HOUSTON, May 13, 2013 (GLOBE NEWSWIRE) -- Coastal Energy Company (the "Company" or "Coastal Energy") (TSX:CEN) (AIM:CEO), an independent exploration and production company with assets in Southeast Asia, announces the financial results for the three months ended March 31, 2013. The functional and reporting currency of the Company is the United States dollar.

Q1 2013 Financial Highlights
  • The Company reported Q1 total production of 23,163 boe/d, up from year ago levels of 22,773 boe/d. Offshore production totalled 20,460 bbl/d, a slight decrease from year ago levels of 21,031 bbl/d. Offshore production was impacted by several factors, including longer than expected completion times for the hydraulic fracturing program at Bua Ban South, delayed production from two horizontal wells at Bua Ban North due to the initial installation of "swelling packers" designed to reduce water production and the Songkhla A-10 well being down for a majority of the quarter awaiting pump replacement. Onshore production was 2,703 boe/d, up from 1,742 boe/d in the same period last year due to stronger gas demand in Thailand.  
  • EBITDAX for Q1 2013 was $152.5 million, 19% higher than the $128.4 million recorded in Q1 2012. Revenue and EBITDAX were driven higher by increased lifting volumes. Crude oil inventory was approximately 188,115 barrels at March 31, 2013, the revenue from which will be recognized in the second quarter.   
  • Operating costs declined 8% year over year on a per barrel basis to $19.90 / bbl as the Company realized the benefits of costs reductions related to the purchase of previously leased production facilities.  
  • The Company announced successful discoveries at Songkhla A in two exploration wells which were drilled into previously untested fault blocks on the western side of the platform.

Operations Update

The Company recently completed the drilling of one exploration well at the Songkhla M prospect and one appraisal/exploration well in the Bua Ban North and Bua Ban Terrace Area.

Bua Ban Terrace

The Bua Ban Terrace A-01 well was drilled to a depth of 5,900 feet TVDSS.  The well penetrated the Miocene interval within the existing Bua Ban North field.  The Miocene contained 52 feet of net pay with 26% average porosity, which was thicker than the 40 feet of prognosed pay.  The well then penetrated the Lower Oligocene and Eocene intervals on the western side of the fault in the Terrace area and encountered 7 feet of net pay in the Lower Oligocene reservoir with 16% porosity.  The Eocene contained 313 feet of net sand with an average porosity of 18.2 %.  Very high gas readings persisted throughout drilling of the Eocene sections.  Although, the majority of the zones in the Eocene were water-bearing, there were several zones with log indications of high oil saturation levels. These log readings, in conjunction with the pay zone in the Lower Oligocene and high gas readings throughout the Eocene, further confirm oil migration in the Terrace area. 

Songkhla M

The Songkhla M-01 well was drilled to a depth of 9,200 feet TVDSS.  The well encountered an extensive section of excellent quality Miocene reservoirs which were water bearing. The well also encountered 57 feet of net sand in the Eocene reservoir with pervasive oil shows.  The Eocene sand section had average porosity of 11%, which is below the Company's conventional commerciality threshold. 

Randy Bartley, President & CEO of Coastal Energy commented:

"Coastal Energy had another successful quarter in the first three months of 2013. The second quarter has also started well with offshore production averaging 22,800 bbl/d and total Company production averaging 25,700 boe/d during the month of April. The Company drilled two successful exploration wells at Songkhla A, making discoveries in two previously untested fault blocks on the western side of the platform.

"The results of both exploration wells yielded positive data points for our exploration portfolio.

"The Bua Ban Terrace well was drilled into the same Terrace fault block as the previously drilled Bua Ban North A-02 well, which penetrated the Lower Oligocene to the south of this location and contains a massive section of high quality, water bearing Lower Oligocene sands. The encounter of Lower Oligocene net pay in this well, combined with the A-02 results, points to a potential stratigraphic trap in the Terrace fault block that is pinched out between the Terrace A-01 well and the Bua Ban North A-02 well. 

"At Songkhla M, we encountered oil shows in both the Miocene and Eocene intervals. The Miocene had high levels of oil saturation, providing further confirmation of oil migration in this high potential section on the eastern side of the Songkhla basin. The M prospect is located at the southern limit of our existing legacy 3D survey. However, the 3D survey acquired last year extends much further to the south and a trend of Eocene closures has been identified over a 2000 acre area. Given our success in hydraulically fracturing the Eocene interval with similar characteristics on the western side of the basin we feel that we have identified a significant trend for hydraulic fracture development in the Eocene."

The following financial statements for the Company are abbreviated versions. The Company's complete financial statements for the three months ended March 31, 2013 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 March 31,  2013   2012 
Revenues and Other Income    
Oil sales  226,800  189,079
Royalties  (26,310)  (20,243)
Oil sales, net of royalties  200,490  168,836
Reimbursement of expenses under Malaysia risk service contract  2,285  --
Other income (Note 12)  261  (10,171)
   203,036  158,665
Production  42,933  36,210
Malaysia risk service contract  2,285  -- 
Depreciation and depletion (Note 7)  23,305  20,044
Net profits interest (Note 13)  1,926  -- 
General and administrative  7,781  8,327
Debt financing fees  528  281
Finance  1,215  1,006
Gains on disposal of property, plant and equipment  (19)  -- 
   79,954  65,868
Net income before income taxes and share of earnings from Apico LLC  123,082  92,797
Share of earnings from Apico LLC (Note 8)  5,218  4,007
Net income before income taxes  128,300  96,804
Income taxes (Note 15)    
Current  45,065  36,608
Deferred  30,239  11,703
   75,304  48,311
Net income and comprehensive income  52,996  48,493
Net income and total comprehensive income attributable to:    
Shareholders of Coastal Energy  52,079  48,135
Non-controlling interest  917  358
   52,996  48,493
Net income per share:    
Basic (Note 14)  0.46  0.42
Diluted (Note 14)  0.45  0.40
The accompanying notes are an integral part of these condensed interim consolidated financial statements.    
As at March 31 2013 December 31, 2012
   $   $ 
Current Assets    
Cash  23,549  63,897
Restricted cash (Note 4)  6,484  6,452
Accounts receivable (Note 5)  145,710  56,848
Derivative asset (Note 11)  131  132
Crude oil inventory  9,204  15,611
Marine fuel inventory 4,742 5,245
Prepaids and other current assets  1,557  628
Total current assets  191,377  148,813
Non-Current Assets    
Exploration and evaluation assets (Note 6)  62,921  118,350
Property, plant and equipment (Note 7)  688,724  560,493
Investment in and advances to Apico LLC (Note 8)  63,144  60,266
Deposits and other assets  6,271  6,271
Total non-current assets  821,060  745,380
Total Assets  1,012,437  894,193
Current Liabilities    
Accounts payable and accrued liabilities (Note 9)  247,216  217,757
Current portion of long-term debt (Note 11)  34  34
Current portion of derivative liabilities (Note 11)  973  1,372
Total current liabilities  248,223  219,163
Non-Current Liabilities    
Long-term debt (Note 11)  95,594  95,066
Non-current portion of derivative liabilities (Note 11)  683  502
Derivative liability - Warrants (Note 10)  3,596  3,784
Deferred tax liabilities  128,662  98,423
Decommissioning liabilities  48,302  46,726
Total non-current liabilities  276,837  244,501
Shareholders' Equity (Note 14)    
Common shares  215,141  213,260
Contributed surplus  20,269  18,940
Retained earnings  245,902  193,877
Total Shareholders' Equity  481,312  426,077
Non-controlling interest  6,065  4,452
Total equity  487,377  430,529
Total liabilities and equity  1,012,437  894,193
Commitments and contingencies (Note 17)    
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
Three Months Ended March 31,  2013   2012 
Operating activities    
Net income  52,996  48,493
Share of earnings from Apico LLC  (5,218)  (4,007)
Unrealized (gain) loss on derivative instruments  (217)  4,007
Depletion and depreciation  23,305  20,044
Finance expenses  1,215  1,006
Amortisation of debt financing fees  528  281
Share-based compensation  2,484  2,991
Deferred income taxes  30,239  11,703
Unrealized foreign exchange (gain) loss  (1,020)  92
Gains on disposal of property, plant and equipment  (19)  --
Income taxes paid  (6,984)  --
Interest received  27  2
Interest paid  (1,118)  (721)
Dividends received from Apico LLC  2,340  --
Change in non-cash working capital:    
Accounts receivable  (88,862)  (15,537)
Inventory  6,910  (5,476)
Prepaids and other current assets  (929)  748
Accounts payable and accrued liabilities  (6,846)  (19,357)
Current income taxes payable  44,974  36,608
Cash flow provided by operating activities  53,805  80,877
Financing Activities    
Issuance of common shares, net of issuance costs  1,288  992
Cash settlement of restricted stock units  (156)  --
Borrowings under long-term debt  15,000  --
Repayment of long-term debt  (15,000)  (30,000)
Loan arrangement fees  --  (746)
Distributions to non-controlling interest  (1,293)  --
Contributions from non-controlling interest  1,989  --
Cash flow provided by (used in) financing activities  1,828  (29,754)
Investing Activities    
(Increase) decrease in restricted cash  (32)  22,036
Expenditure on property, plant and equipment  (95,972)  (45,229)
Acquisition of increased ownership interest in Apico LLC  --  (9,250)
Proceeds from disposal of property, plant and equipment  533  --
Cash flow used in investing activities  (95,471)  (32,443)
Effect of exchange rate changes on cash  (510)  (775)
(Decrease) increase in cash  (40,348)  17,905
Cash - Beginning of period  63,897  22,995
Cash - End of period  23,549  40,900
The accompanying notes are an integral part of these condensed interim consolidated financial statements.

Randy Bartley, President and Chief Executive Officer of the Company and a member of the Society of Petroleum Engineering and Jerry Moon, Vice President, Technical & Business Development, a member of the American Association of Petroleum Geologists, a Licensed Professional Geoscientist and a Certified Petroleum Geologist in the state of Texas, have reviewed the contents of this announcement.

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

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