PEBERCAN INC. (the “Company”), (TSX: PBC) today unveiled its results for the third quarter ended September 30, 2008. All amounts are in U.S. dollars.
Highlights: Q3 2008 versus Q3 2007
* Revenues up 32.3% to $38,696,000
* Block 7 total production: 1,678,548 barrels (18,245 bbl/d)
* Pebercan’s net share of Block 7 total production: 550,128 barrels (5,980 bbl/d)
* Cupet $108.5 million in arrears, resulting in an impairment loss of $8,608,000 against receivables
* Pebercan records net earnings of $8,175,000 ($0.11 per share)
Third quarter 2008 results
Block 7 total production fell 7.7%, to 1,678,548 barrels (18,245 bbl/d) against 1,818,926 barrels (19,771 bbl/d) in the third quarter of 2007.
Pebercan’s net share of Block 7 production stood at 550,128 barrels (5,980 bbl/d), down 15.1% from the 647,900 barrels (7,042 bbl/d) recorded in the same year-ago quarter. This decrease is explained by the increase in profit oil for which the allocation percentage is lower than for cost recovery. The allocation affects Pebercan’s share of total production.
Revenues grew 32.3% to $38,696,000 as at September 30, 2008 against $29,252,000 in the third quarter of 2007.
As a result of the increase in oil revenues associated with greater cost recovery and the surge in the price of oil, Pebercan recorded net earnings of $8,175,000 ($0.11 per share, basic and diluted) in the third quarter of 2008 compared to $9,234,000 ($0.12 per share, basic and diluted) at the same time last year, a decrease of 11.5%.
It will be noted that the proportion of profit oil in relation to total revenues rose sharply over 2007, resulting in a proportionate increase in income taxes payable.
However, as a result of payment arrears totalling $108.5 million, the Company recorded an unrealized impairment loss of $8.6 million against its oil receivables.
Results for the first nine months of 2008
Block 7 total production slipped 0.7% to 5,281,708 barrels (19,347 bbl/d).
Pebercan’s net share of Block 7 total production stood at 1,770,710 barrels, down 17.3% from the 2,142,079 recorded for the same period in 2007.
Nine months into the year, oil revenues were up 30.3% to $107,704,000 versus $82,687,000 for the first three quarters of 2007. This increase is mainly owed to the rise in the gross sales price, which jumped 55.8%, from $45.15/barrel in the third quarter of 2007 to $70.34/barrel a year later.
Despite the terms of the renegotiated sales agreement with Cupet under which discounts rose from 18% and 19% to 26% and 27%, the Company is reaping the benefits of higher oil prices.
Revenues from drilling services recorded until March 2007 stopped completely once the equipment was sold in April 2007.
Net earnings for the first three quarters of 2008 reached $33,524,000$ ($0.45 per basic share and $0.44 per diluted share), against $26,806,000$ ($0.36 per basic share and $0.35 per diluted share) for the same year-ago period, largely due to the surge in the sales price of oil.
Working capital stood at $151,210,000 versus $103,511,000 at the end of last year.
As at September 30, 2008, oil receivables were $138,557,000 versus quarterly sales of $38,696,000. Cupet’s late payments rose sharply in the third quarter of 2008.
At the date hereof, despite frequent contact between Pebercan management and Cupet, no concrete, objective action has been taken to settle the arrears.
Moreover, it should be noted that the global economic slowdown and the fallout of hurricanes Gustav and Ike on Cuba are affecting all the Cuban government’s actions.
With this in mind and in accordance with CICA Section 3855, the Company discounted the value of its oil receivables to reflect Cupet’s late payments, as it had done in the second quarter, resulting in an unrealized impairment loss of $8,608,000.
However, negotiations concerning the debt repayment are scheduled with Cupet in the next quarter so that Pebercan will have a clear idea of where it stands as at December 31, 2008. Whether or not a provision will be made for its oil receivables hinges on the outcome of these negotiations.
For the first nine months of the year, Pebercan made investment commitments of 17,239,000 ($38,134,000 in 2007) and spent $25,911,000 ($45,851,000 in 2007).
The 2009 investment program will be developed based on the financial agreements concluded with Cupet.
Pebercan’s interim consolidated financial statements and management report for the period ended September 30, 2008 are available on our Web site at http://www.pebercan.com, as well as on SEDAR at http://www.sedar.com.
Pebercan is involved in the exploration, development and exploitation of oil reserves in the Republic of Cuba. Pebercan sells its entire production to the Cuban government, but is not bound by any restrictions regarding the sale of its oil. The Company’s shares are listed on the TSX and trade under the symbol PBC.
Legal notice ─ Forward-looking statements
Forward-looking statements contained in this press release involve known and unknown risks, uncertainties or other factors that may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions at the time made, it can give no assurance that its expectations will be achieved. Pebercan disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Important additional information identifying risks and uncertainties is contained in the Company’s most recent annual and interim reports and forms filed with the applicable Canadian securities regulatory authorities.
For more information, please contact:
RENMARK Financial Communications Inc
Montreal - Tel.: 514 939-3989; Fax: 514 939-3717
Toronto – Tel.: 416 644-2020; Fax: 416 644-2021
750 Marcel-Laurin Blvd., Suite 106, Saint Laurent, Québec H4M 2M4 - Canada
Tel.: 514 286-5200; Fax: 514 286-5177
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