After Reporting Decreased Revenue and Low Profits in 2016, Pacific Exploration Eyes Post-Restructuring Stabilization
Last year was full of challenges and change for Canada’s Pacific Exploration & Production Corp. But after losing its main operations in Colombia’s Rubiales Field and undergoing a massive restructuring, it plans to narrow its geographic focus and reduce its organizational scale in 2017 as it moves into a new era.
Pacific Exploration is hoping to turn around the poor results from 2016, which saw its revenue decrease to $1.4 billion USD from $2.8 billion in 2015. It’s operating profit (EBITDA) fell to just $445 million USD lsat year — and a sparse $44 million USD in the fourth quarter — from $1.2 billion USD in 2015 and (and $235 million USD in the fourth quarter of 2015).
Turning this around will prove challenging, but Gabriel de Alba, chairman of the Pacific’s board of directors, expressed optimism while announcing the company’s 2016 results. He highlighted a “plan focused on capital discipline and value maximization” and believes that some “positive momentum” already seen in early 2017 can be built upon. With this and “a targeted cost reduction program,” De Alba said that “we believe that we can continue to expand on this positive performance.”
To achieve its 2017 net production goal of between 80,000 to 85,000 barrels of oil equivalent per day, Pacific Exploration expects to invest between $325 million USD to $375 million USD on exploration and development this year. The company said yesterday that production is already “increasing faster than we expected in the first two months of 2017” and that the first quarter average is likely to fall between 72,000 to 75,000 barrels per day.
Its 2016 net production was 103,532 barrels per day, more than a 50,000-barrel drop from its 154,472 barrel per day average in 2015. The fall was greatest in the fourth quarter, when the company only produced 69,432 barrels per day.
This drop was mainly a result of Pacific returning full control of the Rubiales and Piriri fields to Colombia’s state-controlled Ecopetrol on June 30. The firm says that a 16% decrease in production from the Quifa SW field in Meta, Colombia, also hurt the total.
“While 2016 results were primarily impacted by the expiration of the Rubiales and Piriri fields mid-year and lower drilling activity as a result of reduced capital expenditures during the company’s significant and successful restructuring process, I am very pleased with the amount of progress made on our plan to reduce costs, rationalize our portfolio and allow for a dedicated focus on high return opportunities on our core E&P assets in Colombia and Peru,” said Barry Larson, chief executive officer of Pacific Exploration. “We have a significant opportunity to create future growth and with capital discipline and operational rigor, we will take every step to create long-term value for our shareholders.”