Petrobank Energy’s production increased to 43,856 barrels of oil equivalent per day (boepd) in the first quarter of 2009.
Canadian Business unit (CBU) production raised 59% to 22,085 boepd.
Latin American Business unit (LABU) production increased 152% to 21,771 barrels of oil per day (bopd).
The company’s Heavy Oil Business unit (HBU) pumped 248 bopd in March 2009 and 256 bopd in April 2009.
Inspite of a sharp drop in world oil prices funds flow from operations increased by 1% to $125.2 million ($1.40 per diluted share). We recorded a net loss of $1.5 million ($0.02 per diluted share) in the first quarter compared to net income of $35.5 million ($0.40 per diluted share) in the same 2008 period.
CBU production expenses improved 27% to $6.81/boe and LABU production expenses improved 32% to $7.40/bbl.
CBU operating netbacks, excluding hedging gains of $5.31/boe, averaged $34.68/boe and LABU operating netbacks averaged $30.18/bbl in the first quarter.
On April 27, 2009, Petrobank Energy agreed to sell 9.9 million shares of its Petrominerales holdings for gross proceeds of $101.5 million. The transaction is expected to be completed on May 15, 2009, at which time Petrobank Energy’s ownership interest will be decreased to around 66.8%.
Operational Review
Petrobank Energy announced strong funds flow from operations of $125.2 million, or $1.40 per diluted share, in the first quarter of 2009 as year over year sales volumes almost doubled to 43,856 boepd. Funds flow from operations increased 1% from the prior year, despite a 56% decrease in world oil prices. CBU infrastructure investments in 2008 decreased operating expenses to $6.81/boe in the first quarter of 2009, preserving strong operating netbacks of $34.68/boe, excluding hedging gains of $5.31/boe. Similarly in Colombia, continued improvements in production operations also decreased operating expenses to $7.40/bbl, leading to operating netbacks of $30.18/bbl.
CBU Operational Update
Following an aggressive drilling program through 2008, the company’s first quarter 2009 production averaged 22,085 boepd, a 59% increase from the 13,889 boepd produced in the first quarter of 2008. In response to the lower oil price environment in early 2009 the company reduced its drilling program to 20 (16.14 net) Bakken horizontal wells during the first quarter of 2009.
Despite lower activity levels, production was down less than 1% from the fourth quarter of 2008. The company’s efforts in the field to continue optimizing well performance and operating efficiencies minimized the impact of the reduced activity on its production. Outside of the Bakken, the company’s activities are targeted toward building its expertise and drilling inventory in other large resource accumulations, including the Montney and Horn River basin.
In 2009, the company’s primary focus will be to maintain its low-cost advantage through selective drilling in the Bakken. The company positioned for continued long term reserve and production growth, despite the company’s reduced pace of development at the beginning of 2009. At current commodity prices the company expects to drill a further 50 wells this year and if oil prices improve it is prepared to drill as many as 120 wells in 2009. All of the company’s Bakken drilling emphasizes testing and refining different technologies that have the potential to increase ultimate resource recovery.
