|
|
| Seven Seas Reports Second Quarter Results; Company Also Announces Operations Update |
HOUSTON, Aug. 14 /PRNewswire-FirstCall/ -- Seven Seas Petroleum Inc. (Amex: SEV) announced today results for the three-month and six-month periods ended June 30, 2002. For the second quarter of 2002, the Company reported a net loss of $108.6 million or $2.86 per share, as compared to a net loss of $2.1 million or $0.06 per share for the same three-month period in 2001. For the first six months of 2002, the Company reported a net loss of $108.4 million, or $2.86 per common share, as compared to a net loss of $2.1 million or $0.06 per share for the same six-month period in 2001. Both the three-month and six-month periods ending June 30, 2002, include a non-cash writedown of oil and gas properties equal to $106.1 million. The writedown is attributable to a material downward revision in the Company's proved oil reserves. Based on Ryder Scott Company Petroleum Consultants' recent report, the Company's proved reserves as of June 30, 2002 are approximately 16.3 million barrels of oil. This represents a 31.3 million barrel reduction as compared to the previously reported 47.6 million barrels of oil as of December 31, 2001. The present value, discounted continually over the expected life of the production at 10% per annum (the "SEC PV10"), is approximately $136.3 million or $136.0 million less than the December 31, 2001 SEC PV10 of $272.3 million. The SEC PV10 decrease was partially offset by higher oil prices as of June 30, 2002. The reserve reduction is attributable to lower oil production rates, lower production pressures, and the recent occurrence of rapid gas encroachment in structurally higher wells in the Guaduas Oil Field. In the June 30, 2002 report, Ryder Scott eliminated proved oil reserves located in the structurally higher portion of the producing reservoir. Guaduas Oil Field Production Production from the Guaduas Oil Field averaged approximately 7,500 BOPD gross (3,400 net to Seven Seas) during the second quarter of 2002. This is approximately 2,600 BOPD (1,200 net to Seven Seas) less than the first quarter average daily production of approximately 10,100 BOPD (4,700 net to Seven Seas). July 2002 production continued to decline and averaged approximately 6,700 BOPD gross (3,100 net to Seven Seas); however, production declines have recently diminished. The resulting reduction in cash flows from production declines and an estimated $6 million in additional costs on the Escuela 2 over the budgeted dry hole costs through August 14, 2002 have materially weakened the Company's cash and working capital position. There is now a risk that the $6.9 million interest payment on the $110 million Senior Notes, due November 15, 2002, will not be made. The Company has begun discussions with our $45 million secured debt holders concerning the Company's current financial position and various go-forward scenarios that could include a sale of assets. Operations Update As previously reported, The Company has elected to suspend development drilling operations pending a complete review of all geological, geophysical, and reservoir engineering data. Subsequent to this decision, our partner and 32.9 percent interest owner in the Guaduas Oil Field, Sociedad International Petrolera S.A. ("Sipetrol"), proposed an additional development well, the El Segundo 2-S. Because a drilling rig was currently on-location, the Company had limited time to evaluate the proposal. Seven Seas ultimately declined to participate. The Company's future participation in the revenues from El Segundo 2-S will be subject to Sipetrol recovering 300% of our share of drilling costs from future net operating revenues. The Company is currently implementing a well workover program in an effort to increase oil production from existing wells. Results may not be known for several months. Escuela 2 Update The Escuela 2 is currently drilling at a total depth of 19,159 feet with cumulative costs of approximately $19.1 million. Seven Seas believes it is likely that the Cambao fault has not been encountered. The Company also believes that the well bore is drilling potential reservoir rocks in the lower Cretaceous (Utica-Caballeros) formations that contain gas shows (including traces of heavier hydrocarbons C2-C5). This formation is known to produce oil in other areas of Colombia. When the well reaches its total depth, the Company plans to run electric logs for further evaluation. Aguachica Prospect The decision whether to drill the Santa Fe #1 well, an exploratory test of our Aguachica prospect, has been delayed due to regional political uncertainty and security issues in the surrounding area (the prospect is located in the northern part of Colombia, approximately 220 miles northwest of Bogota). The Company has requested a drilling extension from Ecopetrol beyond our current August 31, 2002 deadline to drill and complete an initial test well on this prospect. "Although this has obviously been a difficult and disappointing quarter, I remain optimistic that our oil production decline can be reduced by workover operations, and that the Escuela 2 lower Cretaceous reservoirs may produce hydrocarbons in commercial quantities," stated Robert A. Hefner III, Chairman and Chief Executive Officer of Seven Seas Petroleum Inc. Seven Seas Petroleum Inc. is an independent oil and gas exploration and production company operating in Colombia, South America. The Company's primary emphasis is on the development and production of the Guaduas Oil Field and exploration of the Subthrust Dindal Prospect, both of which are located in Colombia's prolific Magdalena Basin. Statements regarding anticipated oil and gas production and other oil and gas operating activities, including the costs and timing of those activities, are "forward looking statements" within the meaning of the Securities Litigation Reform Act. The statements involve risks that could significantly impact Seven Seas Petroleum Inc. These risks include, but are not limited to, adverse general economic conditions, operating hazards, drilling risks, inherent uncertainties in interpreting engineering and geologic data, competition, reduced availability of drilling and other well services, fluctuations in oil and gas prices and prices for drilling and other well services and government regulation and foreign political risks, as well as other risks discussed in detail in the Seven Seas Petroleum Inc.'s filings with the U.S. Securities and Exchange Commission. SEVEN SEAS PETROLEUM INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited; In thousands, except share data) THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, 2002 2001 2002 2001 REVENUES Crude oil sales $5,851 $1,217 $13,460 $4,611 Interest income 135 158 309 400 5,986 1,375 13,769 5,011 EXPENSES Oil and gas operating expenses 1,048 1,074 2,343 2,106 Depletion, depreciation and amortization 1,725 509 4,249 1,423 Interest expense 2,818 201 5,564 385 General and administrative 1,252 1,608 2,268 3,111 Other expense 34 66 7 135 Writedown of proved oil and gas properties 106,131 --- 106,131 --- 113,008 3,458 120,562 7,160 NET LOSS BEFORE INCOME TAXES (107,022) (2,083) (106,793) (2,149) INCOME TAXES (1,563) --- (1,563) --- NET LOSS (108,585) (2,083) (108,356) (2,149) BASIC AND DILUTED NET LOSS PER COMMON SHARE $(2.86) $(0.06) $(2.86) $(0.06) WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 37,905,990 37,856,073 37,882,337 37,846,409SOURCE Seven Seas Petroleum Inc.
back to topRelated links:
Company News On-Call:
CONTACT:
Daniel Drum, Investor Relations of Seven Seas
Petroleum Inc., +1-713-622-8218
