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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 1d-16
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE MONTH OF AUGUST 1998
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PETSEC ENERGY LTD
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
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[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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The following is the text of a release to Australian Stock Exchange regarding
the Company's half year / second quarter results ended 30 June 1998:
PETSEC ENERGY LTD
(A.C.N. 000 602 700)
14 August 1998
PETSEC ENERGY ANNOUNCES ITS HALF YEAR / JUNE QUARTER RESULTS
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Sydney, Australia - Petsec Energy Ltd (ASX: PSA; NYSE: PSJ), 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 half year and
three months ended 30 June 1998.
RESULTS
Under Australian accounting standards, for the half-year to 30 June 1998 Petsec
recorded sales of A$97.2 million, net operating cash flows of A$56.3 million and
a profit after tax before abnormal items of A$3.1 million.
Abnormal losses of A$34.2 million after tax (dry holes at South Marsh Island 189
and High Island 308 and an impairment charge at the West Cameron 480 #2 well)
reduced the overall result to a net loss for the half-year of A$31.1 million.
Under US generally accepted accounting principles, for the half year to 30 June
1998 Petsec recorded net sales of US$51.6 million and a cash flow from operating
activities of US$36.5 million. The Company adopts the "successful efforts"
method of accounting, which expenses the costs of exploratory dry holes as and
when incurred. During the half year the Company incurred US$21.8 million (after
tax) of dry hole and impairment charges. There were two dry holes (the High
Island 308 #1 well and the South Marsh Island 189 #1 well) and an impairment
charge at the West Cameron 480 #2 well. These reduced the net income before dry
hole and impairment costs of US$0.6 million to a net loss for the six months of
US$21.2 million. Basic and diluted earnings per ADR were a loss of US$0.99
(1997: a net income per ADR of US$0.40).
In the June quarter Petsec recorded net sales of US$23.6 million and generated
US$13.1 million of cash flow from operating activities. During the quarter the
Company incurred US$10.9 million (after tax) relating to two dry holes (the High
Island 308 #1 well and the balance of the South Marsh Island 189 #1 well costs),
resulting in a net loss after tax of US$12.4 million. Basic and diluted earnings
per ADR were a loss of US$0.57 (1997: a net income per ADR of US$0.09).
Net sales were 17% lower than the comparable quarter in 1997 due to a 10%
reduction in production and a 7% fall in realised prices (resulting from the
sharp fall in oil prices). Realised prices were assisted by the Company's
hedging. At 30 June 1998 the Company had commodity swap contracts for the
remainder of 1998 for 552,000 barrels of oil at an average
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NYMEX price of US$20.10 per barrel and for 8.3 million MMbtu of natural gas at
an average NYMEX price of US$2.19 per MMbtu.
A summary of the unaudited financial results for the three months and for the
half year ended 30 June 1998 is attached.
PRODUCTION
Production in the June quarter was adversely affected by the mechanical failure
of the Ship Shoal A-5ST well and by the high line pressures at the Main Pass
6/7/91 gas field, which restricted gas production rates.
Rectification of the production problems in the June quarter is being addressed.
Remedial work is currently being undertaken on the Ship Shoal 193 A-5ST oil well
and it is planned to restore production from this well within a month. Larger
compressors are being installed at Main Pass 7 to increase output from the Main
Pass 6/7/91 gas field by early in the fourth quarter 1998.
Oil production rates increased late in July, with the Ship Shoal 193 A-6ST well
coming into production. As a result, overall oil and gas production in the
September quarter is expected to be higher than that in the June quarter.
EXPLORATION
During the six months to 30 June 1998 the Company drilled or side-tracked seven
wells, of which three were oil and gas discoveries, two are suspended pending
further work for future production and two were plugged and abandoned.
Petsec was awarded seven new lease blocks as a result of its successful bidding
at the March 1998 Louisiana Gulf Coast lease sale. Five of these blocks are
strategically located adjacent to the Company's producing leases at Main Pass
and Ship Shoal.
Exploration in the balance of 1998 will focus on extending the Ship Shoal 193
A-6 discovery. After completing the remedial work on the Ship Shoal 193 A-5ST
well, the Company intends to spud the Ship Shoal 193 #4 exploration well. The
#4 well will target the lower E-series sands already encountered elsewhere on
Ship Shoal 193 and which are being produced from four other wells on the lease.
The #4 well will also test deeper sands (encountered when the A-6ST was
deepened) within a large fault enclosure.
Petsec also plans drilling wells on the newly acquired Main Pass leases adjacent
to its producing properties at Main Pass 6 / 7 / 91 and is in the process of
permitting these wells.
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STRATEGIC REVIEW
The Company reports that the program to explore its strategic alternatives
(previously announced on 22 June 1998) is proceeding.
For further information please contact:
In Australia: In USA:
Robin Cumming, Chief Financial Officer Ross Keogh, VP Finance and
Petsec Energy Ltd Administration,
(61) 2 9247 4605 (phone) Petsec Energy Inc
(61) 2 9251 2410 (fax) (318) 989 1942 (phone)
Level 13, Gold Fields House (318) 989 7271 (fax)
1 Alfred Street, Sydney, NSW 2000 143 Ridgeway Drive, Suite 113
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.
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PETSEC ENERGY LTD
RESULTS FOR THE HALF YEAR / SECOND QUARTER ENDED 30 JUNE 1998
(A$, AUSTRALIAN ACCOUNTING STANDARDS, UNAUDITED)
Three months ended Change Six months ended Change
30 Jun 98 30 Jun 97 % 30 Jun 98 30 Jun 97 %
(in thousands) (in thousands)
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OIL AND GAS SALES (BEFORE DEDUCTING ROYALTIES) A$ 46,030 45,567 +1% 97,175 95,460 +2%
PROFIT AND LOSS ACCOUNT
Profit before interest and abnormal items A$ 1,983 7,753 -74% 10,132 22,572 -55%
Net interest expense (2,478) (1,253) (4,369) (1,854)
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Operating profit (loss) before abnormal items (495) 6,500 -108% 5,763 20,718 -72%
Abnormal items (dry hole costs and impairment) (24,875) - (53,468) -
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Operating profit (loss) before tax (25,370) 6,500 (47,705) 20,718
Tax benefit (expense) 8,584 (2,230) 16,607 (6,759)
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OPERATING PROFIT (LOSS) AFTER TAX (16,786) 4,270 (31,098) 13,959
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BASIC AND DILUTED EARNINGS PER SHARE A$ (0.16) 0.04 (0.29) 0.13
NUMBER OF SHARES OUTSTANDING (PERIOD END, THOUSANDS) 107,601 107,101 107,601 107,101
NUMBER OF SHARES OUTSTANDING (AVERAGE, THOUSANDS) 107,601 107,101 107,601 107,054
AVERAGE US$ / A$ EXCHANGE RATES 0.6275 0.7648 -18% 0.6491 0.7695 -16%
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PETSEC ENERGY LTD
RESULTS FOR THE SECOND QUARTER ENDED 30 JUNE 1998
(US$, "SUCCESSFUL EFFORTS" ACCOUNTING UNDER US GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES, UNAUDITED)
Three months ended Change Six months ended Change
30 Jun 98 30 Jun 97 % 30 Jun 98 30 Jun 97 %
(in thousands) (in thousands)
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STATEMENT OF OPERATIONS
Oil and gas sales (net of royalties) US$ 23,596 28,381 -17% 51,582 59,302 -13%
Lease operating expenses (3,578) (2,471) (7,814) (4,763)
General, administrative and other expenses (2,403) (2,261) (4,600) (4,054)
Stock compensation expense (320) (413) (629) (822)
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EBITDAX (income before interest, DD&A, exploration, 17,295 23,236 -26% 38,539 49,663 -22%
dry hole costs)
Depletion, depreciation & amortisation (DD&A) (13,843) (15,337) (28,945) (29,440)
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INCOME FROM OPERATIONS (before exploration & 3,452 7,899 9,594 20,223
dry hole costs)
Exploration expenditures (3,046) (1,136) (4,870) (2,429)
Dry hole and impairment expense (17,105) (2,259) (34,056) (2,259)
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INCOME (LOSS) FROM OPERATIONS (16,699) 4,504 (29,332) 15,535
Profit on sale of assets and other income (48) 28 (79) 28
Interest expense (net of interest income) (1,511) (834) (2,717) (1,299)
Equity in income (loss) of affiliates - (1,356) - (1,674)
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Income before tax (18,258) 2,342 (32,128) 12,590
Income tax benefit (expense) 5,886 (342) 10,890 (4,007)
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NET INCOME (LOSS) US$ (12,372) 2,000 (21,238) 8,583
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CASH FLOW DATA
Net cash provided by operating activities US$ 13,135 22,526 -42% 36,485 46,655 -22%
Net cash used in investing activities US$ (43,476) (36,490) (75,837) (70,478)
Net cash provided by financing activities US$ 31,000 51,694 35,000 60,147
BALANCE SHEET DATA (AT END OF PERIOD)
Total assets US$ 266,195 242,891 266,195 242,891
Cash and deposits US$ 14,819 48,852 14,819 48,852
Long-term debt US$ 134,642 99,618 134,642 99,618
Shareholders' equity US$ 79,325 101,212 79,325 101,212
BASIC AND DILUTED EARNINGS PER SHARE
Net income per ordinary share US$ (0.11) 0.02 (0.20) 0.08
Net income per ADR US$ (0.57) 0.09 (0.99) 0.40
Average number of shares outstanding (thousands) 107,601 107,101 107,601 107,054
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ADDITIONAL DATA
NET PRODUCTION
Oil (MBbls) 537 802 -33% 1,220 1,549 -21%
Gas (MMcf) 6,672 6,216 +7% 14,254 12,084 +18%
Total (MMcfe) 9,894 11,028 -10% 21,574 21,378 +1%
NET SALES
Oil (US$ in thousands) US$ 8,964 15,319 19,917 31,310
Gas (US$ in thousands) 14,632 13,062 31,665 27,992
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Total (US$ in thousands) 23,596 28,381 -17% 51,582 59,302 -13%
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AVERAGE SALES PRICE
Oil (US$ per Bbl) US$ 16.69 19.10 -13% 16.33 20.21 -19%
Gas (US$ per Mcf) 2.19 2.10 +4% 2.22 2.32 -4%
Total (US$ per Mcfe) 2.38 2.57 -7% 2.39 2.77 -14%
AVERAGE COSTS (US$ per Mcfe)
Lease operating expenses US$ 0.36 0.22 0.36 0.22
Depletion, depreciation and amortisation 1.40 1.39 1.34 1.38
General, administrative & other expenses 0.24 0.21 0.21 0.19
Stock compensation expense 0.03 0.04 0.03 0.04
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Total (before exploration costs) 2.04 1.86 +10% 1.95 1.83 +6%
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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
Date 14 August, 1998 By /s/ ROBIN A CUMMING
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Robin A Cumming
Chief Financial Officer