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Pursuant to the June 7, 2012 and July 26, 2012 share purchase agreements for a combined 100% operated interest in the South Alamein PSC in Egypt, the Company has a commitment to drill one well (all financial commitments have been met) prior to the termination of the final two-year extension period, which expires on April 5, 2014.
In the normal course of its operations, the Company may be subject to litigations and claims. Although it is not possible to estimate the extent of potential costs, if any, management believes that the ultimate resolution of such contingencies would not have a material adverse impact on the results of operations, financial position or liquidity of the Company.
The Company is not aware of any material provisions or other contingent liabilities as at December 31, 2012.
OFF BALANCE SHEET ARRANGEMENTS
The Company has certain lease arrangements, all of which are reflected in the Commitments and Contingencies table, which were entered into in the normal course of operations. All leases have been treated as operating leases whereby the lease payments are included in operating expenses or G&A expenses depending on the nature of the lease. No asset or liability value has been assigned to these leases in the balance sheet as of December 31, 2012.
Consolidated Statements of Earnings and Comprehensive Income(Expressed in thousands of U.S. Dollars, except per share amounts) 2012 2011--------------------------------------------------------------------------------------------------------------------------------------------------------REVENUEOil sales, net of royalties $317,666 $247,754Derivative gain (loss) on commodity contracts (125) (807)Finance revenue 452 467---------------------------------------------------------------------------- 317,993 247,414----------------------------------------------------------------------------EXPENSES Production and operating 52,367 36,662 General and administrative 28,206 18,893 Foreign exchange (gain) loss (105) 310 Finance costs 13,901 4,983 Exploration 368 1,561 Depletion, depreciation and amortization 46,946 35,081 Unrealized (gain) loss on financial instruments 425 - Impairment of exploration and evaluation assets 76 12,147 Gain on acquisition - (13,187)---------------------------------------------------------------------------- 142,184 96,450----------------------------------------------------------------------------Earnings before income taxes 175,809 150,964----------------------------------------------------------------------------Income tax expense (recovery) - current 88,603 74,017 - deferred (528) (4,445)---------------------------------------------------------------------------- 88,075 69,572----------------------------------------------------------------------------NET EARNINGS AND COMPREHENSIVE INCOMEFOR THE YEAR $87,734 $81,392--------------------------------------------------------------------------------------------------------------------------------------------------------Earnings per share Basic $1.20 $1.12 Diluted $1.16 $1.09--------------------------------------------------------------------------------------------------------------------------------------------------------Consolidated Balance Sheets(Expressed in thousands of U.S. Dollars) As at As at December 31, December 31, 2012 2011--------------------------------------------------------------------------------------------------------------------------------------------------------ASSETSCurrent Cash and cash equivalents $82,974 $43,884 Accounts receivable 221,017 162,225 Derivative commodity contracts - 125 Prepaids and other 6,813 7,441---------------------------------------------------------------------------- 310,804 213,675Non-Current Restricted cash 782 2,226 Intangible exploration and evaluation assets 48,414 17,453 Property and equipment Petroleum properties 280,895 280,524 Other assets 4,350 3,748 Goodwill 8,180 8,180---------------------------------------------------------------------------- $653,425 $525,806--------------------------------------------------------------------------------------------------------------------------------------------------------LIABILITIESCurrent Accounts payable and accrued liabilities $48,587 $73,692---------------------------------------------------------------------------- 48,587 73,692Non-Current Long-term debt 16,885 57,609 Convertible debentures 98,742 - Deferred taxes 52,363 52,891 Other long-term liabilities 988 1,122---------------------------------------------------------------------------- 217,565 185,314----------------------------------------------------------------------------SHAREHOLDERS'EQUITY Share capital 158,721 154,263 Contributed surplus 11,714 8,538 Retained earnings 265,425 177,691---------------------------------------------------------------------------- 435,860 340,492---------------------------------------------------------------------------- $653,425 $525,806--------------------------------------------------------------------------------------------------------------------------------------------------------Consolidated Statement of Changes in Shareholders'Equity(Expressed in thousands of U.S. Dollars) 2012 2011--------------------------------------------------------------------------------------------------------------------------------------------------------Share Capital Balance, beginning of year $154,263 $80,106 Stock options exercised 3,333 1,946 Share issuance - 75,594 Share issue costs - (4,011) Transfer from contributed surplus on exercise of options 1,125 628---------------------------------------------------------------------------- Balance, end of year $158,721 $154,263--------------------------------------------------------------------------------------------------------------------------------------------------------Contributed Surplus Balance, beginning of year $8,538 $5,785 Share-based compensation expense 4,301 3,381 Transfer to share capital on exercise of options (1,125) (628)---------------------------------------------------------------------------- Balance, end of year $11,714 $8,538--------------------------------------------------------------------------------------------------------------------------------------------------------Retained Earnings Balance, beginning of year $177,691 $96,299 Net earnings and total comprehensive income 87,734 81,392---------------------------------------------------------------------------- Balance, end of year $265,425 $177,691--------------------------------------------------------------------------------------------------------------------------------------------------------Consolidated Statements of Cash Flows(Expressed in thousands of U.S. Dollars) Year Ended Year Ended December 31, December 31, 2012 2011--------------------------------------------------------------------------------------------------------------------------------------------------------CASH FLOWS RELATED TO THE FOLLOWING ACTIVITIES:OPERATING Net earnings for the year $87,734 $81,392 Adjustments for: Depletion, depreciation and amortization 46,946 35,081 Deferred lease inducement 458 350 Impairment of exploration and evaluation costs 76 12,147 Stock-based compensation 4,502 3,062 Finance costs 13,901 4,983 Income tax expense 88,075 69,572 Gain on acquisition - (13,187) Unrealized (gain) loss on commodity contracts 125 177 Unrealized (gain) loss on financial instruments 425 - Unrealized (gain) loss on foreign currency translation (141) 416 Income taxes paid (88,603) (74,017) Changes in non-cash working capital (59,506) (56,346)----------------------------------------------------------------------------Net cash generated by (used in) operating activities 93,992 63,630----------------------------------------------------------------------------INVESTING Additions to intangible exploration and evaluation assets (5,384) (6,991) Additions to petroleum properties (45,386) (61,266) Additions to other assets (881) (1,861) Business acquisitions (27,259) (73,836) Changes in restricted cash 1,445 1,161 Changes in non-cash working capital (25,311) 24,690----------------------------------------------------------------------------Net cash generated by (used in) investing activities (102,776) (118,103)----------------------------------------------------------------------------FINANCING Issue of common shares for cash 3,333 77,540 Issue costs for common shares - (4,011) Financing costs (440) - Interest paid (6,737) (3,550) Issue of convertible debentures 97,851 - Issue costs for convertible debentures (4,630) - Repayments of long-term debt (41,550) (30,000) Increase (decrease) in other long-term liabilities (592) 772 Changes in non-cash working capital - 139----------------------------------------------------------------------------Net cash generated by (used in) financing activities 47,235 40,890----------------------------------------------------------------------------Currency translation differences relating to cash and cash equivalents 639 (315)----------------------------------------------------------------------------NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 39,090 (13,898)CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 43,884 57,782----------------------------------------------------------------------------CASH AND CASH EQUIVALENTS, END OF YEAR $82,974 $43,884--------------------------------------------------------------------------------------------------------------------------------------------------------
