ANNUAL REPORT 2011 - Connacher Oil and Gas

More documents

Recommendations

Info

AR 2011 PG 60 5. Trade and ACCRUED RECEIVABLES As at December 31, 2011 December 31, 2010 January 1, 2010 (Canadian dollar in thousands) Trade receivables $ 16,257 $ 16,904 $ 14,295 Accrued revenue 45,848 39,942 16,358 Other receivables 894 527 12,385 Due from associate – 46 29 $ 62,999 $ 57,419 $ 43,067 6. INVENTORIES As at December 31, 2011 December 31, 2010 January 1, 2010 (Canadian dollar in thousands) Diluted bitumen and diluents $ 9,201 $ 4,106 $ - Finished products 31,536 38,056 18,185 Input materials: Crude oil, feedstocks and unfinished products 9,891 8,327 13,456 Chemicals and supplies 9,518 6,655 5,230 $ 60,146 $ 57,144 $ 36,871 The cost of inventories recognized as an expense during 2011 was $719.4 million (2010: $510.2 million). As a result of improved commodity prices, the company reversed the previous write–down totaling $1.4 million in 2010. These reversals are included in “blending and costs of products sold”. There were no material write–downs or reversal of write–downs in 2011. 7. OTHER Assets As at December 31, 2011 December 31, 2010 January 1, 2010 (Canadian dollar in thousands) Prepayments and others $ 11,899 $ 5,585 $ 4,080 Deposits 321 10,948 10,355 Unamortized transaction costs relating to the Facility 1,153 939 1,440 Income taxes refundable – 796 2,607 Share purchase warrants (note 8.2) – – 2,711 Total 13,373 18,268 21,193 Less: non–current portion (676) (615) (3,419) Current portion $ 12,697 $ 17,653 $ 17,774 8. Assets, LIABILITIES and Equity Classified as HELD For Sale The major classes of assets and liabilities classified as held for sale are as follows: As at December 31 Notes 2011 2010 (Canadian dollar in thousands) Assets classified as held for sale Property, plant and equipment 8.1 $ – $ 54,348 Exploration and evaluation assets 8.1 – 5,652 Investment in associate 8.2 – 27,683 Investment in share purchase warrants 8.2 – 474 Assets classified as held for sale $ – $ 88,157 Liabilities associated with assets classified as held for sale Decommissioning liabilities 8.1 $ – $ 10,907 Equity associated with assets classified as held for sale Accumulated other comprehensive loss 8.2 $ – $ 4,492
AR 2011 PG 61 8.1 Petroleum and natural gas properties As a part of the company’s program to rationalize its conventional petroleum and natural gas properties, on November 15, 2010, the company’s management committed to a plan to sell its conventional petroleum and natural gas properties located in Northern Alberta and Southwest Saskatchewan. Accordingly, the carrying amount of the assets and liabilities relating to these properties was classified as held for sale on December 31, 2010. The sale of these properties was completed in 2011 for the net proceeds of $78.3 million resulting in a gain of $28.4 million. Assets classified as held for sale are not depleted, depreciated or amortized. 8.2 Investment in associate The following table shows the changes in the balance of investment in associate: For the year ended December 31 2011 2010 (Canadian dollar in thousands) Balance, beginning of year $ – $ 48,240 Effects of transactions recorded in net earnings (loss) Share of loss – (1,999) Dilution loss – (3,832) Accumulated impairment – (9,763) – (15,594) Share of other comprehensive loss before tax – (4,963) Balance, end of year, classified as held for sale $ – $ 27,683 As at December 31, 2010, Connacher owned 26.9 million common shares, representing 18.5 percent, of Petrolifera Petroleum Limited’s (“Petrolifera”) issued and outstanding common shares and 6.8 million Petrolifera share purchase warrants. Petrolifera’s common shares and common share purchase warrants were listed on Toronto Stock Exchange. Petrolifera was engaged in petroleum and natural gas exploration, development and production facilities in South America. The investment in common shares was recorded as an investment in associate and the investment in share purchase warrants was recorded as the derivative financial asset held for trading and recorded at fair value. In April 2010, Petrolifera closed a public offering of 23,678,500 common shares at a price of $0.85 per common share for gross proceeds of $20.1 million (the “Offering”). Connacher did not subscribe for shares in the Offering and accordingly, Connacher’s equity interest in Petrolifera was reduced to 18.5 percent from 22 percent. The reduction in the ownership interest resulted in a dilution loss of $3.8 million in the year ended December 31, 2010. In addition, $422,000 was transferred from other comprehensive loss to net earnings (loss) representing share of other comprehensive loss of Petrolifera. The assets relating to the associate were classified as an asset held for sale on December 31, 2010, following management’s commitment to support the sale of all of the issued and outstanding common shares of Petrolifera to Gran Tierra Energy Inc. (“Gran Tierra Energy”). Gran Tierra Energy entered into a Plan of Arrangement (the “Arrangement”) with Petrolifera on January 17, 2011, pursuant to which Gran Tierra Energy acquired all of the issued and outstanding common shares and common share purchase warrants of Petrolifera. Equity accounting ceased on December 31, 2010 upon reclassification as an asset held for sale. An impairment loss of $9.8 million on the remeasurement of the investment in Petrolifera to the lower of its carrying amount and its fair value less costs to sell was recognized in 2010. Upon the completion of a share exchange under the Arrangement in March 2011, the company received 3.3 million common shares and 841,000 common share purchase warrants of Gran Tierra Energy (see note 21). Connacher de-recognized the investment in Petrolifera in March 2011 and recorded a loss of $6.8 million, including a $4.5 million transfer from other comprehensive income (loss). In consideration for the assistance provided by the company in 2005 to Petrolifera in securing two Peruvian licenses for exploratory lands and for the provision of financial guarantees respecting Petrolifera’s annual work commitments on the two licensed blocks, Connacher was awarded a 10 percent carried working interest (“CWI”) through the drilling of the first well on each block. Petrolifera had the right of first purchase of this CWI should Connacher elect to sell it at some future date. The CWI is convertible at Connacher’s election into a two percent gross overriding royalty on each license, after the drilling of the first well on each block. In 2011, Connacher was fully released from the provision of financial guarantees. Also, in 2011, Petrolifera relinquished its interest in one of the two Peruvian licenses. The company continues to own the CWI relating to the remaining license and related rights after the completion of the transaction under the Arrangement.
Page 1 and 2:
ANNUAL REPORT 2011 WELL POSITIONED
Page 3 and 4:
AR 2011 PG 1 02 HIGHLIGHTS 05 LETTE
Page 5 and 6:
AR 2011 PG 3 Years ended December 3
Page 7 and 8:
AR 2011 PG 5 Volatility in the oil
Page 9 and 10:
AR 2011 PG 7 “Thanks to our liqui
Page 11 and 12: AR 2011 PG 9 Review of Operations I
Page 13 and 14: AR 2011 PG 11 proposals helped to p
Page 15 and 16: AR 2011 PG 13 reservoir description
Page 17 and 18: AR 2011 PG 15 Connacher Oil and Gas
Page 19 and 20: AR 2011 PG 17 the movement of wildl
Page 21 and 22: AR 2011 PG 19 MANAGEMENT’S DISCUS
Page 23 and 24: AR 2011 PG 21 reduced interest rate
Page 25 and 26: AR 2011 PG 23 Connacher’s bitumen
Page 27 and 28: AR 2011 PG 25 OPERATING COSTS (1) T
Page 29 and 30: AR 2011 PG 27 SALES PRODUCT MIX (%)
Page 31 and 32: AR 2011 PG 29 Depletion expense is
Page 33 and 34: AR 2011 PG 31 NEW NOTES We issued U
Page 35 and 36: AR 2011 PG 33 Compensation of key m
Page 37 and 38: AR 2011 PG 35 ACCOUNTING POLICIES A
Page 39 and 40: AR 2011 PG 37 The company classifie
Page 41 and 42: AR 2011 PG 39 Management is respons
Page 43 and 44: AR 2011 PG 41 The production outloo
Page 45 and 46: AR 2011 PG 43 QUARTERLY HIGHLIGHTS
Page 47 and 48: AR 2011 PG 45 Independent Auditor
Page 49 and 50: AR 2011 PG 47 Consolidated Statemen
Page 51 and 52: AR 2011 PG 49 Consolidated Statemen
Page 53 and 54: AR 2011 PG 51 Impairment of assets
Page 55 and 56: AR 2011 PG 53 Goodwill is allocated
Page 57 and 58: AR 2011 PG 55 3.11 Leases Agreement
Page 59 and 60: AR 2011 PG 57 IAS 1 Presentation of
Page 61: AR 2011 PG 59 Reconciliation of seg
Page 65 and 66: AR 2011 PG 63 10. PROPERTY, Plant a
Page 67 and 68: AR 2011 PG 65 Accounts receivable a
Page 69 and 70: AR 2011 PG 67 December 31, 2010 - C
Page 71 and 72: AR 2011 PG 69 13.3 Refinancing of l
Page 73 and 74: AR 2011 PG 71 Changes in present va
Page 75 and 76: AR 2011 PG 73 The provision for inc
Page 77 and 78: AR 2011 PG 75 The following table s
Page 79 and 80: AR 2011 PG 77 19. FINANCE Charges F
Page 81 and 82: AR 2011 PG 79 Compensation of key m
Page 83 and 84: AR 2011 PG 81 Estimates Hindsight w
Page 85 and 86: AR 2011 PG 83 Reconciliation of Con
Page 87 and 88: AR 2011 PG 85 27.3 Asset and Liabil
Page 89 and 90: AR 2011 PG 87 The following table s
Page 91 and 92: CORPORATE INFORMATION Board of Dire
show all

ANNUAL REPORT 2011 - Connacher Oil and Gas

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?