1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE MONTH OF MAY 1998
------------------------------
PETSEC ENERGY LTD
(FORMERLY PETROLEUM SECURITIES AUSTRALIA LIMITED)
Level 13, 1 Alfred Street
Sydney, NSW 2000
Australia
[Indicate by check mark whether the registrant files or will file
annual reports under cover of Form 20-F or Form 40-F]
Form 20-F __X__ Form 40-F
[Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange
Act of 1934.]
Yes ____ No __X__
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2
This report contains the following documents:
a) The Company's press release of 4 May 1998 entitled "PETSEC ENERGY
ANNOUNCES ITS MARCH QUARTER RESULTS AND EXPLORATION SUCCESS", which
includes the summary financial results for the three months ended 31
March 1998;
b) The Company's "QUARTERLY REPORT FOR PERIOD ENDED 31 MARCH 1998" lodged
with the Australian Stock Exchange on 30 April 1998.
3
PETSEC ENERGY LTD
(A.C.N. 000 602 700)
4 May 1998
PETSEC ENERGY ANNOUNCES ITS MARCH QUARTER RESULTS
AND EXPLORATION SUCCESS
SYDNEY, Australia - Petsec Energy Ltd (ASX: PSA / Nasdaq: PSALY), an independent
oil and gas exploration and production company with its operations offshore Gulf
of Mexico, USA, today reported its results of operations for the three months
ended 31 March 1998.
RESULTS OF OPERATIONS
Net production for the quarter was 11.7 Bcfe, up 13% on the March 1997 quarter.
Net sales of US$28.0 million were 9% down on 1997, following a 20% drop in
realised oil and gas prices from a year ago. Cash flow from operating activities
in the quarter was $23.4 million, 3% down on 1997 ($24.1 million), also
reflecting the decline in oil and gas prices.
Under US generally accepted accounting principles, Petsec incurred a net loss of
US$8.9 million in the quarter (1997: a net income of US$6.6 million). The
Company adopts the "successful efforts" method of accounting. In the quarter it
expensed US$17.0 million of dry hole and impairment costs related to the South
Marsh Island 189 #1 well and the West Cameron 480 #2 well. In April 1998 a
further US$2.7 million was incurred on the South Marsh Island well and this will
be expensed in the June 1998 quarter. Basic and diluted earnings per ADR were a
loss of US$0.41 (1997: a net income per ADR of US$0.31).
Under Australian accounting standards, the Company reported an after tax loss of
A$14.3 million in the quarter, after expensing A$28.6 million of dry hole and
impairment costs as an abnormal item.
Production was up 13% on the March quarter a year ago and was 5% down on the
December 1997 quarter. This was achieved despite extremely bad weather
conditions and production shut-ins necessitated by our platform drilling
activities. The poor weather required safety shutdowns to platforms and delayed
production start-ups at Main Pass 84 and 104.
Petsec's Managing Director, Terry Fern, said: "The financial results for the
quarter mainly reflected the dry hole and impairment expenses at South Marsh
Island 189 and West Cameron 480 and the decline in both oil and gas prices from
a year ago. Our oil and gas hedging program improved income by US$1.9 million,
which offset some of this decline in prices."
"While the accounting results showed a loss for the quarter, our exploration
success this year has more than offset the loss and Petsec's underlying value
increased most satisfactorily," Mr Fern added.
4
-2-
EXPLORATION SUCCESS
The Company has achieved significant exploration success in 1998. To date the
Ship Shoal 193 A-6 well has encountered 16 metres (51 feet) of net oil pay. The
well's primary target, the E-8 sand, had 7 metres (23 feet) of the net oil pay.
This pay sand has now been established as oil-bearing over an area of up to 900
acres up-dip from Petsec's B-1 well, which is producing out of the E-8 sand at
the rate of 1,060 barrels of oil and 1.9 million cubic feet of gas per day. The
Company expects to bring this discovery into production later this month,
boosting oil production levels significantly.
The South Marsh Island 189 #1 well encountered 10 metres (32 feet) of net gas
pay, but was plugged and abandoned as non-commercial, resulting in a dry hole
expense. The existing proved reserves on the lease were unaffected by the
results of this well and the Company will focus on development of these reserves
and the remaining exploration potential of the leases.
The West Cameron 480 #2 well encountered 15 metres (50 feet) of net gas pay, but
adverse hole conditions prevented it from reaching its deeper primary target.
The well has been cased and temporarily suspended while development plans are
finalised. Petsec is planning to test the deeper target zone by another well
from a more favourable surface location. An impairment expense was recorded in
the March quarter, reflecting the extra costs from the adverse hole conditions.
During the quarter Petsec was the high bidder for seven leases at the OCS
Central Gulf of Mexico lease sale in March 1998 and it won one lease at the
Texas State Waters lease sale in April 1998.
Four of the leases are strategically located adjacent to the Company's existing
producing Main Pass leases. The remaining leases have large mapped potential and
add to Petsec's growing inventory of prospects.
Mr Fern said: "The results from the Ship Shoal 193 A-6 ST well are excellent. We
estimate that this well has added substantially to the Company's proved and
probable reserve base and to the exploration potential of all our Ship Shoal
192/193/194 leases. We are also pleased that Petsec was awarded the adjacent
Ship Shoal 180 lease from the OCS Central Gulf of Mexico lease sale in March
1998."
"We are now looking to increase the oil-processing capacity of our facilities at
Ship Shoal 193 to cater for this success and we shall shortly begin a drilling
program of three to five more wells on the Ship Shoal 192/193/194 leases," Mr
Fern added.
5
- 3 -
As announced last week, Petsec Energy Ltd has received approval for listing its
American Depositary Receipts on the New York Stock Exchange, and anticipates
that trading on the NYSE will begin on 18 May 1998.
A summary of the unaudited financial results for the March 1998 quarter is
attached.
For further information please contact:
In Australia: In USA:
Terry Fern, Managing Director
or Ross Keogh,
Robin Cumming, Chief Financial Officer VP Finance and Administration
Petsec Energy Ltd Petsec Energy Inc
(61) 2 9247 4605 (phone) (318) 989 1942 (phone)
(61) 2 9251 2410 (fax) (318) 989 7271 (fax)
Level 13, Gold Fields House 143 Ridgeway Drive, Suite 113
1 Alfred Street, Sydney, NSW 2000 Lafayette Louisiana, 70503-3402
Company information is available at Petsec's web site http://www.petsec.com
1 Information in this report which relates to hydrocarbon reserves is
based on information compiled by a person qualified in accordance with
Listing Rule 5.11 and accurately reflects the information compiled by
that person.
2 Certain statements in this report regarding future expectations and
plans of the Company may be regarded as "forward-looking statements"
within the meaning of Section 27A of the USA Securities Act of 1933 and
Section 21E of the USA Securities Exchange Act of 1934. Although the
Company believes that its expectations and plans are based upon
reasonable assumptions, it can give no assurance that its goals will be
met. Actual results may vary significantly from those anticipated due
to many factors, including oil and gas prices, operating hazards,
drilling risks, environmental risks and uncertainties in interpreting
engineering and other data relating to oil and gas reservoirs, as well
as other risks discussed in the Company's SEC filings.
6
Petsec Energy Ltd
Results for the first quarter ended 31 March 1998
(A$, Australian accounting standards)
(unaudited)
Three months ended Change Year to date ended Change
31 Mar 98 31 Mar 97 % 31 Mar 98 31 Mar 97 %
(in thousands) (in thousands)
- ---------------------------------------------------------------------------------------------------------------------------
Oil and gas sales (before deducting royalties) A$ 51,145 49,893 +3% 51,145 49,893 +3%
Profit and loss account
Operating profit before abnormal items A$ 6,258 14,218 -56% 6,258 14,218 -56%
Abnormal items (28,593) - (28,593) -
----------------------- -----------------------
Operating profit (loss) before tax (22,335) 14,218 (22,335) 14,218
Tax benefit (expense) 8,023 (4,529) 8,023 (4,529)
----------------------- -----------------------
Operating profit (loss) after tax (14,312) 9,689 -248% (14,312) 9,689 -248%
----------------------- -----------------------
Basic and diluted earnings per share A$ (0.13) 0.09 (0.13) 0.09
Number of shares outstanding (period end, thousands) 107,601 107,101 107,601 107,101
Number of shares outstanding (average, thousands) 107,601 107,008 107,601 107,008
Average US$ / A$ exchange rates 0.6690 0.7736 0.6690 0.7736
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Petsec Energy Ltd
Results for the first quarter ended 31 March 1998
(US$, US generally accepted accounting principles)
(unaudited)
Three months ended Change Year to date ended Change
31 Mar 98 31 Mar 97 % 31 Mar 98 31 Mar 97 %
(in thousands) (in thousands)
- ----------------------------------------------------------------------------------------------------------------------------
Statement of operations
Oil and gas sales (net of royalties) US$ 27,986 30,921 -9% 27,986 30,921 -9%
Lease operating expenses (4,236) (2,292) (4,236) (2,292)
General, administrative and other expenses (2,197) (1,793) (2,197) (1,793)
Stock compensation expense (309) (409) (309) (409)
---------------------- ---------------------
EBITDAX (income before interest, DD&A, exploration,
dry hole costs) 21,244 26,427 -20% 21,244 26,427 -20%
Depletion, depreciation & amortisation (DD&A) (15,102) (14,103) (15,102) (14,103)
---------------------- ---------------------
Income from operations (before exploration &
dry hole costs) 6,142 12,324 -50% 6,142 12,324 -50%
Exploration expenditures (1,824) (1,293) (1,824) (1,293)
Dry hole and impairment expense (16,951) - (16,951) -
---------------------- ---------------------
Income (loss) from operations (12,633) 11,031 -215% (12,633) 11,031 -215%
Profit on sale of assets and other income (31) - (31) -
Interest expense (net of interest income) (1,206) (465) (1,206) (465)
Equity in income (loss) of affiliates - (318) - (318)
---------------------- ---------------------
Income before tax (13,870) 10,248 -235% (13,870) 10,248 -235%
Income tax benefit (expense) 5,004 (3,665) 5,004 (3,665)
---------------------- ---------------------
Net income (loss) US$ (8,866) 6,583 -235% (8,866) 6,583 -235%
---------------------- ---------------------
Cash flow data
Net cash provided by operating activities US$ 23,350 24,129 -3% 23,350 24,129 -3%
Net cash used in investing activities US$ (32,361) (33,988) (32,361) (33,988)
Net cash provided by financing activities US$ 4,000 8,453 4,000 8,453
Balance sheet data (at end of period)
Total assets US$ 242,830 181,692 242,830 181,692
Cash and deposits US$ 14,160 11,122 14,160 11,122
Long-term debt US$ 103,636 45,000 103,636 45,000
Shareholders' equity US$ 92,640 98,890 92,640 98,890
Basic and diluted earnings per share
Net income per ordinary share US$ (0.08) 0.06 (0.08) 0.06
Net income per ADR US$ (0.41) 0.31 (0.41) 0.31
Average number of shares outstanding (thousands) 107,601 107,008 107,601 107,008
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Additional data
Net production
Oil (MBbls) 683 747 -9% 683 747 -9%
Gas (MMcf) 7,582 5,868 +29% 7,582 5,868 +29%
Total (MMcfe) 11,680 10,350 +13% 11,680 10,350 +13%
Net sales
Oil (US$ in thousands) US$ 10,953 15,991 10,953 15,991
Gas (US$ in thousands) 17,033 14,930 17,033 14,930
---------------------- ---------------------
Total (US$ in thousands) 27,986 30,921 -9% 27,986 30,921 -9%
---------------------- ---------------------
Average sales price
Oil (US$ per Bbl) US$ 16.04 21.41 -25% 16.04 21.41 -25%
Gas (US$ per Mcf) 2.25 2.54 -12% 2.25 2.54 -12%
Total (US$ per Mcfe) 2.40 2.99 -20% 2.40 2.99 -20%
Average costs (US$ per Mcfe)
Lease operating expenses US$ 0.36 0.22 0.36 0.22
Depletion, depreciation and amortisation 1.29 1.36 1.29 1.36
General, administrative & other expenses 0.19 0.17 0.19 0.17
Stock compensation expense 0.03 0.04 0.03 0.04
---------------------- ---------------------
Total (before exploration costs) 1.87 1.80 +4% 1.87 1.80 +4%
---------------------- ---------------------
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PETSEC ENERGY LTD
(A.C.N. 000 602 700)
QUARTERLY REPORT FOR PERIOD ENDED 31 MARCH 1998
HIGHLIGHTS FOR THE QUARTER
---------------------------------- ----------------------------------- ------------------
PRODUCTION MARCH QUARTER DECEMBER QUARTER CHANGE IN
---------------------------------- -----------------------------------
GROSS NET OF ROYALTIES GROSS NET OF ROYALTIES NET PRODUCTION
- --------------------------- --------------- ------------------ ---------------- ------------------ ------------------
Oil: Barrels ("Bbls") 844,836 683,255 930,077 753,466 Down 9%
- --------------------------- --------------- ------------------ ---------------- ------------------ ------------------
Gas: Million cubic feet 9,362 7,582 9,549 7,722 Down 2%
("MMcf")
- --------------------------- --------------- ------------------ ---------------- ------------------ ------------------
Total: Billion cubic feet 14.43 11.68 15.13 12.24 Down 5%
gas equivalent
("Bcfe")
- --------------------------- --------------- ------------------ ---------------- ------------------ ------------------
Production commenced at Main Pass 104 and Main Pass 84.
Production for the quarter (down 5% from December quarter) was adversely
affected by prolonged severe weather conditions which caused delay in production
start-up at Main Pass 104 and 84 and safety shut-downs at some of our platforms.
Also, platform drilling activities caused some production shut-ins.
EXPLORATION
Four wells were spudded and one well side-tracked during the quarter: Ship Shoal
193A-6ST was an oil discovery, West Cameron 480 #2 ST was a gas discovery, Main
Pass 91B-3 was suspended prior to reaching its primary targets, and High Island
A-308 #1 is currently drilling and yet to reach its primary targets. One well,
South Marsh Island 189 #1, was plugged and abandoned.
SHIP SHOAL 193 A-6ST: The Ship Shoal 193 A-6ST well encountered a total
of 16 metres (51 feet) of net oil pay in three sands
and is drilling ahead.
WEST CAMERON 480 #2ST: The West Cameron 480 #2ST well encountered a total of
15 metres (50 feet) of net gas pay in two sands, and
has been cased and suspended.
RESERVES
Net proved reserves have increased 51% to 186 Bcfe (231 gross) at 31 December
1997 from 123 Bcfe (152 gross) at 31 December 1996. Net proved and probable
reserves increased 55% to 255 Bcfe from 165 Bcfe.
LEASE ACQUISITION
Petsec was successful high bidder on seven leases at the OCS Central Gulf of
Mexico lease sale held in New Orleans on 18 March 1998 and won one lease tract
at the Texas State Waters lease sale held on 7 April 1998.
The eight leases have a net unrisked mapped reserve potential of 370 Bcfe.
9
OPERATIONS
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PRODUCTION FOR QUARTER ENDED 31 MARCH 1998
- ------------------------------------------------------------------------------------------------------------------
OIL (BBLS) OIL (BBLS) GAS (MMCF) GAS (MMCF)
GROSS NET OF ROYALTIES GROSS NET OF ROYALTIES
- --------------------- --------------------- ---------------------- ----------------------- -----------------------
USA:
Gulf of Mexico 844,836 683,255 9,341 7,567
California - - 21 15
- --------------------- --------------------- ---------------------- ----------------------- -----------------------
TOTAL: 844,836 683,255 9,362 7,582
- --------------------- --------------------- ---------------------- ----------------------- -----------------------
OFFSHORE LOUISIANA, GULF OF MEXICO, USA
MAIN PASS 6, 7 AND 91 Net revenue interests: 75.5%, 81.33% and 80.33%
Gross production for the quarter from Main Pass 6, 7 and 91 was 2,351 MMcf of
gas (1,889 MMcf net) and 51,329 barrels of oil (42,640 barrels net).
Gas production volumes were 15% higher than the previous quarter reflecting the
commencement of production from the A-3 and B-2 wells. Oil production volumes
were only slightly (4%) lower than the previous quarter. Drilling activities at
Main Pass 91 and severe weather conditions adversely affected production
volumes.
The Main Pass 91 B-3 development well spudded during the quarter and was
suspended prior to reaching its primary targets because of erosion of the sea
floor drilling pad caused by severe storm activity. It is expected that drilling
will recommence during the second quarter of 1998.
SHIP SHOAL 192, 193 AND 194 Net revenue interest: 83.33%, 80.33% and 83.33%
Gross production for the quarter was 566,923 barrels of oil (458,822
barrels net) and 713 MMcf of gas (576 MMcf net).
Oil and gas production volumes were respectively 18% and 24% lower than the
previous quarter due mostly to production shut-ins required by the drilling of
the Ship Shoal A-6ST well and to a production problem in the A-5ST well, which
will require remedial work. This work was delayed by adverse weather conditions
and drilling activities, and is scheduled to be undertaken during the second
quarter of 1998.
The Ship Shoal 193 A-6 exploration well, suspended in 1997, was sidetracked and
is currently still drilling. To date the well has intersected a total of 16
metres (51 feet) of net oil pay in three sands with one prospective zone
remaining to be drilled. The primary target E-8 sand had 7 metres (23 feet) of
net oil pay. This pay sand has now been established as oil bearing over an area
of up to 900 acres up-dip from the E-8 producing Ship Shoal 193 B-1 well.
The Ship Shoal 193 A-6ST well is expected to be on production in May 1998 and a
drilling programme of three to five wells on the Ship Shoal 193/192/194 leases
will be commenced immediately. It is also proposed that an upgrade of the oil
processing capacity of the Ship Shoal 193 platform be commenced immediately.
10
WEST CAMERON 542, 543 AND 544 Net revenue interests: 36.11%, 80.83% and 80.33%
Gross production for the quarter was 1,842 MMcf of gas (1,481 MMcf net) and
188,159 barrels of oil (151,160 barrels net).
Oil production volumes were 10% higher reflecting the commencement of production
from the A-8 and A-9 wells. Gas production volumes were 5% lower than those of
the previous quarter due to natural reservoir decline.
WEST CAMERON 461, 462 AND 480 Net revenue interest: 80.33%
Gross production for the quarter was 1,690 MMcf of gas (1,357 MMcf net) and
1,075 barrels of oil (864 barrels net) from the West Cameron 461 A-1 and A-2
wells.
Gas production volumes were 36% lower than the previous quarter reflecting the
natural decline of the depletion drive gas reservoirs that are currently
completed. To improve production rates a compressor, expected to be operational
by the end of April 1998, has been installed on the West Cameron 461 platform.
The West Cameron 480 #2 ST exploration well intersected a total of 15 metres (50
feet) of net gas pay in two sands and has been cased and suspended pending
evaluation of future development options. Adverse hole conditions resulted in
the termination of drilling prior to the well reaching its primary target. To
evaluate this deep target a new well, drilled from a more optimal surface
location, is programmed to be drilled later in 1998.
WEST CAMERON 237 Net revenue interest 83.33%
Gross production for the quarter was 1,193 MMcf of gas (994 MMcf net), a 63%
increase over the previous quarter reflecting the commencement of production
from the A-8 well and a full quarter's production from the A-7 well. Gross oil
production for the quarter was 2,372 barrels (1,977 barrels net).
SOUTH MARSH ISLAND 7 Net revenue interest: 80.33%
Gross production for the quarter was 377 MMcf of gas (303 MMcf net) and 1,915
barrels of oil (1,538 barrels net).
SOUTH MARSH ISLAND 189 & 190 Net revenue interest: 83.33%
The South Marsh Island 189 #1 well encountered 10 metres (32 feet) of net gas
pay in two sands and was plugged and abandoned as non-commercial. The four
predicted target sands were encountered, as predicted and on depth, and are now
believed to be within the original trap as mapped but subsequently breached.
Activities will now focus upon the development of the existing proved reserves
and evaluation of the remaining exploration potential on the leases.
GRAND ISLE 45 Net revenue interest: 83.33%
Gross production for the quarter was 813 MMcf of gas (677 MMcf net) and 12,568
barrels of oil (10,473 barrels net).
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MAIN PASS 104 Net revenue interest: 80.33%
Gross production for the quarter was 281 MMcf of gas (225 MMcf net) and 6
barrels of oil (5 barrels net).
Production start-up from the A-1 and A-2 wells, delayed because of weather,
commenced in February 1998.
MAIN PASS 84 Net revenue interest: 77%
Gross production for the quarter was 20,489 barrels of oil (15,777 barrels net)
and 73 MMcf of gas (56 MMcf net) from the Main Pass 84 #1 well. The well
commenced production in March 1998 at an initial rate of 660 barrels of oil and
0.9 MMcf of gas per day following installation of a refurbished oil storage
barge with processing facilities and the laying of a gas pipeline.
FUTURE EXPLORATION
During the June quarter of 1998 the Company expects to commence drilling
operations on the Main Pass 91, West Cameron 237 and Ship Shoal 193/194 leases.
LEASE ACQUISITION
Petsec was successful high bidder on the following seven leases at the Central
Gulf of Mexico OCS lease sale held on 18 March 1998:
o Ship Shoal 180 (awarded 24 April)
o West Cameron 145
o West Delta 112
o Main Pass 90
o Main Pass 91 (East)
o Main Pass 93 (part)
o Main Pass 105
Petsec also won the 720 acre lease tract Mustang Island 797L at the Texas State
Waters lease sale held on 7 April 1998.
The above eight leases have a net unrisked 3D mapped reserve potential of 370
Bcf of gas equivalent.
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RESERVES
Net proved oil and gas reserves, as estimated by independent petroleum
engineers, Ryder Scott Company, were 186 Bcfe at 31 December 1997 (1996 123
Bcfe), up 51%. Net proved and probable reserves were 255 Bcfe (1996 165 Bcfe),
up 55%.
EXPENDITURES
Production and Development Expenditure A$ 19,818,632
Exploration Expenditure A$ 42,086,858
----------
TOTAL A$ 61,905,490
==========
Dated: 30 April 1998
G H FULCHER
COMPANY SECRETARY
For further information, please contact:
Australia: Mr Doug Battersby, Technical Director or USA: Ross Keogh, VP - Finance/Administration
Mr Geoff Fulcher, Company Secretary Petsec Energy Inc
(61) 2 9247 4605 (phone) (61) 2 9251 2410 (fax) (318) 989 1942 (phone) (318) 989 7271 (fax)
Level 13, Gold Fields House 143 Ridgeway Drive, Suite 113
1 Alfred Street, Sydney NSW 2000 Lafayette Louisiana 70503-3402
1. Information in this report which relates to hydrocarbon reserves is based on
information compiled by a person qualified in accordance with Listing Rule
5.11 and accurately reflects the information compiled by that person.
2 Certain statements in this report regarding future expectations and plans
of the Company may be regarded as "forward looking statements" within the
meaning of Section 27A of the USA Securities Act of 1933 and Section 21E of
the USA Securities Exchange Act of 1934. Although the Company believes that
its expectations and plans are based upon reasonable assumptions, it can
give no assurance that its goals will be met. Actual results may vary
significantly from those anticipated due to many factors, including oil and
gas prices, operating hazards, drilling risks, environmental risks and
uncertainties in interpreting engineering data relating to oil and gas
reservoirs, as well as other risks discussed in the Company's SEC filings.
- -------------------------------------------------------------------------------
For the latest information on the company's activities,
go to our home page on www.petsec.com
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13
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PETSEC ENERGY LTD
Dated: 7 May 1998 By /s/ ROBIN A CUMMING
------------------------
Robin A Cumming
Chief Financial Officer