ($/basic share)                                   1.76     3.00     -41%
    Earnings per share ($/basic share)                 0.03     1.54     -98%

    Weighted average common shares outstanding
     (diluted, millions)                                158      162      -2%
    Funds Flow From Operations per share
     ($/diluted share)                                 1.69     2.87     -41%
    Earnings per share ($/diluted share)               0.03     1.51     -98%

    Total assets                                      5,588    4,318      29%
    Long-term debt, excluding convertible bonds       1,400    1,125      24%

    Capital Expenditures - by Region
    Nigeria (excluding deepwater) & Cameroon            282      261       8%
    Gabon                                               151       66     129%
    Kurdistan Region of Iraq                             18        7     157%
    Deepwater Nigeria & JDZ                              13        3     333%
    Corporate, acquisitions, farm-in and licence
     signature fees                                      (2)       3    -167%
    Total                                               462      340      36%

    Capital Expenditures - by Type
    Development                                         337      243      39%
    Exploration & appraisal                             127       94      35%
    subtotal                                            464      337      38%
    Corporate, acquisitions, farm-in and licence
     signature fees                                      (2)       3    -167%
    Total                                               462      340      36%

    -   Petroleum sales before royalties in the first quarter (Q1) of 2009
        amounted to $576 million, a decrease of 50 per cent over petroleum
        sales before royalties of $1,154 million in Q1 2008. The decrease in
        petroleum sales before royalties was primarily driven by a 54 per
        cent decrease in the average crude oil sales price in Q1 2009 to
        $43.98 per barrel (/bbl) as compared to $96.03/bbl realized in Q1
        2008, offset partially by an 8 per cent increase in sales volumes
        between the same periods.

    -   Funds Flow From Operations for Q1 2009 decreased 41 per cent to $276
        million ($1.76 per basic share) compared to $466 million ($3.00 per
        basic share) in Q1 2008.

    -   Net income in Q1 2009 decreased 98% to $5 million ($0.03 per basic
        share) compared to $240 million ($1.54 per basic share) in Q1 2008.

    -   Capital expenditures increased by 36 per cent to $462 million in Q1
        2009 from $340 million in Q1 2008. Development capital expenditures
        totaled $337 million in the first quarter, an increase of 39 per cent
        over development capital expenditures of $243 million in Q1 2008.
        Exploration and appraisal capital expenditures increased to $127
        million in the quarter, an increase of 35 per cent over exploration
        and appraisal capital expenditures of $94 million in Q1 2008. The
        Corporation is on track to spend approximately $1 billion in capital
        expenditures during 2009 due to a planned slowdown in development
        activities and reductions in service costs.

    -   At the end of Q1 2009, bank debt increased to $1,400 million due to
        the planned use of debt to fund temporary working capital
        fluctuations. Debt is drawn under two facilities that consist of a
        $1.6 billion senior secured reducing revolving borrowing base
        facility (of which $1.3 billion can be drawn as debt) and a $500
        million senior unsecured revolving facility.

    Selected Operational Highlights

    The following table summarizes selected operational information:

                                                         Quarter ended as at
    Selected operational highlights                           March 31
                                                       2009     2008   Change
    Quarter average gross working interest oil
     production (Mbbl/d)
      Nigeria (offshore)                               98.3    102.3      -4%
      Nigeria (onshore)                                 5.6      7.4     -24%
      Nigeria sub-total                               103.9    109.7      -5%

      Gabon (offshore)                                  6.6      7.0      -6%
      Gabon (onshore)                                  21.3     22.4      -5%
      Gabon sub-total                                  27.9     29.4      -5%

      Kurdistan                                         2.9        -      n/a

      Total                                           134.7    139.1      -3%

    Prices, expenses and netbacks ($/bbl)
      Average realized price                          43.98    96.03     -54%
      Operating expense                                8.47     8.09       5%
      Operating netback                               29.35    72.49     -60%

    -   Average gross working interest oil production in Q1 2009 was 134,730
        bbl/d, representing a decrease of approximately 3 per cent over Q1
        2008 average production of 139,100 bbl/d.


        -  average oil production from Nigeria in Q1 2009 was 103,930 bbl/d
           and in line with expectations, compared to a Q1 2008 average
           production level of 109,700 bbl/d;

        -  lower production in the first quarter of 2009 was primarily
           attributed to contractor delays in the start-up of new wells and a
           gas constraint in gas-lift, both in the OML123 licence area, and a
           scheduled shutdown of the Sendje Berge FPSO for a statutory
           inspection in the OML126 licence area.


        -  average oil production from Gabon in Q1 2009 was 27,960 bbl/d and
           in line with expectations, compared to a Q1 2008 average
           production level of 29,400 bbl/d;

        -  production in the first quarter of 2009 was impacted from the
           start-up of the new Obangue production facility and wells awaiting
           gas-lift installation.


        -  Addax Petroleum's entitlement to crude oil production from the Taq
           Taq field in the Kurdistan Region of Iraq commenced in Q1 2009 at
           an average rate of 2,850 bbl/d;

        -  petroleum activities for Taq Taq remain in the pre-production or
           development stage for accounting purposes, and as such, all
           revenues are currently being recorded as a reduction to
           capitalized expenditures.

    -   Development project highlights in Q1 2009 include:


        -  drilled four new development wells which included two oil
           production wells and one water injection well in OML123 and one
           oil production well in OML126;

        -  placed a total of two new oil production wells on production in
           the quarter, being the two wells drilled in OML123 in the quarter;

        -  installed and tested the Adanga North B platform topsides in
           OML123 offshore Nigeria.


        -  drilled three new development wells onshore in the Addax Petroleum
           operated Obangue field in the Panthere NZE licence area and a
           further two development wells in the third party operated Ebouri
           field in the Etame Marin licence area;

        -  placed three new oil production wells on production in the
           quarter, being two wells in the Obangue field and one well in the
           Ebouri field;

        -  completed the new onshore Obangue East Central Processing Facility
           that will handle the planned increase in production and associated
           fluids from the Obangue field during the ongoing field
           development; and,

        -  continued development of the Koula field by the operator of the
           Awoun licence area for a planned production start-up in the fourth
           quarter of 2009.


        -  commenced sustained crude oil production and sales to the domestic
           market from the Taq Taq field;

        -  submitted a full field development plan for the Taq Taq field to
           the Kurdistan Regional Government; and,

        -  continued expansion of the on-site processing facilities to
           increase capacity up to 70 Mbbl/d in late 2009.

    -   Operating netbacks in Q1 2009 decreased 60 per cent to $29.35/bbl
        compared to $72.49/bbl in Q1 2008. Unit operating expenses in Q1 2009
        increased to $8.47/bbl, an increase of 5 per cent over the 2008 level
        of $8.09/bbl primarily due to additional downhole maintenance and
        personnel related costs in relation to the growing operations in
        Gabon and increased security costs for ocean marine vessels in

    Selected Exploration and Appraisal Highlights

    -   Exploration and appraisal highlights to date in 2009 include:

        Kurdistan Region of Iraq

        -  completed testing on the TT-10 appraisal well that was drilled
           into the crest of the Cretaceous formations in the Taq Taq field
           where it encountered a gross oil column of 530 metres. The TT-10
           well successfully flow-tested three reservoirs with an aggregate
           rate of 44,240 bbl/d of light oil, measured gravity of 48 degrees
           API with low gas oil ratio; and,

        -  commenced the exploration drilling of the Kewa Chirmila prospect
           in the Taq Taq licence area where the well is expected to reach
           total depth by mid-2009.

        Gulf of Guinea Deep Water (Nigeria and JDZ)

        -  announced that the Corporation signed an agreement with a
           subsidiary of Transocean Ltd. for the provision and operation of
           the Deepwater Pathfinder drillship to commence its exploration
           drilling campaign in the Deepwater Gulf of Guinea. Addax Petroleum
           expects to receive delivery of the Deepwater Pathfinder in the
           second half of 2009 in order to commence the drilling of four
           consecutive wells.

        Gulf of Guinea Shallow Water (Nigeria and Cameroon)

        -  notified intention to enter the next two-year exploration period
           in the Ngosso licence area offshore Cameroon, subject to
           government approval, which includes the commitment to drill one
           exploration well by January 2011.


        -  drilled an appraisal well at the Autour field in the Panthere
           licence area onshore Gabon, the results of which are currently
           being evaluated;

        -  commenced the exploration program in the Gryphon Marin licence
           area offshore Gabon with the drilling of the Corporation's first
           wells. The Ajomba South and Ajomba Main wells were plugged and
           abandoned as dry holes, however, the results and technical data
           acquired from the well will be used in the additional seismic and
           exploration drilling that is planned for the license area; and,

        -  participated in the drilling of the North Etame exploration well
           in the Corporation's Etame Marin license area offshore Gabon. The
           third party operated well encountered lower than anticipated
           hydrocarbons, was water bearing and was plugged and abandoned.

    Dividend Declaration

    The Board of Directors of the Corporation declared a dividend of CDN$0.10
per share on May 12, 2009 which is payable on June 18, 2009 to shareholders of
record on June 4, 2009. During the first quarter of 2009, the Corporation
declared a dividend of CDN$0.10 per share. In accordance with Canada Revenue
Agency Guidelines, dividends paid by the Corporation during the period are
eligible dividends.

    Recent Developments

    In May 2009, the Corporation received formal notification from the
Kurdistan Regional Government that international exports of crude oil from the
Taq Taq licence area will commence on or soon after June 1, 2009.
    In April 2009, the Corporation completed drilling one exploration well at
the Okwori East prospect in the OML126 licence area offshore Nigeria where the
well was plugged and abandoned as a dry hole.


    The Corporation's production outlook for 2009 continues to be in line
with previous guidance provided. Addax Petroleum expects annual average
working interest gross oil production for 2009 to be between 132 and 137

    Regulatory Filings

    This announcement coincides with the filing with the Canadian and U.K.
securities regulatory authorities of Addax Petroleum's Unaudited Consolidated
Financial Statements for the quarter ended March 31, 2009 and related
Management's Discussion and Analysis. Copies of these documents may be
obtained via, and the Corporation's

    Analyst Conference Call

    Financial analysts are invited to participate in a conference call today
Wednesday, May 13, 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
participate in the conference call, please dial one of the following:

    Toronto:                          (416) 644 3416
    Toll-free (Canada and the US):    1 800 733 7560
    Toll-free (UK):                   00 800 2288 3501
    Toll-free (Switzerland):          00 800 2288 3501

    A replay of the call will be available at (416) 640 1917 or (877) 289
8525, passcode 21296234 followed by the number sign until Saturday, June 13,

    Reader Advisory Regarding Forward-Looking Information

    Certain statements contained in this news release, including statements
related to future capital expenditures, financing and capital activities,
business strategy and goals, future commodity prices, reserves and resources
estimates, drilling plans, development plans and schedules, future seismic
activity, production levels and sources of growth thereof, results of
exploration activities and dates that areas may come on-stream, royalties
payable, construction projects, contingent liabilities and government
approvals, statements that contain words such as "may", "will", "would",
"could", "should", "anticipate", "believe", "intend", "expect", "plan",
"estimate", "budget", "outlook", "propose", "project", and statements relating
to matters that are not historical fact constitute forward-looking information
within the meaning of applicable Canadian securities legislation. In this news
release, forward-looking information and statements include: Addax Petroleum's
capital expenditures budget and associated anticipated production, anticipated
cost controls, future commodity prices, and access to future financing and
liquidity, income tax and other contingent liabilities, major capital projects
and ongoing contractual obligations and commitments.
    Forward-looking information is subject to known and unknown risks and
uncertainties attendant with oil and gas operations, and other factors, which
include, but are not limited to imprecision of reserves and resources
estimates; ultimate recovery of reserves; commodity prices; general economic,
market and business conditions; industry capacity; competitive action by other
companies; refining and market margins; the ability to produce and transport
crude oil and natural gas to markets; weather and climate conditions; results
of exploration and development drilling and other related activities;
fluctuation in interest rates and foreign currency exchange rates; 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; international political
events; and expected rates of return. More specifically, production may be
affected by 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.
    In this news release, Addax Petroleum has made assumptions with respect
to the following:

    -   prices for oil and natural gas;
    -   oil and gas reserve and resource quantities and the discounted
        present value of future net cash flows from these reserves and the
        ultimate recoverability of reserves;
    -   timing and amount of future production, forecasts of capital
        expenditures and the sources of financing thereof;
    -   the amount, nature, timing and effects of capital expenditures;
    -   plans for drilling wells and the timing and location thereof;
    -   expectations regarding the negotiation and performance of contractual
    -   operating and other costs;
    -   business strategies and plans of management;
    -   anticipated benefits and enhanced shareholder value resulting from
        prospect development and acquisitions;
    -   approvals for petroleum exports from the Kurdistan Regional
        Government; and,
    -   treatment under the fiscal terms of Production Sharing Contracts and
        governmental regulatory regimes.

    Addax Petroleum's actual results could differ materially from those
anticipated in these forward-looking statements if the assumptions underlying
them prove incorrect, or if one or more of the uncertainties or risks
described above materializes. Risk factors are discussed in greater detail in
filings made by Addax Petroleum with the Canadian provincial securities
    Readers are strongly cautioned that the above list of factors affecting
forward-looking information is not exhaustive. Further, forward-looking
statements are made as at the date they are given and, except as required by
applicable law, Addax Petroleum does not intend, and does not assume any
obligation, to update any forward-looking statements, whether as a result of
new information or otherwise. The forward-looking statements contained in this
news release are expressly qualified by this advisory.

    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 pre-tax profit margin associated with the production and sale
of crude oil and is calculated as the average realized sales price less
royalties and operating expenses, on a per barrel basis. FFFO and Operating
Netback are not recognized measures under Canadian Generally Accepted
Accounting Principles ("GAAP"). Readers are cautioned that these measures
should not be construed as an alternative to net income or cash flow from
operating activities determined in accordance with Canadian GAAP or as an
indication of Addax Petroleum's performance. Addax Petroleum's method of
calculating these measures may differ from other companies and accordingly, it
may not be comparable to measures used by other companies.

For further information:

For further information: Mr. Michael Ebsary, Chief Financial Officer,
Tel.: +41 (0) 22 702 94 03,; Mr. Craig
Kelly, Investor Relations, Tel.: +41 (0) 22 702 95 68,; Mr. Chad O'Hare, Investor Relations, Tel.: +41
(0) 22 702 94 10, chad.o'; Ms. Marie-Gabrielle Cajoly,
Press Relations, Tel.: +41 (0) 22 702 94 44,; Mr. Nick Cowling, Press Relations,
Tel.: (416) 934-8011,; Mr. Mark Antelme, Press
Relations, Tel.: +44 (0) 20 3178 6242,

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