Addax Petroleum Announces Record Results for 2008

4 Mar 2009 16:08 Africa/Lagos

Addax Petroleum Announces Record Results for 2008

CALGARY, Canada, March 4/PRNewswire-FirstCall/ --



- 41 per cent increase in Funds Flow From Operations to US$1,850 million
- 63 per cent increase in Net Income to US$784 million
- 8 per cent increase in Production to 136.5 Mbbl/d
- 20 per cent increase in Proved plus Probable Reserves to 536.7 MMbbl




Addax Petroleum Corporation ("Addax Petroleum" or the "Corporation") (TSX:AXC and LSE:AXC), today announced its results for the year ended December 31, 2008. The financial results are prepared in accordance with Canadian GAAP and the reporting currency is US dollars.


A conference call will be held for analysts and investors today Wednesday, March 4, 2009 at 11:00 a.m. Eastern Time / 4:00 p.m. London, U.K. Time. Full details can be found at the end of this announcement.


CEO's Comment


Commenting today, Addax Petroleum's President and Chief Executive Officer, Jean Claude Gandur, said: "I take great pleasure to report that Addax Petroleum's 2008 performance has resulted in another year of record operational performance, robust reserves growth and a significant increase in our prospective oil resources. Despite a challenging environment in the fourth quarter of 2008, Addax Petroleum achieved record production of 142.5 Mbbl/d in the quarter and ended the year with a significant discovery at the Njaba prospect. We advanced our early entrant position in the rapidly developing Kurdistan Region of Iraq through the completion of a 30 Mbbl/d facility which is expected to translate into first commercial oil production later this year. In recognition of the current challenging environment, we have undertaken an aggressive cost control program and are prudently managing our business to protect our balance sheet and maintain ongoing liquidity. Addax Petroleum has operated successfully in previous low oil price environments similar to the one we are currently experiencing today and is positioning itself to do so again. I would like to thank our employees, management, board of directors, business partners and shareholders for their support and contribution to Addax Petroleum's outstanding performance in 2008."

- Petroleum sales before royalties in 2008 amounted to US$4,607 million,an increase of 35 per cent over petroleum sales before royalties of US$3,412 million in 2007.

The increase in petroleum sales before royalties was primarily driven by a 29 per cent increase in average crude oil sales price in 2008 to US$94.38 per barrel (/bbl)as compared to US$72.94/bbl realized in 2007 and an increase of 8 per cent in the
average gross working interest oil production. The Corporation experienced a build up of crude oil inventory in the fourth quarter of approximately 540 Mbbl (equivalent to approximately 5.9 Mbbl/d) as production volumes exceeded sales volumes. This crude oil inventory is expected to decline in the first half of 2009.

- Funds Flow From Operations for the fourth quarter of 2008 decreased 26 per cent to US$318 million (US$2.03 per basic share) compared to US$428 million (US$2.75 per basic share) in the fourth quarter of 2007.

On an annual basis, Funds Flow From Operations for 2008 increased 41 per cent to US$1,850 million (US$11.86 per basic share) compared to US$1,313 million (US$8.45 per basic share) in 2007.

- Net Income for the fourth quarter of 2008 decreased 98 per cent to US$3 million (US$0.02 per basic share) compared to US$180 million (US$1.16 per basic share) in the fourth quarter of 2007. On an annual basis, Net Income for 2008 increased 63 per cent to US$784 million (US$5.03 per basic share) compared to US$482 million (US$3.10 per basic share) in 2007.

- Capital expenditures, excluding corporate and acquisition costs, totaled US$521 million in the fourth quarter of 2008 and were comprised of US$406 million for development and US$115 million for exploration and appraisal activities. Capital expenditures, excluding corporate and acquisition costs, increased by 56 per cent to US$1,694 million in 2008 from US$1,088 million in 2007. Development capital expenditures totaled US$1,376 million in 2008, an increase of 67 per cent over development capital expenditure of US$822 million in 2007. Exploration and appraisal capital expenditures totaled US$318 million in 2008, a 20 per cent increase over exploration and appraisal capital expenditures of US$266 million in 2007.

- Corporate and acquisition costs associated with new business activities were US$82 million in 2008 as compared to US$84 million in 2007. New business activities included the acquisition of four new exploration license areas for the Corporation's property portfolio, the increase of the Corporation's working interest in one exploration license area and the commencement of an integrated gas utilization project in Nigeria.

- Bank debt increased in 2008 by US$250 million to US$1,200 million and is currently drawn under two facilities that consist of a US$1.6 billion senior secured reducing revolving borrowing base facility (of which US$1.3 billion can be drawn as debt) and a US$500 million senior unsecured revolving facility that was entered into during the year.

- Average gross working interest oil production in 2008 was 136,450 bbl/d, an increase of approximately 8 per cent over the 2007 average production of 125,940bbl/d. Average oil production for 2008 included 107,980 bbl/d from Nigeria and 28,470 bbl/d from Gabon.

- Total gross working interest proved plus probable reserves, as evaluated in accordance with National Instrument 51-101 by Netherland, Sewell & Associates("NSAI") as at December 31, 2008, increased by approximately 20 per cent to 536.7 MMbbl from 446.7 MMbbl as at December 31, 2007. The Corporation did not make reserves acquisitions or disposals during the year and the 2008 reserve additions arose primarily from the Corporation's operational activity, including extensions and discoveries. Proved reserves decreased by 8 per cent in the same period as NSAI has not assigned proved reserves to wells without production test results. Addax Management elected not to test the Kita Marine appraisal wells in 2008, where 34.0 MMbbl of proved plus probable (2P) reserves were added during the year, given Addax Petroleum had previously tested the initial discovery in 2007 and has adequate data to submit a Field Development Plan to the Government. Similarly, 42.0 MMbbl of 2P
reserves were added from the Njaba well but there were no proved (1P) reserves booked due to the fact that the well was drilled late in the year and had not been production tested within the year. Management expects a portion of these reserves to be reclassified as 1P reserves through additional drilling in 2009.

- The Corporation's overall 2008 reserves replacement ratio was 281 per cent. The reserves replacement ratio is calculated by dividing the gross working interest 2P reserve additions of 140.0 MMbbl (before deduction of 2008 production of 49.9 MMbbl) by the 2008 production.

- Development project highlights in 2008 include:

Nigeria

- drilled 12 successful new development wells offshore, 10 in OML123 and two in OML126, all of which were placed on production during the year;

- drilled two successful new development wells onshore in OML124, all of which were placed on production during the year;

- initial production from the Inagha field in OML123; and,

- ongoing full field development at the Adanga North Horst field in OML123 and at the Okwori field in OML126.


Dividends


The Corporation declared and paid aggregate dividends in 2008 of CDN$0 .40 per share. A dividend of CDN$0.10 per share was declared on March 3, 2009, payable on April 2, 2009 to shareholders of record on March 19, 2009. In accordance with Canada Revenue Agency Guidelines, dividends paid by the Corporation during the period are eligible dividends.


Recent Developments


In January 2009, the Corporation announced a significant discovery from the Njaba 2 well in the eastern part of the OML124 license area in Nigeria. The discovery resulted in Addax Petroleum booking 42.0 MMbbl of probable reserves from this well as at December 31, 2008.


In January 2009, the Corporation commenced production from the Ebouri field in the Etame Marin license area, offshore Gabon.


In February 2009, the operator completed drilling the North Etame exploration well in the Corporation's Etame Marin license area offshore Gabon. The well encountered lower than anticipated hydrocarbons, was water bearing and is expected to be plugged and abandoned.


2009 Outlook & Capital Budget


For 2009, Addax Petroleum has budgeted total capital expenditures of approximately US$1.6 billion (excluding acquisitions), which are expected to result in total production averaging between 140 Mbbl/d to 145 Mbbl/d from its Nigeria and Gabon operations. This budget is consistent with the Corporation's philosophy of funding capital expenditures from internally generated cash flow and has been determined using the average Brent Crude price of US$60/bbl. Should the prevailing Brent Crude price continue to be below US$60/bbl for the balance of 2009, Addax Petroleum intends, and has the flexibility, to reduce its capital expenditures such that total capital expenditures continue to be funded by internally generated cash flow. An average Brent Crude price of US$40/bbl would result in a reduction of capital expenditures to approximately US$1 billion and the associated reduced drilling and facilities expenditures would result in Addax Petroleum's total production for 2009 averaging between 132 Mbbl/d and 137 Mbbl/d.


Regulatory Filings


This announcement coincides with the filing with the Canadian and U.K. securities regulatory authorities of Addax Petroleum's Audited Consolidated Financial Statements for the year ended December 31, 2008 and related Management's Discussion and Analysis, as well as Addax Petroleum's Annual Information Form including the Corporation's Statement of Reserves Data and Other Information, Report of the Independent Qualified Reserves Evaluator and Report of Management and Directors. Copies of these documents may be obtained via http://www.sedar.com, http://www.londonstockexchange.com and the Corporation's website, http://www.addaxpetroleum.com.


Analyst Conference Call


Financial analysts are invited to participate in a conference call today Wednesday, March, 4, 2009 at 11:00 a.m. Eastern Time / 4:00 p.m. London, U.K. time with Mr. Jean Claude Gandur, President and Chief Executive Officer, Mr. Michael Ebsary, Chief Financial Officer and Mr. James Pearce, Chief Operating Officer. The media and shareholders may participate on a listen only basis. To participate in the conference call, please dial one of the following:



Toronto: 416-644-3420
Toll-free (Canada and the US): 1-800-731-5319
Toll-free (UK): 00-800-2288-3501
Toll-free (Switzerland): 00-800-2288-3501




A replay of the call will be available at +1-(416)-640-1917 or +1-(877)-289-8525, passcode 21296229 followed by the number sign until Wednesday, March 18, 2009.





Capital Markets Day


Addax Petroleum will host a Capital Markets Day presentation to financial analysts and investors on Monday, March 23, 2009 in London, UK and Tuesday, March 24, 2008 in Toronto, Canada. The Corporation's senior management team will discuss the Corporation's most recent operating results and expectations regarding future operations. A live webcast of the presentations will be made available and the Capital Markets Day presentation materials will be available on the Corporation's website at http://www.addaxpetroleum.com prior to the event. Interested attendees are encouraged to contact any of the individuals listed at the end of this announcement in order to register in advance.


Reader Advisory Regarding Forward-Looking Information


Certain statements contained in this news release, including statements related to future capital expenditures, business strategy and goals, future commodity prices, reserves and resources estimates, drilling plans, development plans and schedules, future seismic activity, production levels and sources of growth thereof, results of exploration activities and dates that areas may come on-stream, royalties payable, contingent liabilities and statements that contain words such as "may", "will", "would ", "could", "should", "anticipate", "believe", "intend", "expect", "plan", "estimate", "budget", "outlook", "propose", "project", and statements relating to matters that are not historical fact constitute forward-looking information within the meaning of applicable Canadian securities legislation.


Forward-looking information is subject to known and unknown risks and uncertainties attendant with oil and gas operations, and other factors, which include, but are not limited to: imprecision of reserves and resources estimates; ultimate recovery of reserves; commodity prices; general economic, market and business conditions; industry capacity; competitive action by other companies; refining and market margins; the ability to produce and transport crude oil and natural gas to markets; weather and climate conditions; results of exploration and development drilling and other related activities; fluctuation in interest rates and foreign currency exchange rates; ability of suppliers to meet commitments; actions by governmental authorities, including increases in taxes; decisions or approvals of administrative tribunals; changes in environmental and other regulations; international political events; and expected rates of return. More specifically, production may be affected by exploration success, start-up timing and success, facility reliability, reservoir performance and natural decline rates, water handling and drilling progress. Capital expenditures may be affected by cost pressures associated with new capital projects, including labour and material supply, project management, drilling rig rates and availability and seismic costs.

The Corporation's actual results could differ materially from those anticipated in these forward-looking statements if the assumptions underlying them prove incorrect, or if one or more of the uncertainties or risks described above materializes. Risk factors are discussed in greater detail in filings made by Addax Petroleum with the Canadian provincial securities commissions.


Readers are strongly cautioned that the above list of factors affecting forward-looking information is not exhaustive. Further, forward- looking statements are made as at the date they are given and, except as required by applicable law, Addax Petroleum does not intend, and does not assume any obligation, to update any forward-looking statements, whether as a result of new information or otherwise. The forward-looking statements contained in this new release are expressly qualified by this advisory.


Non-GAAP Measures


Addax Petroleum defines "Funds Flow From Operations" or "FFFO" as net cash from operating activities before changes in non-cash working capital. Management believes that in addition to net income, FFFO is a useful measure as it demonstrates Addax Petroleum's ability to generate the cash necessary to repay debt or fund future growth through capital investment. Addax Petroleum also assesses its performance utilizing Operating Netbacks which it defines as the per barrel pre-tax profit margin associated with the production and sale of crude oil and is calculated as the average realized sales price less royalties and operating expenses, on a per barrel basis. FFFO and Operating Netback are not recognized measures under Canadian GAAP. Readers are cautioned that these measures should not be construed as an alternative to net income or cash flow from operating activities determined in accordance with Canadian GAAP or as an indication of Addax Petroleum's performance. Addax Petroleum's method of calculating these measures may differ from other companies and accordingly, it may not be comparable to measures used by other companies.


For further information: Mr. Michael Ebsary, Chief Financial Officer, Tel.: +41(0)22-702-94-03, michael.ebsary@addaxpetroleum.com; Mr. Craig Kelly, Investor Relations, Tel.: +41(0)22-702-95-68, craig.kelly@addaxpetroleum.com; Mr. Chad O'Hare, Investor Relations, Tel.: +41(0)22-702-94-10, chad.o'hare@addaxpetroleum.com; Ms. Marie-Gabrielle Cajoly, Press Relations, Tel.: +41(0)22-702-94-44, marie-gabrielle.cajoly@addaxpetroleum.com; Mr. Nick Cowling, Press Relations, Tel.: +1-416-934-80-11, nick.cowling@cossette.com; Mr. Mark Antelme, Press Relations, Tel.: +44(0)20-3178-6242, mark.antelme@pelhampr.com


Source: Addax Petroleum Corporation

For further information: Mr. Michael Ebsary, Chief Financial Officer, Tel.: +41(0)22-702-94-03, michael.ebsary@addaxpetroleum.com; Mr. Craig Kelly, Investor Relations, Tel.: +41(0)22-702-95-68, craig.kelly@addaxpetroleum.com; Mr. Chad O'Hare, Investor Relations, Tel.: +41(0)22-702-94-10, chad.o'hare@addaxpetroleum.com; Ms. Marie-Gabrielle Cajoly, Press Relations, Tel.: +41(0)22-702-94-44, marie-gabrielle.cajoly@addaxpetroleum.com; Mr. Nick Cowling, Press Relations, Tel.: +1-416-934-80-11, nick.cowling@cossette.com; Mr. Mark Antelme, Press Relations, Tel.: +44(0)20-3178-6242, mark.antelme@pelhampr.com


N.B:
PLEASE, CLICK ON THE NEWS RELEASE FROM ADDAX PETROLEUM CORPORATION BELOW FOR THE FULL DETAILS OF THIS REPORT.


Releases displayed in Africa/Lagos time
4 Mar 2009
16:08
Addax Petroleum Announces Record Results for 2008
13:32
Addax Petroleum announces record results for 2008
02:54
ContourGlobal tekent overeenkomst met de Republiek van Rwanda om methaangasproject Kivumeer te ontwikkelen
02:51
ContourGlobal unterzeichnet Vertrag mit der Republik Ruanda über die Abwicklung des Kivu-See-Methangas-Projekts
02:47
ContourGlobal firma un contratto con la Repubblica del Ruanda per sviluppare il progetto di gas metano del Lago Kivu
3 Mar 2009
15:14
ContourGlobal acuerda con la República de Ruanda el desarrollo del proyecto de gas metano del Lago Kivu
2 Mar 2009
21:31
ContourGlobal firma un contrato con la República de Rwanda para desarrollar un proyecto de gas metano en el lago Kivu
21:13
Etisalat y Tata Communications introducen servicios de comunicaciones avanzados en EAU
19:57
Etisalat y Tata Communications presentan los servicios de comunicaciones avanzadas en los EAU
17:55
ContourGlobal Signs Agreement With Republic of Rwanda to Develop Lake Kivu Methane Gas Project
14:30
Etisalat & Tata Communications Introduce Advanced Communication Services in UAE

Addax Petroleum Announces Significant New Discovery in Nigeria

28 Jan 2009 15:02 Africa/Lagos

Addax Petroleum Announces Significant New Discovery in Nigeria

CALGARY, Canada, January 28/PRNewswire-FirstCall/ --


- Exploration Success With Njaba Discovery in Onshore OML124 License Area


Addax Petroleum Corporation ("Addax Petroleum" or the "Corporation") (TSX:AXC and LSE:AXC) today announces a significant onshore oil discovery from the Njaba 2 well (formally Okaka) currently drilling in the eastern part of the OML124 license area in Nigeria. Addax Petroleum has a 100 per cent working interest under a Production Sharing Contract covering the OML124 license area, whereby the Nigeria National Petroleum Corporation is the concessionaire. Addax Petroleum currently produces approximately six thousand barrels per day from the Ossu and Izombe fields in OML124, which is located within the stable and peaceful Imo State.


Commenting, Jean Claude Gandur, President and Chief Executive Officer of Addax Petroleum said: "I am extremely proud to report an excellent start to 2009 with this successful exploration result in Nigeria as it is a leading discovery that has the potential to be one of our largest fields in Nigeria. The Njaba discovery is the first exploration well to be drilled in OML124 since the mid-80's and these results will increase the production potential of the license area considerably, as well as significantly upgrade the remaining undrilled prospects. This onshore discovery is a further example of Addax Petroleum's commitment to development in Nigeria. In addition, this recent success represents yet another highlight for our highly prolific Nigerian operations as it will strengthen our record of growth in Nigeria and it underpins our robust and consistent operational performance."


The Njaba discovery was consistent with pre-drill estimates having encountered four oil bearing reservoirs totaling 289 feet of gross oil column, including the two main individual gross columns of 149 feet and 115 feet of between 20 degrees and 28 degrees API at depths from 990 to 1,050 metres. Production from the Njaba discovery can be readily tied in as the Corporation has existing production facilities and infrastructure in the OML124 license area. Addax Petroleum continues to drill into secondary, lower sections relative to the newly discovered oil bearing intervals and plans to carry out a test of the main reservoirs. The Corporation also plans to drill an additional appraisal well down-dip of the discovery which may further enhance the recoverable reserves from Njaba.


About Addax Petroleum


Addax Petroleum is an international oil and gas exploration and production company with a strategic focus on Africa and the Middle East. Addax Petroleum is one of the largest independent oil producers in West Africa and has increased its crude oil production from an average of 8,800 bbl/d for 1998 to an average of approximately 134,000 bbl/d for the first nine months of 2008. Further information about Addax Petroleum is available at http://www.sedar.com, http://www.londonstockexchange.com or the Corporation's website, http://www.addaxpetroleum.com.


Legal Notice - Forward-Looking Statements


Certain statements in this news release constitute forward-looking statements under applicable securities legislation. Such statements are generally identifiable by the terminology used, such as "anticipate", "believe", "intend", "expect", "plan", "estimate", "budget", "outlook", "may", "will", "should", "could", "would" or other similar wording. Forward- looking information in this news release includes, but is not limited to, drilling plans, including testing of previously drilled wells, results of exploration activities and dates by which certain areas may be developed or may come on-stream. By its very nature, such forward-looking information requires Addax Petroleum to make assumptions that may not materialize or that may not be accurate. Forward-looking information is subject to known and unknown risks and uncertainties and other factors, which may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such information. Such factors and assumptions include, but are not limited to: the results of exploration and development drilling and related activities; imprecision of reserves and resources estimates, ultimate recovery of reserves, prices of oil and natural gas; general economic, market and business conditions; industry capacity; competitive action by other companies; fluctuations in oil prices ; refining and marketing margins; the ability to produce and transport crude oil and natural gas to markets; the effects of weather and climate conditions; fluctuation in interest rates and foreign currency exchange rates; the ability of suppliers to meet commitments; actions by governmental authorities, including increases in taxes; decisions or approvals of administrative tribunals; changes in environmental and other regulations; risks attendant with oil and gas operations, both domestic and international; international political events; expected rates of return; and other factors, many of which are beyond the control of Addax Petroleum. More specifically, production may be affected by such factors as exploration success, start-up timing and success, facility reliability, reservoir performance and natural decline rates, water handling, and drilling progress. Capital expenditures may be affected by cost pressures associated with new capital projects, including labour and material supply, project management, drilling rig rates and availability, and seismic costs. These factors are discussed in greater detail in filings made by Addax Petroleum with the Canadian provincial securities commissions.


Readers are cautioned that the foregoing list of important factors affecting forward-looking information is not exhaustive. Furthermore, the forward-looking information contained in this press release is made as of the date of this press release and, except as required by applicable law, Addax Petroleum does not undertake any obligation to update publicly or to revise any of the included forward-looking information, whether as a result of new information, future events or otherwise. The forward-looking information contained in this press release is expressly qualified by this cautionary statement.


For further information: Mr. Craig Kelly, Investor Relations, Tel.: +41-(0)-22-702-95-68, craig.kelly@addaxpetroleum.com; Mr. Chad O'Hare, Investor Relations, Tel.: +41-(0)22-702-94-10, chad.o'hare@addaxpetroleum.com; Ms. Marie-Gabrielle Cajoly, Press Relations , Tel.: +41-(0)22-702-94-44, marie-gabrielle.cajoly@addaxpetroleum.com; Mr. Nick Cowling, Press Relations, Tel.: +1-(416)-934-80 11, nick.cowling@cossette.com; Mr. James Henderson, Press Relations, Tel.: +44-(0)20-7743-6673, james.henderson@pelhampr.com; Mr. Mark Antelme, Press Relations, Tel.: +44-(0)20-3178-6242, mark.antelme@pelhampr.com/


Source: Addax Petroleum Corporation

For further information: Mr. Craig Kelly, Investor Relations, Tel.: +41-(0)-22-702-95-68, craig.kelly@addaxpetroleum.com; Mr. Chad O'Hare, Investor Relations, Tel.: +41-(0)22-702-94-10, chad.o'hare@addaxpetroleum.com; Ms. Marie-Gabrielle Cajoly, Press Relations, Tel.: +41-(0)22-702-94-44, marie-gabrielle.cajoly@addaxpetroleum.com; Mr. Nick Cowling, Press Relations, Tel.: +1-(416)-934-80 11, nick.cowling@cossette.com; Mr. James Henderson, Press Relations, Tel.: +44-(0)20-7743-6673, james.henderson@pelhampr.com; Mr. Mark Antelme, Press Relations, Tel.: +44-(0)20-3178-6242, mark.antelme@pelhampr.com/



14:08
Addax Petroleum announces significant new discovery in Nigeria
13:00
Bristow Group to Present at the 2009 Credit Suisse Energy Summit
11:00
Baker Hughes Announces Fourth Quarter and Annual Results
27 Jan 2009
08:30
The Business Phone Breaks New Ground In East Africa
22 Jan 2009
22:06
AllianceBernstein Global High Income Fund Releases Monthly Portfolio Update
22:01
Most People Think Their Nation's Foreign Policy Is Morally No Better Than Average: Global Poll
13:23
Nokia Q4 2008 Net Sales EUR 12.7 Billion, non-IFRS EPS EUR 0.26 (Reported EPS EUR 0.15)
21 Jan 2009
18:00
Global Health Community Commits Over US$630 Million in Aggressive Push for Polio Eradication
18:00
La comunità internazionale si impegna a fornire 630 milioni di dollari per eradicare una volta per tutte la polio
18:00
Internationale Gemeinschaft stellt über 630 Millionen US-Dollar für massive Anstrengungen zur Ausrottung der Kinderlähmung bereit
18:00
Global Health Community Commits Over $630 Million in Aggressive Push for Polio Eradication