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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 DECEMBER 1998
------------------------------
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 ___
[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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PETSEC ENERGY LTD
(A.C.N. 000 602 700)
25 February 1999
PETSEC ENERGY REPORTS 1998 RESULTS AND YEAR END RESERVES
Sydney, Australia - Petsec Energy Ltd (ASX: PSA and NYSE: PSJ), today
announced its results for the three months and year ended December 31, 1998.
FULL YEAR 1998 RESULTS
Under Australian accounting standards, the Company reported a loss from its oil
and gas operations (before tax and abnormal items) of A$9.2 million, compared
to a profit in 1997 of A$45.9 million. Expensed as abnormal items are A$42.7
million for dry hole costs and a non-cash charge against the carrying value of
the Company's oil and gas assets of A$126.5 million. The non-cash charge arises
because of current low commodity prices. The operating loss after tax and
abnormal items was A$151.9 million, compared to a profit of A$21.0 million in
1997.
Under U.S. generally accepted accounting principles ("US GAAP"), the Company
reported a net loss of US$96.5 million, or US$4.48 per American Depositary
Receipt ("ADR"). This is compared to a profit in 1997 of US$10.3 million, or
US$0.48 per ADR. The 1998 result includes an expense of US$27.5 million for dry
hole costs and a non-cash charge of US$72.9 million reflecting the impact of
lower oil and gas prices on the carrying value of the Company's oil and gas
properties.
Net sales in 1998 were US$92.0 million, down from US$125.1 million in 1997 due
to lower commodity prices (-14%) and production (-15%). Net production for the
year was 39.5 Bcfe.
Cash flow from operating activities in 1998 was US$55.1 million or US$2.56 per
ADR. In 1997 cash flow from operating activities totalled US$90.8 million
or US$4.22 per ADR.
A disappointing drilling program in the year compounded by low oil and gas
prices caused the Company's financial gearing to reach unacceptable levels. In
December the Company agreed to sell to Apache Corporation, 50% of certain of
its assets. The US$68.3 million sale was completed on February 1, 1999,
reducing bank debt to US$9 million and total debt to US$109 million. The US$100
million of interest only subordinated notes are due for repayment in 2007.
FOURTH QUARTER 1998 RESULTS
Under Australian accounting standards, for the three months ended December 31,
1998, Petsec reported a loss from its oil and gas operations (before tax and
abnormal items) of A$14.5 million (1997: profit of A$17.2 million). After an
abnormal charge against the carrying value of the Company's oil and gas assets
of A$111.3 million the Company reported an operating loss after tax and
abnormal items of A$118.1 million, (1997: profit of A$6.6 million).
Under US GAAP, for the three month period ended December 31, 1998, the Company
reported a net loss of US$72.7 million, or US$3.38 per ADR, on revenue of
US$19.8 million. This is compared to net income in the December quarter of 1997
of US$3.2 million, or US$0.15 per ADR, on revenue of US$33.2 million. The
fourth quarter result was impacted by a non-cash impairment expense of US$63.7
million arising from low oil and gas prices.
YEAR END 1998 RESERVES
Net proven reserves at December 31, 1998 were 58.3 billion cubic feet of gas
and 5.3 million barrels of oil, a total of 90.3 billion cubic feet of gas
equivalent. Net proven and probable reserves were 93.7 Bcf of gas and 8.4
million barrels of oil, a total of 143.9 billion cubic feet of gas equivalent.
The SEC pre-tax present value (discounted at 10% p.a.) of the proven reserves,
based on prices of US$2.04 per Mcf for gas and US$11.98 per barrel for oil, was
US$67.1 million. The SEC pre-tax present value of proven and probable reserves
was US$124.5 million.
The reserves, determined by Ryder Scott Company, are net of the Apache sale
that was effective on January 1, 1999. Proven reserves sold to Apache were 50
net billion cubic feet of gas equivalent for a total price of US$68.3 million.
MANAGEMENT MOVES TO THE USA
In recognition of the fact that the Company's operating assets are located in
the US, it has been decided to concentrate senior management in the Company's
operating headquarters in Lafayette, Louisiana, USA.
Accordingly, a search for a US based Chief Executive Officer has begun. It is
hoped that an appointment will be made prior to the Company's Annual General
Meeting in late May. The present Sydney based CEO, Mr Terry Fern, will move to
the position of Chairman of the Board as soon as the new CEO has been engaged.
Mr Adrian Fletcher, the Company's Chairman for 18 years, has announced his
intention to retire. The Board expresses its thanks to Mr Fletcher for his
significant contribution to the Company over that time.
Mr Doug Battersby, Sydney based technical director for 9 years, has retired
following the Apache sale. The Board expresses its thanks to him for his
valuable service over this time.
OUTLOOK FOR 1999
The current low oil and gas prices are expected to persist through the year.
Petsec has, however, significantly reduced its financial gearing and has a
large part of this year's expected production of 15 Bcfe, hedged. Approximately
75% of its gas and 35% of oil production is hedged at US$2.45 per Mcf and
US$19.70 per Bbl respectively.
The Company owns 44 leases in the Gulf shelf, of which 23 leases are held in
50% joint venture with Apache. The Company is currently negotiating to farm out
a number of the 21 leases in which it owns a 100% interest. A significant
lowering of service costs has much improved the operating economics of the
Gulf. The Company expects to participate in 6-8 exploration wells this year.
Petsec Energy is an independent oil and gas exploration and production company
with its operations in the offshore Gulf of Mexico (based in Lafayette,
Louisiana) and its head office in Sydney, Australia.
For further information please contact:
In Australia: In USA:
Terry Fern, Managing Director Ross Keogh, Chief Financial Officer
Petsec Energy Ltd Petsec Energy Ltd
(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.
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Petsec Energy Ltd
Results for the fourth quarter ended 31 December 1998
(A$, Australian accounting standards, unaudited)
<TABLE>
<CAPTION>
Three months ended Change Twelve months ended Change
31 Dec 98 31 Dec 97 % 31 Dec 98 31 Dec 97 %
(in thousands) (in thousands)
------------------------- ------ ------------------------ ------
<S> <C> <C> <C> <C> <C> <C>
Oil and gas sales (before deducting royalties) A$ 39,543 61,602 -36% 178,526 212,066 -16%
Profit and loss account
Profit before interest and abnormal items A$ (10,015) 18,890 -153% 3,638 52,075 -93%
Net interest expense (4,470) (1,696) (12,809) (6,179)
----------------------- ------------------------
Operating profit (loss) before abnormal items (14,485) 17,194 (9,171) 45,896
Abnormal items - impairments expense (111,288) - (126,465) -
- dry hole costs (772) (7,202) (42,727) (14,271)
----------------------- ------------------------
Operating profit (loss) before tax (126,545) 9,992 (178,363) 31,625
Tax benefit (expense) 8,402 (3,403) 26,466 (10,596)
----------------------- ------------------------
Operating profit (loss) after tax (118,143) 6,589 (151,897) 21,029
----------------------- ------------------------
Basic and diluted earnings per share A$ (1.10) 0.06 (1.41) 0.20
Number of shares outstanding (period end, thousands) 107,601 107,601 107,601 107,601
Number of shares outstanding (average, thousands) 107,601 107,601 107,601 107,320
Average US$ / A$ exchange rates 0.6223 0.6780 0.6302 0.7325
</TABLE>
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Petsec Energy Ltd
Results for the fourth quarter ended December 31, 1998
(US$, "successful efforts" accounting under US generally
accepted accounting principles, unaudited)
<TABLE>
<CAPTION>
Three months ended Change Twelve months ended Change
December 31 December 31
1998 1997 % 1998 1997 %
(in thousands) (in thousands)
------------------- ------ -------------------- ------
<S> <C> <C> <C> <C> <C> <C>
Statement of operations
Oil and gas sales (net of royalties) US$ 19,846 33,169 -40% 92,017 125,139 -26%
Lease operating expenses (4,033) (3,861) (14,989) (11,527)
General, administrative and other expenses (3,813) (2,594) (10,777) (9,001)
Stock compensation expense (141) (195) (937) (1,461)
------------------- --------------------
EBITDAX (income before interest, DD&A, exploration,
impairments, dry hole costs) 11,860 26,519 -55% 65,315 103,150 -37%
Depletion, depreciation & amortisation (DD&A) (16,018) (15,351) (57,672) (63,903)
------------------- --------------------
Income from operations (before exploration, impairments
& dry hole costs) (4,159) 11,168 7,642 39,247
Exploration expenditures (912) (2,115) (7,427) (7,328)
Impairments expense (63,715) - (72,916) -
Dry hole costs (480) (2,843) (27,503) (10,454)
------------------- --------------------
Income (loss) from operations (69,265) 6,210 (100,204) 21,465
Profit on sale of assets and other income 50 110 (17) 163
Interest expense (net of interest income) (2,738) (1,142) (7,830) (4,337)
Equity in income (loss) of affiliates - 51 - (1,595)
------------------- --------------------
Income (loss) before tax (71,954) 5,229 (108,052) 15,696
Income tax benefit (expense) (714) (2,005) 11,547 (5,416)
------------------- --------------------
Net income (loss) US$ (72,668) 3,224 (96,505) 10,280
------------------- --------------------
Cash flow data
Net cash provided by operating activities US$ 3,569 22,010 -84% 55,056 90,806 -39%
Net cash used in investing activities US$ (11,729) (35,474) (134,750) (145,790)
Net cash provided by financing activities US$ 8,000 (2) 74,011 61,512
Balance sheet data (at end of period)
Total assets US$ 199,213 247,962 199,213 247,962
Cash and deposits US$ 13,488 19,171 13,488 19,171
Borrowings US$ 173,656 99,630 173,656 99,630
Shareholders' equity US$ 4,354 101,155 4,354 101,155
Basic and diluted earnings per share
Net income per ordinary share US$ (0.68) 0.03 (0.90) 0.10
Net income per ADR US$ (3.38) 0.15 (4.48) 0.48
Average number of shares outstanding (thousands) 107,601 107,601 107,601 107,320
</TABLE>
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Petsec Energy Ltd
Results for the fourth quarter ended December 31, 1998 (Continued)
(US$, "successful efforts" accounting under US generally
accepted accounting principles, unaudited)
Additional data
<TABLE>
<CAPTION>
Three months ended Change Twelve months ended Change
December 31 December 31
1998 1997 % 1998 1997 %
(in thousands) (in thousands)
--------------------- ------ ------------------- ------
<S> <C> <C> <C> <C> <C> <C>
Net production
Oil (MBbls) 584 754 -23% 2,353 3,078 -24%
Gas (MMcf) 5,334 7,722 -31% 25,390 27,940 -9%
Total (MMcfe) 8,841 12,246 -28% 39,511 46,408 -15%
Net sales
Oil (US$ in thousands) US$ 9,338 14,600 37,846 60,369
Gas (US$ in thousands) 10,508 18,569 54,171 64,770
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Total (US$ in thousands) 19,846 33,169 -40% 92,017 125,139 -26%
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Average sales price
Oil (US$ per Bbl) US$ 15.99 19.36 -17% 16.08 19.61 -18%
Gas (US$ per Mcf) 1.97 2.40 -18% 2.13 2.32 -8%
Total (US$ per Mcfe) 2.24 2.71 -17% 2.33 2.70 -14%
Average costs (US$ per Mcfe)
Lease operating expenses US$ 0.46 0.32 0.38 0.25
Depletion, depreciation and amortisation 1.80 1.25 1.46 1.38
General, administrative & other expenses 0.43 0.21 0.27 0.19
Stock compensation expense 0.02 0.02 0.02 0.03
--------------------- -------------------
Total (before exploration, impairments
and dry hole costs) 2.72 1.80 +51% 2.14 1.85 +15%
--------------------- -------------------
</TABLE>
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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 25 February, 1999 By /s/ ROSS A. KEOGH
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Ross A. Keogh
Chief Financial Officer
