ROC Oil has released its Preliminary Final Report (Appendix 4E), Directors' Report and Annual Financial Report for the Financial Year ended 31 December 2008. The key highlights are:
Sales revenue of US$358.2 million (2007: US$208.5 million); up 72% on the previous year.
Average sales price of US$92.06/BBL (before hedging); a 5.3% discount to the Brent oil average price of US$97.26/BBL.
Net cash flow from operations of US$182.5 million (2007: US$138.1 million); up 32%.
Trading profit of US$163.8 million (2007: US$104.7 million); up 56%.
EBITDAX (and impairments) of US$312.3 million (2007: $US112.3 million); up 178%.
Net loss after income tax of US$278.4 million (2007: loss of US$84.4 million) including:
- non-cash asset impairments of US$376.9 million;
- exploration expensed of US$112.7 million; and
- hedging gain of US$38.6 million.
Normalised net loss after income tax US$66.5 million (2007: loss of US$28.0 million) after adjusting for significant items.
Amortisation expense of US$120.4 million (2007: US$81.4 million); up 48%.
Year end debt of US$168.7 million (2007: US$133.3 million), partially offset by cash of US$54.3 million (2007: US$41.4 million).
Funding in 2009 largely underpinned by existing cash flow, existing bank loan facilities and new loan facilities established subsequent to year end.
Production of 4.0 MMBOE from seven producing fields in Australia, Africa, China and UK compared to 3.5 MMBOE produced from six fields in 2007; up 14%.
Exploration and appraisal expenditure of US$115.2 million (2007: US$94.7 million) relating to:
- eight exploration wells (one discovery at Coco-1, onshore Angola);
- six appraisal wells;
- three 3D seismic surveys; and
- one aeromagnetic survey.
Development expenditure of US$76.2 million (2007: US$57.4 million) relating to:
- Construction, fabrication and installation of new facilities, as well as development drilling activities at Zhao Dong Block, Bohai Bay, offshore China; and
- Ongoing expansion activity at Basker-Manta-Gummy Oil and Gas Fields, offshore Victoria.
Commenting on the 2008 Financial Results, ROC's Chief Executive Officer, Mr Bruce Clement, stated:
"ROC's 2008 Financial Results are dominated by non-cash balance sheet asset impairments that largely resulted from the fall in oil price during the year. The oil price fell 62% year-on-year and by 64% since the acquisition of Anzon in September. Asset revaluations have resulted in write-downs and impairments of US$376.9 million (before tax), which was a major contributor to the reported loss of US$278.4 million (after tax).
However, underlying these results is a healthy business, with a sound operational and cash flow base, substantial 2P Reserves (24 MMBOE) and development potential from Contingent Resources (23.9 MMBOE). The Anzon acquisition contributed 7.7 MMBOE of 2P Reserves and 18.7 MMBOE of Contingent Resources. The 2008 cash flow from operations was US$182.5 million from production of 4.0 MMBOE. Current production exceeds 12,000 BOEPD and average operating cost is approximately US$15/BBL. Even in today's US$40/BBL oil price environment, ROC continues to generate positive operating cash flow.
Importantly, the funding for ROC's 2009 business plans is largely underpinned by operating cash flow and support from existing lenders. In particular, a new US$35 million bridge facility has been provided by CBA to support development activities in 2009 and the term of the existing US$30 million working capital facility from CBA has been extended to 30 June 2010.
In this uncertain global financial environment and with oil prices at four year lows, ROC's business strategy is to steward financial resources and to continue focusing on production and development operations. ROC has taken positive action to ensure the business operates effectively in this environment. Exploration expenditure for 2009 has been minimised, development programmes have been structured to focus on delivering optimal financial returns and opportunities are already being pursued to enhance production performance and to take advantage of cost reductions now being experienced in the industry.