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Message: Candax Reports First Quarter 2009 Results

Candax Reports First Quarter 2009 Results

posted on May 15, 2009 09:52AM
May 15, 2009
Candax Reports First Quarter 2009 Results
TORONTO, ONTARIO--(Marketwire - May 15, 2009) -


Candax Energy Inc. ("Candax") (TSX:CAX) reports revenues of $8.4 million for the first quarter 2009 compared to $2.5 million for the same period in 2008. Based on these increased revenues, the Company generated positive cash flow from its operating activities of $5.1 million in the first quarter, compared to a cash outflow of $1.3 million for the same period in 2008. The Company recorded a net loss of $9.9 million ($0.08 per common share) for the three months ended March 31, 2009, compared to a net loss of $2.3 million ($0.05 per common share) for the same period prior year, primarily as a result of higher DD&A and Interest charges.

Candax's net average production for the first quarter was 1,651 boepd, compared to 454 boepd in the same period for 2008. Production was comprised of 1,063 bopd and 3.5 mmcf/d compared to 454 bopd and nil mmcf/d in 2008. The increase is primarily attributable to El Bibane, which resumed production in mid-March 2008. Production from Ezzaouia in the first quarter was in line with 2008, with contributions from EZZ-17 and EZZ-18 offsetting natural declines from the remaining producing wells.

As at March 31, 2009, Candax had cash and cash equivalents of $11.7 million and had utilized US$47.4 million of its US$50.0 million credit facility. Capital expenditures in the first quarter were $1.5 million.

Candax's first quarter 2009 Interim Consolidated Financial Statements and Management's Discussion and Analysis may be viewed under the Candax profile at www.sedar.com.

Operational and Corporate Updates

Candax has received a report from the Tunisian tax authorities setting forth proposed adjustments to the Company's profits tax returns for 2005, 2006 and 2007. The total amount of the proposed adjustments for profits tax payments and interest is 10.2 million Tunisian Dinars (US$7.3 million). The Company has filed a rebuttal with the tax authorities, which are expected to issue a revised report in due course. The Company has made the appropriate accounting provisions relating to this matter in the financial statements, and has been advised that any final settlement on this matter is likely to include an agreement for a phased settlement over a number of years.

Candax's Q1 2009 results have been prepared on a going concern basis. The continued appropriateness of this basis of accounting is dependent upon the Company reaching agreement with its lending bank to achieve a rescheduling of the Company's debt repayment obligations, or the ability to secure additional financing through a combination of the issue of new equity and or debt instruments. There is a risk that the negotiations with the lending bank may not succeed and that additional financing may not be available on a timely basis or on acceptable terms. The Company's Board and Management are addressing this issue and expect that financing options will be available to enable the Company to continue to operate as a going concern.

The Company has previously given guidance for 2009 forecast average net oil production in the range of approximately 1,700 to 2,100 bopd and net sales of natural gas to SEEB of approximately 4.7 mmcf/d (2,400 to 2,900 boe/d). Updated full year guidance for 2009 is for average net oil production of approximately 1,600 bopd and net sales of natural gas to SEEB of approximately 4.2 mmcf/d (2,300 boe/d). The revisions reflect lower production from El Bibane, where production continues to be constrained by capacity limitations in the export line, which has prevented simultaneous production from the EBB-3 and EBB-4 wells. Current production is solely from EBB-3 at a gross rate of approximately 1,250 bopd. Candax's revised production guidance assumes a work-over of EBB-4 in the third quarter to reduce water production and to allow both production wells to produce simultaneously at a combined gross rate of 2,500 bopd. Current gross production at Ezzaouia of 1,350 bopd is forecast to increase to 2,200 bopd as a consequence of a planned multiple well sidetrack and work-over program in the second half of 2009. The work-over and sidetrack program has been delayed from the second quarter of this year due to rig availability issues.

The Madagascar government has approved a twelve month extension to the first phase of the exploration permit for Block 1101. The revised term will run until July 2010, within which time Candax and its partners have a commitment to drill an exploration well. Work on prospect generation from seismic data interpretation and analysis is ongoing following the completion of the 2D seismic data acquisition program in the last quarter of 2008.

Candax Energy Inc. is an international energy company with its head office in Toronto and offices in London, Tunis, and Madagascar. The Candax group is engaged in exploration and the production of oil and gas and power generation in Tunisia and holds an interest in an exploration permit in Madagascar.
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