EARNINGS / Gulf Indonesia Resources 1997 Results
GULF INDONESIA RESOURCES - 1997 YEAR-END RESULTS
JAKARTA, INDONESIA, Feb. 19 /CNW/ -
HIGHLIGHTS
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1997 1996
FINANCIAL
Cash Generated ($mm) $73.9 $42.4
Cash Generated per Share ($) 0.96 0.58
Earnings ($mm) 8.3 9.3
Earnings per Share ($) 0.11 0.13
SALES VOLUMES
Crude Oil (mbbls/d) 22.5 13.9
RESERVES (gross)
Proved Liquids (mmbbls) 42 36
Proved Natural Gas (bcf) 754 504
Total Proved (mmboe) 168 120
Probable Liquids (mmbbls) 28 22
Probable Natural Gas (bcf) 689 807
Total Probable (mmboe) 143 157
(x) All dollar amounts in this release are in US dollars
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Gulf Indonesia Resources Limited made significant strides and
achievements throughout 1997. In short, a public offering of 28 per cent of
the company in September, sizable exploration successes and the acquisition of
Clyde Petroleum Plc's producing assets in Indonesia have expanded operations
and realized value for the Company beyond what could have been envisioned a
year ago. Gulf Indonesia's assets provide a tremendous base for future
expansion, and the Company looks forward to extending its 36-year history in
the area into the next millenium.
Operational highlights for 1997 include:
- Crude oil sales volumes increased 62 per cent to 22,500 barrels per day
as a result of the Clyde assets acquisition.
- Proved crude oil and natural gas reserves increased 40 per cent to 168
million barrels of oil equivalent, primarily from Gulf discoveries, but
also as a result of the acquisition. This equates to a production
replacement rate of over 500 per cent for the year.
- The acquisition of Clyde Petroleum (Kakap) for $105 million added 22.6
million barrels of oil equivalent gross proved reserves and 8,700
barrels to daily production.
- In February, project financing was obtained from a consortium of
lenders for the Corridor Block Gas Project. Gulf's share of the
limited recourse loan totaled $270 million of which $150 million was
drawn by year end, reflecting the significant progress made in
construction of the field facilities.
- Drilling successes announced in the second quarter included delineation
drilling on the Corridor Block resulting in confirmation of a large
extension of the Sumpal structure; the first discovery well on the 100
per cent Gulf held Tungkal PSC, which showed both oil and natural gas;
and an oil discovery made on the currently producing Kakap PSC.
- Two new natural gas discoveries were added to the 1996 Bungkal
discovery on the South Jambi 'B' PSC adjacent to the Corridor Block,
providing additional reserves with the potential to be developed as
another Corridor-size project.
- The promising Halilintar well, spudded near year end, is the deepest
well Gulf has ever drilled in Indonesia; results are expected early in
the second quarter of 1998.
Gulf Indonesia's 1997 operating revenue was generated primarily from
crude oil sales from production at the Kakap and Corridor Blocks. Net oil
revenue of $117 million for the year was 54 per cent higher than in 1996,
primarily due to production from the acquired Kakap PSC. This was offset
slightly by a lower average oil price received of $19.12 versus $20.09 per
barrel in 1996. Cash generated from operations of $73.9 million increased
approximately 74 per cent over 1996, due mostly to the impact of the Kakap
acquisition. Earnings of $8.3 million were approximately $1 million lower
than in 1996, mainly due to the extensive drilling program and associated dry
hole costs that offset the benefits from higher production.
Capital expenditures and exploration expenses of $268 million in 1997
reflected a much higher level of investment activity compared to $52 million
in 1996. Capital expenditures included construction and drilling costs
associated with the Corridor Project of approximately $178 million; 89 per
cent of the project facilities and 59 per cent of the drilling were completed
by year end. Drilling activity also increased significantly, resulting in six
discoveries during the year including Mengoepeh, Tetangga and Rayun. The
exploration drilling success rate exceeded 50 per cent. Gulf Indonesia also
announced a discovery at Bungin in January 1998.
In September, the Company completed a public offering of 28 per cent of
its outstanding shares (the remainder of the shares are held by Gulf Canada
Resources Limited). The Company actively trades on the New York Stock
Exchange under the symbol GRL and is actively pursuing a listing on the
Jakarta Stock Exchange. At the time of the initial public offering, the stock
sold for $19.50 per share, creating a recognized value for the Company of $1.7
billion. From this transaction, the Company netted approximately $100 million
(after inter-company repayments and a dividend to Gulf Canada) that can be
applied to the 1998 capital budget.
Since 1990, Gulf Indonesia has made several large natural gas
discoveries. The 1998 capital budget will accelerate the exploration and
development of these areas, including the Company's three major natural gas
projects:
Corridor Block Gas Project (54% WI)
This project, currently under construction in South Sumatra, is on
schedule and under budget. The project will market 300 mmcf/d (160 mmcf/d net
to Gulf) of natural gas to the Caltex-operated Duri steamflood project 550
kilometres (340 miles) away. The Duri project currently burns approximately 20
per cent of the oil produced, or 67,000 b/d, for steam assisted enhanced oil
recovery. Gulf Indonesia's project will substitute Corridor natural gas to
generate steam, and Gulf and its partners will be paid in oil. Project
completion is on schedule with commissioning expected in the third quarter of
1998. Construction includes gathering and processing facilities that will tie
the fields to the trans-central Sumatra pipeline currently under construction.
In addition, expansion plans are already underway for the Corridor Project
based on new fields now being delineated on the block. Gulf expects to expand
the project by 85 mmcf/d (45 mmcf/d net to Gulf) by fourth quarter 1999 and a
further expansion of 215 mmcf/d (116 mmcf/d net to Gulf) could come from the
Sumpal and Dayung fields by mid-2001. The Company plans to conduct a 3-D
seismic program and delineation drilling in 1998.
South Jambi 'B' Block (45% WI)
Gulf has announced three natural gas discoveries on the South Jambi 'B'
PSC, located adjacent to and north of the Corridor Block. The cumulative
potential of the Bungkal, Rayun and Bungin fields ranges from 0.9 to 1.6 tcf
recoverable sales gas, providing sufficient reserves to form the basis for
another Corridor-size project. Gulf Indonesia plans six appraisal wells and
additional 3D seismic to delineate the Rayun reserves in 1998.
Block 'A' PSC (50%)
Pertamina, the Indonesian state oil company, has approved a Plan of
Development for the Block 'A' PSC natural gas fields. The $320 million
project will include construction of gathering systems from three fields plus
a plant to process gas prior to delivery to the Arun LNG facility 67
kilometres away. Project start-up is expected during 2000 with 120 mmcf/d (60
mmcf/d net to Gulf) of natural gas production.
In addition to these three projects, the 1998 drilling program has
already begun to yield encouraging results:
- Two Dayung delineation wells encountered a thicker than expected major
pay zone; this, combined with a gas-water contact approximately 40
metres (130 feet) lower than expected in the second well, should result
in significantly increased reserves.
- Gulf is currently drilling three delineation wells on the Sumpal field.
Preliminary results from Sumpal-3, two kilometres southeast of the
original discovery, confirm an extension of the Sumpal field; final
results from all three wells are expected by mid-year.
- The Company also has made a significant discovery at Jangkar-1 on the
Kakap PSC (31.25% WI). Although the well is still drilling,
preliminary logging at 3000 metres (9700 feet) showed over 150 metres
(500 feet) of net pay that Gulf Indonesia believes can be brought on to
production by year end.
- The Puyuh-9 well came in higher and with more net pay, adding more
reserves than anticipated and confirming an extension of the Puyuh oil
field; the well will be on production at an expected rate of 500-700
b/d within one month.
Substantially all of Gulf's onshore oil production (approximately 60 per
cent of 1997 production) is sold to Pertamina. The Indonesian Rupiah has
experienced a devaluation of more than 50 per cent since August 1997, creating
a very tight fiscal situation for state agencies. However, Pertamina
continues to make payments and of the approximately $16 million in accounts
receivable due to Gulf Indonesia from Pertamina at year end 1997, only $6
million remains outstanding today.
''In the short time since Gulf Indonesia became a public company, we have
witnessed significant progress in terms of exploration success and
construction of the Corridor Project,'' says Dick Auchinleck, President and
CEO. ''We have a strong role to play in the economic development of Indonesia.
Through increased natural resource development and particularly the production
of natural gas to replace domestically-consumed crude oil, we will generate
foreign currency for the country.''
Gulf Indonesia looks forward to 1998 and beyond, recognizing the huge
growth potential afforded by development of discoveries, plus exploration and
development of its large land position. This potential, coupled with a
rapidly growing demand for oil and natural gas in the region, positions the
Company well for the future.
CONSOLIDATED STATEMENTS OF EARNINGS
AND RETAINED EARNINGS (DEFICIT)
Year Ended December 31,
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(thousands of US dollars) 1997 1996 1995
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EARNINGS
Revenues
Gross oil revenue $ 157,337 $ 102,003 $ 86,578
Government take 40,661 26,134 21,573
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Net oil revenue 116,676 75,869 65,005
Other 2,955 594 2,167
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119,631 76,463 67,172
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Expenses
Operating 26,857 17,901 17,780
Petroleum revenue tax 1,658 2,995 2,457
Exploration 18,016 4,646 7,916
General and administrative
(Notes 5 and 7) 5,994 3,182 2,853
Depreciation, depletion
and amortization 39,463 21,290 22,223
Interest 260 - -
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92,248 50,014 53,229
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Earnings before tax 27,383 26,449 13,943
Income tax expense (Note 1) (19,069) (17,177) (11,447)
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Earnings for the year $ 8,314 $ 9,272 $ 2,496
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Earnings per common share (Note 2) $ 0.11 $ 0.13 $ 0.03
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RETAINED EARNINGS (DEFICIT)
Balance, beginning of year $ 42,757 $ 33,485 $ 45,489
Earnings for the year 8,314 9,272 2,496
Dividend declared (Note 11) (56,766) - (14,500)
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Balance, end of year $ (5,695) $ 42,757 $ 33,485
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(see summary of significant accounting policies and notes to consolidated
financial statements)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
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(thousands of US dollars) 1997 1996 1995
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OPERATING ACTIVITIES
Earnings for the year $ 8,314 $ 9,272 $ 2,496
Non-cash items included
in earnings:
Depreciation, depletion
and amortization 39,463 21,290 22,223
Exploration expense 18,016 4,646 7,916
Deferred income taxes 8,134 7,241 2,851
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Cash generated from operations 73,927 42,449 35,486
Changes in non-cash working
capital (Note 3) (1,228) (3,981) (3,451)
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72,699 38,468 32,035
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INVESTING ACTIVITIES
Capital expenditures and
exploration expenses (268,347) (51,864) (22,859)
Acquisition of Gulf Resources
(Kakap) Ltd. (Note 4) (105,137) - -
Changes in non-cash working
capital (Note 3) 9,895 3,331 (1,475)
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(363,589) (48,533) (24,334)
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FINANCING ACTIVITIES AND DIVIDENDS
Proceeds from issue of long-term
debt (Note 10) 150,400 - -
Debt placement costs (Note 10) (6,774) (3,447) (1,510)
Issue of equity (Note 11) 268,589 - -
Dividends (Note 11)
From share capital (11,234) - -
From retained earnings (56,766) - (14,500)
Changes in non-cash working
capital (Note 3) 45,078 16,864 2,966
Other (Note 7) (1,751) - -
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387,542 13,417 (13,044)
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Increase (decrease) in cash 96,652 3,352 (5,343)
Cash at beginning of year 10,579 7,227 12,570
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Cash at end of year (1) $ 107,231 $ 10,579 $ 7,227
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(1) Comprises cash and short-term investments.
(see summary of significant accounting policies and notes to consolidated
financial statements)
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
December 31,
1997 1996
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(thousands of US dollars)
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ASSETS
Current
Cash and short-term investments (Note 12) $ 107,231 $ 10,579
Accounts receivable 40,773 25,541
Accounts receivable - parent/affiliates
(Note 5) 258 42,500
Other current assets (Note 6) 25,062 14,301
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173,324 92,921
Deferred charges 13,482 4,957
Property, plant and equipment (Notes 8 and 10) 579,980 239,396
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$ 766,786 $ 337,274
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable $ 51,163 $ 18,758
Other current liabilities (Note 9) 5,700 814
56,863 19,572
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Long-term debt (Note 10) 150,400 -
Deferred income taxes 65,941 33,023
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273,204 52,595
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Commitments and contingent liabilities (Note 13)
Shareholders' equity
Share capital 499,277 241,922
Retained earnings (deficit) (5,695) 42,757
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493,582 284,679
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$ 766,786 $ 337,274
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(See summary of significant accounting policies and notes to consolidated
financial statements)
SUPPLEMENTARY INFORMATION
Year Ended December 31,
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1997 1996
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CRUDE OIL VOLUMES SOLD (gross/net) (1)
(thousands of barrels per day)
Onshore 13.8 / 10.6 13.9 / 10.3
Offshore 8.7 / 6.0 - / -
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22.5 / 16.6 13.9 / 10.3
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(1) ''Gross'' sales reflects the Company's interest prior to the
deduction of government take; ''net'' sales is after deduction of
government take.
CRUDE OIL GROSS AVERAGE PRICES (dollars per barrel)
Onshore 18.88 20.09
Offshore 19.49 -
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Average 19.12 20.09
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NET CRUDE OIL REVENUE (millions of dollars)
Onshore 95 102
Offshore 62 -
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157 102
Less: Government take
Onshore (22) (26)
Offshore (18) -
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Net oil revenue 117 76
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YEAR-END RESERVES AND F&D COST CALCULATION
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PROVED & PROBABLE
RESERVES YEAR-END 1997 Liquids Sales Gas MMBOE
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PROVED Gross Net Gross Net Gross Net
Corridor PSC 10 7 675 579 122 103
Corridor TAC 17 11 - - 17 11
Kakap PSC 9 6 79 70 23 18
Block A PSC 0 - - - 0 0
Jambi EOR 4 3 - - 4 3
Other 2 1 - - 2 1
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42 28 754 649 168 136
PROBABLE Gross Net Gross Net Gross Net
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Corridor PSC 2 2 429 351 73 60
Corridor TAC 8 5 - - 8 5
Kakap PSC 4 2 27 20 9 5
Block A PSC 6 5 233 203 45 39
Jambi EOR 8 5 - - 8 5
Other - - - - - -
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28 19 689 574 143 114
1997 1996 1995
RESERVE CONTINUITY Gross Net Gross Net Gross Net
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Proved Reserves
Oil 42 28 36 21 27 16
Gas 754 649 504 426 - -
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Boe 168 136 120 92 27 16
Probable Reserves
Oil 28 18 22 12 18 11
Gas 689 574 807 621 877 737
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Boe 143 114 157 116 164 134
FINDING & DEVELOPMENT COSTS (PROVED)
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Proved Reserve Additions (mmboe) 47 39 95 77 3 2
Capital Expenditures &
Exploration Expense $268 $52 $23
F&D per Barrel Proved Reserves
F&D / Boe $5.79 $6.81 $0.55 $0.67 $7.62 12.03
F&D / Boe 3-Year Average $2.37 $2.90
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