Rocksource ASA – Q4 2009 financial results and preliminary 2009

2009 was a challenging year for the E&P industry with sharp drops in oil and gas prices, and significant cutbacks in capital expenditures. Rocksource chose to maintain a high activity level throughout the year, with exploration costs in 2009 exceeding prior years. The company also continued to build on its acreage position, capitalising on a subdued bidders market in the Western Gulf of Mexico Lease Sale 210.

The goal throughout 2009 was to continue the build-up of the high quality exploration portfolio, now exceeding more than 1 billion barrels in net risked resources, and to also build near term drilling opportunities. In preparation for the company’s upcoming drilling campaign, Rocksource also recruited a number of skilled professionals throughout 2009.

The financials for the fourth quarter and full year 2009 are heavily influenced by the continued build-up of the company coupled with sharp drops in prices and lower production. Rocksource had operating revenue of NOK 19.9 million in the fourth quarter of 2009, a decrease of NOK 37.5 million compared to the corresponding quarter 2008. Total revenue for 2009 was NOK 105.6 million versus NOK 287.2 million in 2008.

The company posted a net loss in the fourth quarter of NOK 81.9 million, including an impairment of the US onshore oil- and gas assets of NOK 23.1 million, versus a net loss of NOK 7.0 million in the corresponding quarter 2008. The net loss for 2009 amounted to NOK 217.3 million versus a profit in 2008 of NOK 60.9 million.

Rocksource has an improved financial foundation in place. Rocksource’s main operational focus will be to firm up spud dates and move the company rapidly towards a period of continuous drilling.

The recent sanctioning of a well on PL 416 on the NCS represents the company’s first sanctioned well on the NCS. The sanctioned well is estimated to be drilled in May 2011 with the drilling rig Borgland Dolphin. Rocksource has swapped the company’s rig slot in 2011 with an E.ON Ruhrgas slot in 2012, to allow the operator to drill this well earlier. The well will target the “Breiflabb” prospect, which Rocksource estimates to contain mean recoverable resources amounting to 170 million barrels of oil equivalents. The prospect has an associated EM anomaly, and Rocksource estimates a chance of success of 44 per cent.

Internationally, Rocksource is preparing for well operations in 2010 on the AGC Profond PSC. Spud date of the first well is uncertain and dependent upon rig scheduling. In India, the company has been in recent discussions with ONGC over the 2010 work programme for the exploration block CY DWN 2001/1. Rocksource still expects a 2010 spud for the third and final well in the Phase One work programme.

Drilling on PL 530 on the NCS is likely to slip into 2011. The operator Gaz de France is still considering options with regards to rig availability and conclusions have yet to be drawn with regards to drilling rig and estimated spud date.

In the US Gulf of Mexico Rocksource still expects to participate in two wells in 2010.

The US onshore production assets are on a natural decline, and Rocksource is continuously monitoring the market with the aim to strengthen its onshore production base. The company expects its current US production to average 600 boepd in 2010.

2010 will represent the initiation of a major drilling campaign. The company expects to participate in approximately 8 to 10 offshore wells over the next two years. At the same time Rocksource will continue to actively pursue growth opportunities that may add to the company’s longer term portfolio of low risk, high potential exploration wells. It is Rocksource’s ambition to retain a level of activity in the order of 4 to 5 wells per year.

Please find the Q4 presentation here: http://www.rocksource.com/presentations/category157.html

The financial report can be found here: http://www.rocksource.com/financial-reports/category159.html

Please follow this link for a corresponding press release: http://www.rocksource.com/press-releases/category166.html

 
Oslo, 17.2.2010
Rocksource ASA

Trygve Pedersen
CEO

+47 90 09 77 41