Wednesday, Addax Petroleum Corp. (AXC.TO) reported a sharp decline in fourth quarter earnings, as average realized crude oil prices plunged year-on-year.
Net income for the fourth quarter plunged to US$3 million or US$0.02 per basic share from US$180 million or US$1.16 per basic share in the prior-year quarter.
Funds flow from operations declined 26% to US$318 million or US$2.03 per basic share in the quarter from US$428 million or US$2.75 per basic share in the same period last year.
Average realized sales price for the quarter declined 44% to US$49.28 per billion barrels per day, or bbl, from US$88.46/bbl in the comparable period last year, as a result of a 38% decrease in the average dated Brent benchmark price from last year and the timing of the crude oil liftings.
"Despite a challenging environment in the fourth quarter of 2008, Addax Petroleum achieved record production of 142.5 million barrels per day or Mbbl/d in the quarter and ended the year with a significant discovery at the Njaba prospect," said Jean Claude Gandur, president and chief executive officer.
For fiscal 2008, the company reported 63% increase in net income to US$784 million from US$482 million a year ago and diluted earnings on a per share basis grew to US$4.95 from US$3.09 last year.
Funds flow from operations rose to US$1.850 billion or US$11.49 per share from US$1.313 billion or US$8.31 per share last year.
Petroleum sales before royalties advanced 35% to US$4.607 billion from US$3.412 billion in the previous year. Sales volumes rose to 48.7 million barrels and average crude oil sales price increased to US$94.38 bbl/d from US$72.94 bbl/d last year.
Looking ahead, Addax Petroleum said for 2009 it 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.
Should the prevailing Brent Crude price continue to be below US$60/bbl for the balance of 2009, Addax Petroleum intends to reduce its capital expenditures in such way that total capital expenditures continue to be funded by internally generated cash flow.
Further, the company said that 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 total production averaging between 132 Mbbl/d and 137 Mbbl/d for 2009.
AXC.TO is trading up C$0.81 or 3.63% at C$23.11 on a volume of about 27 thousand shares.
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