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10-Q: IVANHOE ENERGY INC via COMTEX May 9, 2003 4:37:00 PM (EDGAR Online via COMTEX) -- Item 2. Management?s Discussion and Analysis of Financial Condition and Results of Operations The following should be read in conjunction with the Company?s consolidated financial statements contained herein and in the Form 10-K for the year ended December 31, 2002, along with Management?s Discussion and Analysis of Financial Condition and Results of Operations contained in such Form 10-K. Any terms used but not defined in the following discussion have the same meaning given to them in the Form 10-K. Results of Operations For the three-month period ended March 31, 2003, the net loss was $1.0 million ($.01 per share) compared to a net loss of $1.5 million ($.01 per share) for the comparable period in 2002. Cash from operating activities for the three-month period ended March 31, 2003 was $0.5 million compared to a cash deficit from operating activities of $0.9 million for the comparable period in 2002. Our cash position decreased $1.2 million for the three-month period ended March 31, 2003 primarily due to $1.9 million of capital spending partially offset by cash from operating activities and a $0.25 million loan from a related party. Cash for the comparable period in 2002 decreased $6.3 million primarily due to $6.7 million of capital spending and the cash deficit from operating activities partially offset by the $1.2 million proceeds from the sale of our Daqing assets in January 2002. Production and Operations Oil and gas revenues for the three-month period ended March 31,2003 were $2.5 million. This represents an increase of $0.9 million for the comparable period in 2002 primarily as a result of an average increase of $9.62 per barrel of oil equivalent (boe) in oil and gas prices. For the three-month period ended March 31, 2003, net production from the U.S and China was down slightly compared to the same period in 2002. U.S. production volume increases from South Midway mostly offset the loss in production from Spraberry as a result of the sale of certain Spraberry interests in the second half of 2002. Operating costs in the U.S. are up 4% per boe for the three-month period ended March 31, 2003 compared to the same period in 2002. Operating costs per boe in the South Midway increased as a result of additional costs associated with the full scale cyclic steaming program initiated in May 2002 and an increase in well workover costs. This decrease was partially offset by a decrease in operating costs per boe at Spraberry due to a maturing of those operations and continuing cost controls. U.S. depletion costs per boe increased 33% for the first quarter of 2003 primarily due to the partial impairment of Northwest Lost Hills and other California properties in the second half of 2002. Operating costs per barrel in China increased 46% for the three-month period ended March 31, 2003 compared to the same period in 2002 as a result of increased workover costs on two wells in 2003. Depletion in China increased 14% for the first quarter of 2003 primarily due to a downward revision of our proved reserves at Dagang as a result of increased oil prices. Production and operating information are detailed below: Three-Month Periods Ended March 31, --------------------------------------------------------------------------- 2003 2002 ------------------------------------ ------------------------------------ U.S. China Total U.S. China Total ---------- ---------- ---------- ---------- ---------- ---------- Net Production: BOE 55,979 37,060 93,039 57,621 36,958 94,579 BOE/day for the year 622 412 1,034 640 411 1,051 Per BOE Per BOE --------------------------------- --------------------------------- Oil and gas revenue $ 25.74 $ 29.42 $ 27.21 $ 17.92 $ 17.08 $ 17.59 ----- ----- ----- ----- ----- ----- Operating costs 6.17 7.07 6.53 5.95 4.85 5.52 Production taxes 0.93 ? 0.56 0.68 ? 0.41 Engineering support 1.88 3.59 2.56 2.57 3.98 3.12 ----- ----- ----- ----- ----- ----- 8.98 10.66 9.65 9.20 8.83 9.05 ----- ----- ----- ----- ----- ----- Net Revenue before depletion 16.76 18.76 17.56 8.72 8.25 8.54 Depletion 10.09 9.58 9.88 7.53 8.43 7.88 ----- ----- ----- ----- ----- ----- Net Revenue from operations $ 6.67 $ 9.18 $ 7.68 $ 1.19 $ (0.18 ) $ 0.66 ----- ----- ----- ----- ----- ----- General and Administrative General and administrative costs declined by $0.3 million due to staff reductions and cost cutting measures implemented in 2002, however, such costs allocated to our exploration and development activities declined by $0.5 million primarily due to a reduction in those activities for the first quarter of 2003. As a result we expensed a net of $0.2 million more in general and administrative costs for the first three-month period ended March 31, 2003 compared to the same period in 2002. Exploration and Development Activities Spending on these activities for the three-month period ended March 31, 2003 was $1.7 million a decrease of $4.3 million over the amounts spent during the comparable period in 2002. U.S. spending was down $3.9 million in the first quarter of 2003, primarily due to the completion of our exploration drilling at Northwest Hills #1-22 and a cessation of our Spraberry drilling program. Spending in China was down $0.4 million for the first quarter of 2003 primarily due to reduced activities pending final approval of our Dagang Overall Development Program. The South Midway expansion project is being financed with a line of credit established in February 2003 at which point project development began. Long lead-time items such as steam generation equipment have been ordered and construction of surface facilities began. Drilling of the first five wells, with two development wells in current producing zones and three wells in new pools, commenced in late April 2003. Drilling will be followed by cycle steaming each of the new wells. First production is expected during May 2003 and will continue to build through the end of June 2003 as wells are returned from cycle steam. Results and evaluation of the new pool and development well tests will dictate the future well locations that will optimize project economics. The second phase of permanent facility installation will commence in June 2003 and is expected to be completed in September 2003 at which point drilling the remaining fifteen planned wells will begin. By year-end 2003, it is anticipated that all twenty wells will be on production and in various stages of response to the initial cyclic steaming. Peak production for the project is expected to occur in the first quarter of 2004. Northwest Lost Hills # 1-22 continues to be suspended while we seek a partner to share the costs of the testing program. In the Bossier trend, we have a farm-out agreement in place to test the shallow zones at Creslenn Ranch. We are in advanced discussions to farm-out interests in our other Bossier prospects in return for an exploration drilling commitment. In the Dagang project, we expect to receive final approval of our Overall Development Program in the second quarter 2003 at which time we will commence activities to implement our project development. At our Zitong project, we established our project office in Chengdu, the capital of Sichuan Province. As part of our obligations under the first three-year exploration period, we executed a contract with a local geophysical company and began seismic reprocessing activities, which will continue along with other geological reviews, through year-end 2003. Gas-to-Liquids Activities Spending on GTL projects for the three-month period ended March 31, 2003 was $0.2 million a decrease of $0.4 million over the amounts spent during the comparable period in 2002. This decrease is due to the completion of technical and commercial feasibility studies for both the Qatar and Egypt projects. Negotiations in Qatar for an agreement to build a 185,000 barrels per day GTL plant and 121,000 barrels per day natural gas liquids (NGL) plant continue and are currently at an advanced and detailed stage. We cannot guarantee, however, that such an agreement will be realized. Liquidity and Capital Resources: Thus far in 2003 we have achieved progress towards key objectives to improve our liquidity and provide access to capital resources needed to further our short and medium term goals. In February 2003, the Company obtained bank financing for up to $5.0 million to construct facilities and drill an estimated 20 additional wells in the southern expansion of South Midway. As at March 31, 2003 we had spent approximately $0.1 million on facilities development and had not drawn from the bank line of credit. At current oil prices in the mid $20/bbl, we anticipate net cash flow from U.S. operations to be flat to down slightly from 2002 until the fourth quarter of 2003 at which time we should start to realize higher cash flows from the production increases in South Midway. In April 2003, we signed a new agreement with China International Trust &Investment Corporation (?CITIC?) that builds on the initial partnership formed between our two companies in October 2002. This new agreement will see CITIC assist in the financing and rapid development of Sunwing?s exploration and development projects in China. The immediate priority will be the potential for CITIC?s direct investment in the development program of the Dagang project. At current oil prices in the mid $20/bbl, we anticipate a 20% increase in net cash flows from the Dagang operations for the remainder of 2003 compared to the same period in 2002 due to higher volumes as a result of placing a reworked well on production in late 2002 and realizing higher oil prices into the second quarter of 2003 as delayed under operation of the contract with PetroChina. Additionally, in April 2003 we agreed to an extension of the $1.0 million unsecured, convertible debenture to December 27, 2003 under the same terms. On this date the lender may request repayment of the principal and unpaid interest or convert the principal and any unpaid interest into our common shares at $0.50 per share. We will continue to take the necessary measures to meet our goals and improve our liquidity including the sale of non-core assets, equity financings and loans from related parties. However, additional funding will be required to complete future capital programs through a combination of equity, debt and joint venture partner participation. We cannot assure you that we will be successful in raising the additional funds necessary or securing joint venture partners to complete our capital programs. If we are unsuccessful, we will have to prioritize our capital programs, which may result in delaying and potentially losing some valuable business opportunities. Forward-Looking Statements With the exception of historical information, certain matters discussed in this Form 10-Q are forward looking statements that involve risks and uncertainties. Certain statements contained in this Form 10-Q, including statements which may contain words such as ?could?, ?should?, ?expect?, ?believe?, ?will? and similar expressions and statements relating to matters that are not historical facts are forward-looking statements. Such forward-looking statements involve known and unknown risks and uncertainties which may cause our actual results, performances or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Although we believe that our expectations are based on reasonable assumptions, we can give no assurance that our goals will be achieved. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include, but are not limited to, our ability to raise capital as and when required, the timing and extent of changes in prices for oil and gas, competition, environmental risks, drilling and operating risks, uncertainties about the estimates of reserves and the potential success of gas-to-liquids development technology, the prices of goods and services, the availability of drilling rigs and other support services, legislative and government regulations, political and economic factors in countries in which we operate and implementation of our capital investment program. May 09, 2003 |
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| aus der Diskussion: | Ivanhoe Energy |
| Autor (Datum des Eintrages): | Kubanisch_Rauchen (10.05.03 09:04:52) |
| Beitrag: | 18 von 117 (ID:9410262) |
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