Maurel & Prom : 2014 Results
(Thomson Reuters ONE) -
Paris, 26 March 2015
No. 07-15
2014 RESULTS
In a general economic climate shaken up by the fall in oil prices, and with the
need to protect its balance sheet, in 2014 Maurel & Prom proved its ability to:
1. Strictly manage its cash flow:
1. Increase in the Group's available cash by ?38 million to ?229 million;
2. Renegotiation of the debt term (maturities extended)
3. Demonstrate the resistance of its EBITDA (?352 million)
4. Consolidate its operations by abandoning non-strategic exploration projects
and focusing on its producing assets
Units 2014 2013* Change
--------------------
Sales ?M 550.4 570.7 -4%
--------------------------------------------------------------------------
EBITDA 351.9 421.7 -17%
Write-offs -113.4 -18.9 N/A
Amortisation, depreciation and other adjustments -98.0 -64.5 N/A
EBIT 140.6 338.2 -58%
Financial income ?M -10.8 -67.1 -84%
--------------------------------------------------------------------------
Net income, Group share ?M 13.2 62.8 -79%
Investments ?M 331 254 +30%
--------------------------------------------------------------------------
Cash at period-end ?M 229 191 +20%
P1 reserves at 1/1/2015 Mboe 148.5 141.7 +5%
--------------------------------------------------------------------------
P1+P2 reserves at 1/1/2015 Mboe 207.1 184.0 +13%
* Restated to reflect the change in accounting method.
Jean-François Hénin, Chairman:
"The entire oil industry was shaken up in the second half of 2014 after the
collapse of oil prices in the summer. This drop, which has continued into 2015,
weighs on the Group's operating profitability and has led us to implement
measures to sustain our performance and thus the Company's value. This has
involved:
1. restructuring the entire debt and in particular extending its maturity;
2. drastically reducing costs;
3. strict arbitrage of current investments.
The results presented today are very much characterised by this environment and
the measures we have taken to address it.
We are now focusing on assets with strong potential, namely those already in
production plus the two discoveries made in Gabon, which we will be developing,
and on gas assets in Tanzania, which will contribute to cash flow as from 2015.
The goal of this adaptation strategy is to maintain the Group's financial health
so that we can take advantage of acquisition opportunities that may arise from a
weak oil-industry environment."
OUTLOOK FOR 2015
In 2014, the Group restructured the maturities of its various lines of credit.
No repayments of principal are forecast before the end of 2016, and the
covenants relating to the new $400-million line of credit are being complied
with. The Group also had cash of ?229 million at 1 January 2015. The OCEANE
2015 bond matures in July 2015 in the amount of ?70 million.
Maurel & Prom will continue to pursue its growth strategy by optimising its
mining portfolio following the renegotiation contract in Gabon, controlling
investment, and increasing production in the coming months.
The exploration programme set up by the Company for fiscal year 2015 takes
account of the new economic environment, especially the sharp drop in the price
of Brent, which weighs on our ability to generate cash flow. The programme
addresses the mandatory work that must be carried out on certain permits in
order to retain them and includes the work already under way to enhance the
Group's mining portfolio, particularly in Gabon following the recent
discoveries. A budget of $44 million, versus ?118 million in 2014, has been
allocated to exploration, which may be revised during the year depending on the
results of studies and drilling operations and also on changes in the economic
environment.
Investment for production and development for an amount of ?186 million ($207
million) is scheduled for 2015, primarily in Gabon and Tanzania.
In the current economic climate, the Group is studying the shutdown and/or sale
of some of its subsidiaries and marginal holdings.
The first quarter of 2015 has been jointly impacted by a lower-price effect and
a quantity effect related to operating challenges encountered by the operator of
the pipeline linking Coucal to Cap Lopez, preventing the Group from producing at
the normal pace. Average production for January and February 2015 was 16,178
bopd and 21,624 bopd respectively, with a sales price of $44.1/bbl and $53.5/bbl
respectively. Production is expected to increase substantially throughout fiscal
year 2015, depending on the extent of the ramp-up of the water injection
programme, which will be spread over the next twelve months at least. The start-
up of recent discoveries will contribute to this increase as connections are
established.
OVERVIEW OF THE ACTIVITY
New Exploration and Production Sharing Contract (PSA) in Gabon
The new "Ezanga" permit, which replaces the "Omoueyi" permit, was awarded to
Maurel & Prom Gabon by the Gabonese Republic under a contract approved by decree
on 11 March 2014.
This new PSA formalises a mutually beneficial partnership between the Gabonese
Republic and Maurel & Prom for a 20-year period, automatically renewable for the
same duration.
It also renews the five existing Exclusive Exploitation Authorisations (AEEs)
for the same duration. The interest of the Gabonese Republic is increased,
mainly on account of its share in the permit having been raised from 15% to
20%, with a proportional increase in mining royalties.
Oil discoveries in Gabon
The Mabounda-1 (EZMAB-1D) and Niembi-1 (EZNI-1D) exploration wells located on
the Ezanga permit in Gabon were drilled on independent structures to a total
depth of 2,060 metres and 2,425 metres respectively. A 24-hour production test
was conducted on each of the two wells in February 2015 with the following
positive results:
* the Grès de Base test on the EZMAB-1D well showed a stabilised eruptive flow
of 1,002 bopd of anhydrous oil with surface pressure stabilised at nine
bars. The oil has a density of 28° API;
* the test at the Lower Kissenda summit on the EZNI-1D well revealed a
stabilised eruptive flow of 1,162 bopd of anhydrous oil with surface
pressure stabilised at 40 bars. This oil has a density of 35° API. The other
hydrocarbon reservoirs of Upper Kissenda and at the base of Lower Kissenda
have different pressure systems and will be tested later.
The Group is now looking into all possibilities to connect to the existing
treatment and evacuation network so that production can be as fast as possible.
Signature of a gas sales agreement in Tanzania
The Company, along with its Mnazi Bay permit partners Wentworth and Tanzania
Petroleum Development Corporation (TPDC), signed a sales and purchase agreement
on 12 September 2014 for the long-term sale of natural gas from the Mnazi Bay
and Msimbati fields in southern Tanzania. The partners are contracted to supply
up to a maximum of 80 mmcf of natural gas per day during the first eight months,
with the option to increase production over time to a maximum of 130 mmcf per
day for a period of up to 17 years.
The sales price was set at US$3.07 per mcf, increasing with the United States
industrial-sector consumer price index. Terms for the payment guarantee are
still under negotiation.
Reduction in exploration commitments
In Mozambique, two exploration wells were drilled during the period on the
Rovuma onshore permit. The Tembo-1 well issued a Notice of Discovery in December
2014 but was plugged since the operator did not plan to undertake additional
appraisal work immediately. Drilling on the Kifaru-1 well that began in December
2014 stopped in March 2015 after encountering all targeted formations (Miocene,
Oligocene and Eocene) without revealing any hydrocarbons. As part of a programme
to reduce its exploration activities, operator Anadarko plans to withdraw from
this permit. The Company is considering what action to take in light of this
information and the results recently obtained on this permit.
In Colombia, Pacific Rubiales Energy had contracted in 2011 a carry obligation
of $120 million in exploration costs after taking interests in the Muisca, SSJN-
9 and CPO-17 permits. Given the investment made at end-2014, the partner met its
commitment and this obligation was fulfilled. M&P Colombia, an operator in which
the Company has a 50% stake, finished drilling the Balsa-1 well on the Muisca
permit without proving oil. Three stratigraphic wells have been drilled on the
CPO-17 permit (in which M&P Colombia has a 50% working interest), operated by
Hocol. The results are currently being interpreted against prior discoveries in
order to define an appraisal programme. On 23 July 2014, at the "Ronda ANH
2014" (a bidding process in Colombia), Maurel & Prom was awarded the SN-11
exploration permit. Negotiations are under way to find a partner to finance the
exploration work.
In Peru, drilling of the Fortuna-1 well was abandoned. The Group has no plans to
continue this project once it enters the third exploration period. Within the
framework of the agreement signed in December 2011 and which came into effect on
1 January 2012, Pacific Rubiales Energy (PRE) provided financing for the works
in the amount of US$75 million.
In Sawn Lake, Alberta, the pilot test of the SAGD (Steam Assisted Gravity
Drainage) production process continued. The test was performed on two wells to
appraise the technical and commercial feasibility of this project, which aims to
produce bitumen by steam injection. Production began in September 2014 and will
continue until spring 2015 so that enough data can be collected to appraise the
field's potential.
In Quebec, on Anticosti Island, the stratigraphic core holes campaign was a
technical and operational success. The Macasty target was met in each of the
five drilling locations and the results of the core analysis met or exceeded the
partners' expectations. The drilling programme, which has so far consisted of
18 stratigraphic wells, was suspended during the winter. It is expected to
resume in May 2015 and end at the beginning of autumn 2015. Meanwhile, the
Hydrocarbures Anticosti joint venture (Saint-Aubin Energie 21.7%) announced on
23 October 2014 that it had signed a strategic partnership agreement with Quebec
company Gaz Métro to develop natural gas from Anticosti Island.
In Myanmar, drilling of the SP-1X well, operated by Petrovietnam, began on 27
December 2014 and was completed in March 2015. The results of this drilling are
currently being analysed.
Restructuring of Group debt
In June 2014, the Group carried out an issuance of net share settled bonds
convertible into new shares and/or exchangeable for existing shares (ORNANE)
maturing on 1 July 2019, in the amount of ?253 million (after exercise of the
over-allocation option).
The purpose of the bond issue was to restructure the debt by extending its
maturity. The net proceeds from the bond issue were used to redeem the OCEANE
2014 bonds.
In addition to the above transaction, on 18 December 2014, Maurel & Prom set up
a new Revolving Credit Facility of $650 million, split into an initial tranche
of $400 million and an accordion of $250 million that can be drawn down twice
subject to certain conditions.
The debt restructuring leaves the Group leeway to adjust its maturities based on
its development strategy and changes in the oil products market.
RESERVES AT 1/1/2015
The Group's reserves correspond to volumes of hydrocarbons recoverable from
fields already in production and to those revealed by discovery and delineation
wells that can be operated commercially. The P1 (proven), P2 (probable) and P3
(possible) oil reserves, net of royalties, were evaluated by DeGolyer and
MacNaughton as at 1 January 2015. Gas reserves were evaluated by RPS Energy as
at 31 December 2014.
In line with the Group's traditional policy, reserves are presented net of
royalties as Maurel & Prom's share, before contract-specific taxes (e.g.
Production Sharing and concessions).
The Group's P1+P2 reserves totalled 207.1 MMboe, broken down as follows:
* 171.6 million barrels of oil (MMbls); and
* 212.9 billion cubic feet of gas (bcf), i.e. 35.5 MMboe.
In Gabon, the level of P1+P2 oil reserves at 1 January 2015 amounted to 171.6
MMboe. P1 proven oil reserves represented 73% of certified P1+P2 reserves.
Production net of royalties due to the Group came in at 6.94 MMbls for fiscal
year 2014. The audit conducted by the certifiers led to a reduction in P1
reserves of 8.7 MMbls, of which 3.2 MMbls were reclassified as P2 reserves. As
at 1 January 2015, P1 reserves stood at 126.1 MMbls, and P2 reserves at 45.5
MMbls.
In Tanzania, following the signature of the gas sales and purchase agreement in
September 2014, the Group mandated RPS Energy to certify the reserves related to
the Mnazi Bay production permit, of which Maurel & Prom is the operator with a
48.06% working interest.
Gas reserves reflect the Group's share, with royalties due under the Production
Sharing Contract being paid by TPDC (Tanzanian Petroleum Development
Corporation) in accordance with the agreements in place.
As at 31 December 2014, the level of reserves of P1+P2 gas from Tanzania was
212.9 bcf, or 35.5 MMboe. P1 proven gas reserves represented 63% of certified
P1+P2 reserves.
The recent discoveries made on the Ezanga PSA in December 2014 and January 2015
by the EZNI-1D and EZMAB-1D wells are not taken into account in the evaluation
of reserves at 1 January 2015.
CONSOLIDATED FINANCIAL STATEMENTS AT 31/12/2014
Audit process is still underway. The certification report is in the process of
being issued. The consolidated financial statements at 31 December 2014,
approved by the Board of Directors on 25 March 2015, are available on the
Company's website at www.maureletprom.fr.
The following table shows the key financial data for the Group:
+----------------------------------------+-------+-------+
| | 2014 | 2013* |
+----------------------------------------+-------+-------+
| ?/US$ average rate | 1.329 | 1.328 |
+----------------------------------------+-------+-------+
| in ? M | | |
+----------------------------------------+-------+-------+
| Sales | 550 | 571 |
+----------------------------------------+-------+-------+
| EBITDA | 352 | 422 |
+----------------------------------------+-------+-------+
| EBIT | 141 | 338 |
+----------------------------------------+-------+-------+
| Financial income | -11 | -67 |
+----------------------------------------+-------+-------+
| Income before tax | 130 | 271 |
+----------------------------------------+-------+-------+
| Net income from consolidated companies | 28 | 137 |
+----------------------------------------+-------+-------+
| Net income, Group share | 13 | 63 |
+----------------------------------------+-------+-------+
| | | |
+----------------------------------------+-------+-------+
| Cash at opening | 191 | 58 |
+----------------------------------------+-------+-------+
| Cash at closing | 229 | 191 |
+----------------------------------------+-------+-------+
* Restated to reflect the application of IFRS 11
Consolidated sales for 2014 amounted to ?550.4 million, down 3.5% on 2013. This
change was largely due to the following:
* a quantity effect on sales from the Ezanga permit in Gabon, including:
* -?39.7 million related to the application of the terms of the new PSA,
namely an 80% share for Maurel & Prom in the production fields, versus
85% previously, and 70% cost oil, versus 75%. This falls under the basic
renewal of long-term agreements with the Gabonese Republic;
* +?43.2 million related to increased production between 2013 and 2014;
* a price effect of -?62 million on those sales;
* a currency effect limited to -?0.3 million;
* consolidation of non-Group sales arising from drilling activity in the
amount of +?45.2.
At 31 December 2014, the Group's operating income stood at ?140.6 million, down
by 58.4% compared to 2013.
+-------------------------------------------------------+----------+-----------+
|In ? millions |31/12/2014|31/12/2013*|
+-------------------------------------------------------+----------+-----------+
|Sales | 550.4| 570.7|
| | | |
|Gross margin | 422.1| 479.3|
+-------------------------------------------------------+----------+-----------+
|EBITDA | 351.9| 421.7|
| | | |
|as % of sales | 64%| 74%|
+-------------------------------------------------------+----------+-----------+
|Amortisation and depreciation of depletion and other | -86.7| -66.4|
|impairment | | |
+-------------------------------------------------------+----------+-----------+
|Impairment of exploration and production assets | -113.4| -18.9|
+-------------------------------------------------------+----------+-----------+
|Other operating items | -11.2| 1.9|
+-------------------------------------------------------+----------+-----------+
|EBIT | 140.6| 338.2|
| | | |
|as % of sales | 26%| 59%|
| | | |
|* Restated to reflect the application of IFRS 11 | | |
+-------------------------------------------------------+----------+-----------+
The Group's gross margin was lower than in fiscal year 2013, largely as a
consequence of the drop in sales prices as from summer 2014 and the
consolidation of drilling activity, which has lower margins. Following the
downgraded economic environment and negative exploration results, the Group has
started to reduce its exposure to certain regions and has therefore recognised
impairment losses on the assets of some permits as follows:
-------------
Arbitrage of current investments 31/12/2014
--------------------------------------------------
Impairment related to exploration -101.3
Mozambique -39.3
Tanzania -37.9
Peru -10.1
Congo -14.0
Impairment related to oil services -9.6
Drilling activities -9.6
Other -2.4
+------------------------------------+------------
| TOTAL | -113.4
+------------------------------------+------------
Amortisation and depreciation charges mainly consisted of the following:
* amortisation of depletion of assets in Gabon: ?71.1 million;
* amortisation of Caroil rigs under drilling activities: ?13.3 million.
The Group's net income for fiscal year 2014 stood at -?10.8 million. Gross
borrowing costs correspond to:
* interest expense on OCEANE 2014 and 2015 bonds amounting to ?20 million;
* interest expense on the new ORNANE bond issued on 6 June 2014 in the amount
of ?4.4 million;
* interest expense on bank borrowings: ?13.3 million.
In addition, the revaluation of the year-end EUR/USD rate of the Group's
currency positions led to the recognition of positive foreign exchange income of
?25 million.
The corporation tax payable corresponds primarily to the tax charge related to
the state's share of profit oil under the Ezanga permit in Gabon in the amount
of ?40.2 million. The deferred tax charge reflects the difference between the
tax and accounting amortisations of Gabonese assets in the amount of ?58
million.
Total income for equity associates amounted to -?15.4 million, mainly due to
operations in Colombia.
As a result, consolidated net income, Group share for fiscal year 2014 amounted
to ?13.2 million.
The balance sheet total at 31 December 2014 stood at ?2,116 million, versus
?1,865 million at 31 December 2013. Equity, Group share at 31 December 2014
stood at ?890.7 million, versus ?765.8 million in 2013, representing an increase
of ?124.9 million, due primarily to the appreciation of the dollar against the
euro.
Investment stood at ?331 million in 2014, versus ?254 million for fiscal year
2013. The following table shows investments per country and per activity:
+-----+--------+----------+-----+-----+
in ?m |Gabon|Tanzania|Mozambique|Other|TOTAL|
+-------------------------------+-----+--------+----------+-----+-----+
|Development | 201 | 6 | - | - | 207|
+-------------------------------+-----+--------+----------+-----+-----+
|Intangible assets / Exploration| 57 | 29 | 27 | 5 | 118|
+-------------------------------+-----+--------+----------+-----+-----+
|Oil services | 4 | - | - | 1 | 6|
+-------------------------------+-----+--------+----------+-----+-----+
At 31 December 2014, Maurel & Prom had cash of ?229 million, up ?39 million from
31 December 2013, mainly due to:
* investments in the amount of ?331 million;
* cash flow from operating activities in the amount of ?376 million;
* proceeds from the ORNANE bond issued on 6 June 2014 in the amount of ?253
million;
* repayment of OCEANE 2014 bonds in the amount of ?296 million plus ?16
million in interest;
* the ?328 million ($400 million) drawdown on the new credit facility signed
on 18 December 2014 and full repayment of the existing facility in the
amount of ?263 million ($350 million).
COMPANY FINANCIAL STATEMENTS AT 31/12/2014
Sales in 2014 amounted to ?17.3 million and correspond to services and studies
provided to the Company's subsidiaries.
Operating expenses, including asset impairment, amounted to ?109.5 million
compared to ?39.8 million in fiscal year 2013. Asset impairment identified for
fiscal year 2014 mainly concerned the recognised expense of the exploration
assets on the La Noumbi permit in the Congo and exploration assets in
Mozambique.
Financial income for fiscal year 2014 was negative at ?44 million compared to
negative income of ?3 million in 2013. This change was mainly attributable to
the impairment provision for the advances granted to Tanzania in the amount of
?34.1 million and Peru in the amount of ?10.2 million.
Net income for fiscal year 2014 was a loss of ?140.6 million versus a loss of
?64.6 million the previous year.
The balance sheet total at 31 December 2014 stood at ?817 million, versus ?686
million at 31 December 2013. Equity at 31 December 2014 stood at ?95 million,
versus ?230 million at 31 December 2013.
The construction of the earnings of Etablissements Maurel & Prom and the
structure of its distributable income does not allow for a dividend payment in
2015 in respect of fiscal year 2014.
To listen to the audiocast of Maurel & Prom's annual results, click on the
following link after 10 a.m. on Thursday, 26 March 2015:
http://edge.media-server.com/m/p/tkbevef8/lan/en
For more information, visit: www.maureletprom.fr
MAUREL & PROM
Tel: +33 (0)1 53 83 16 00
Press, shareholder and investor relations
Tel: +33 (0)1 53 83 16 45
ir(at)maureletprom.fr
This document may contain forward looking statements about Maurel & Prom's
financial position, income, activities and industrial strategy. By their very
nature, such forward looking statements consider risks and uncertainties based
on events and circumstances that may or may not occur in the future. Such
forward looking statements are based on assumptions that are in our opinion
reasonable but nevertheless may be inaccurate and are subject to various risks
such as fluctuations in the price of crude, exchange rate movements,
uncertainties over the valuation of our oil reserves, the effective rate of oil
production and associated costs, operational problems, political instability,
legislative or regulatory changes, war, terrorism and sabotage.
Maurel & Prom is listed for trading on Euronext Paris - Compartment A -
CAC® mid 60 - SBF120® - CAC® Mid & Small - CAC® All-Tradable - CAC® All-Share -
CAC PME - EnterNext(©) PEA-PME 150
ISIN FR0000051070 / Bloomberg MAU.FP / Reuters MAUP.PA
RN14_MAU_26MAR15_EN.pdf:
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Source: Maurel & Prom via GlobeNewswire
[HUG#1906333]
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Datum: 26.03.2015 - 07:00 Uhr
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