1. consolidated balance sheet as of december 31, 2008
TRANSCRIPT
Annual Report 2008Staatsolie Maatschappij Suriname N.V.
State Oil Company of Suriname
Vision and Values
Values1. Excellence. We shall be strong result-oriented and strive for
continual improvement in everything we do. We shall meet orexceedtheproductqualitythatourclientsexpect.
2. Integrity.Weshallbehonestandtransparentinourdealingswithemployees,clients,suppliers,shareholdersandthecommunity inwhichwework.
3. Employee-focus.Weconsiderouremployeesthemostdistinctivefactortooursuccess.
4. Growth. We shall focus on continuous growth and maximizeshareholders’value.
5. Public spirit. As a responsible member of the community, weshallbaseourbusinessprinciplesonsustainabledevelopmentandregard for the environment. Moreover, we shall make a strongcontributiontotheadvancementofoursociety.
VisionThecorebusinessofStaatsolieisthedevelopmentofenergyresources.Activities include exploration, development, production and refining&marketingofhydrocarbonsandthegenerationofpower.Staatsoliemaypursueotherbusinessopportunities, if thesearealignedwith itsbusinessvision.Tothisendthefollowingvisionhasbeenformulated.
Staatsolie Vision 2020•Leading the Sustainable Development of Suriname's Energy
Industry.•MakingaStrongContributiontotheAdvancementofourSociety.•Becoming a Regional Player with a Global Identity in the Energy
Market.
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Contents
I. Shareholder,SupervisoryBoard,BoardofExecutiveDirectors Page andManagementasofDecember31,2008 4
II. LetteroftheManagingDirector 6
III. OperationalPerformance2008andWorkProgram2009 8 FinancialPerformance 8 CrudeProduction 8 ReservoirStudies 8 Exploration 10 Refinery 10 Marketing 10 ParadiseOilCompanyN.V. 11 StaatsoliePowerCompanySuriname 11 HumanResourceManagement(HRM) 11 Health,Safety,EnvironmentandQuality(HSEQ) 12 ManagementInformation,ProcurementandFinancing 12 CorporateImage&SocialResponsibility 14 InstitutionalActivities 14 ParticipationandAcquisitions 14 InternationalActivities 14 WorkProgram2009 15
IV. Technology 18
V. ConsolidatedFinancialStatements2008 24 1. ConsolidatedBalanceSheetasofDecember31,2008 24 2. ConsolidatedIncomeStatement2008 26 3. ConsolidatedCashFlowStatement2008 27 4. NotestotheConsolidatedFinancialStatements 28 4.1 Accountingprinciples–BalanceSheetandIncomeStatement 28 4.2 NotestotheBalanceSheetasofDecember31,2008 31 4.3 NotestotheIncomeStatement2008 41
VI. FinancialStatementsStaatsolie2008 42 1. BalanceSheetasofDecember31,2008 42 2. IncomeStatement2008 44 3. NotestotheBalanceSheetasofDecember31,2008 45
VII. OtherInformation 46 1. Auditors’Report 46 2. DistributionofEarnings 47 3. AdoptionofFinancialStatementsofthePrecedingFiscalYear 47
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SoleShareholder
TheRepublicofSurinamerepresentedby:- thePresident,HisExcellencyR.R.Venetiaan,onhisbehalf:- theMinisterofNaturalResources,G.A.Rusland
SupervisoryBoardMaricaS. ActingChairmanAdhinR.S. MemberKasantaroenoF.T. MemberPahladsinghR.K. Member
KensmilH.S. Secretary
BoardofExecutiveDirectorsWaaldijkM.C. ManagingDirectorKortramI.E. FinanceDirectorNuboerB.F. Refining&MarketingDirector
DeputyDirectorsSairrasG. DeputyDirectorProduction&DevelopmentDwarkasingB. DeputyDirectorExploration&PetroleumContracts
DivisionManagersBruningsD. ManagerHumanResourcesDaal-VogellandM. ManagerPetroleumContractsGoerdajalP. ManagerProductionOperationsHughesC. ManagerRefiningOperationsJagesarA. ManagerCorporatePlanningKleiboerA. ManagerTechnicalServicesMacDonaldD. ManagerHealth,Safety,Environment&QualityMoensi-SokowikromoA. ManagerControllingMurliS. ManagerProcurementNaiChungTongA. ManagerMarketingNandlalB. ManagerFieldEvaluation&DevelopmentRamautarR. ManagerRenewableEnergySourcesSam-SinA. ManagerEngineering&DrillingSlemanA. ManagerInformation&CommunicationTechnologyVermeerA. ManagerFinanceAdministration
ManagersassignedBruningsP. OperationalManagerParadiseOilCompanyN.V.FränkelE. OperationalManagerStaatsoliePowerCompanySurinameKeteleT. ProjectManagerRefineryExpansion
I. Shareholder, Supervisory Board, Board of Executive Directors and Management as of December 31, 2008
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I. Shareholder, Supervisory Board, Board of Executive Directors and Management as of December 31, 2008
Supervisory Board
S. MaricaActing Chairman
R.S. AdhinMember
F.T. KasantaroenoMember
R.K. PahladsinghMember
H.S. KensmilSecretary
II. Letter of the Managing Director
I am pleased to report that 2008 was another year of solidgrowth and achievement for Staatsolie. For the fiscal year revenuesexceededahalfbillionUSdollarsandamountedtoUS$ 576 million, with a profit before tax of US$ 360 million. These excellent financial results were achieved despite the globalrecession.
Our crude production increased with 8.5%. The record inrevenueshowever,wasmainlytheresultofhighoilpricesduringthe year. In general, the first half of 2008 was a period of a sharp increase of prices of other commodities and services relatedto the oil & gas industry. Continuous cost control initiativeshowever resulted in a marginal increase of our productioncostandIwouldliketoexpressmyappreciationtotheentireorganizationfortheireffortsinachievingtheseresults.
In the reporting year we developed a ‘Vision 2020ImplementationStrategy’,inourjourneytotheyear2020.Inthis strategy, four periods of three years each were identified, resulting in plateaus reflecting the realization of selected strategicgoals.Wedevelopeddifferentthemesforeachthree-yearperiod,characterizingthefocusofthedevelopmentefforte.g.: ‘Foundation for Growth’, ‘Transition’, ‘Exponential Growth’, and ‘Rationalization’.In the first period, which coincides with our ‘Strategic Plan 2008 –2012’,wewilllaythefoundationforthesecondperiodinwhichthe transition of Staatsolie into an energy company will takeplace. In the thirdperiodStaatsoliewillsubstantially increaseits crude production and will also be active as a producer ofbio-fuels,hydropowerandthermalpower.Inthefourthandlastperiodtotheyear2020,weenvisionaseparationbetweentheinstitutionalandthecommercialrolewithinStaatsolie.
From our activities in 2008, I would like to highlight fourimportant strategic goals marking the first plateau, the ’Foundation for growth’.
The first strategic goal is increasing our onshore reserves by atleast64millionbarrelsat theendofthisplanningperiod.To this end a new exploration strategy was formulatedwith an allocated budget of US$ 85 million for onshore.Implementationhasstartedinthereportingyear.Anextensiveappraisalandexplorationprogramof35wellswascarriedout.The540km,2Dregionalseismicsurvey,withatotalbudgetofUS$25million,startedinNickerieonNovember13,2008.TheprogramisprogressingandattheendofMarch,293kmofseismicdatahasbeenrecorded.
Inouroffshoreexplorationprogramwithproductionsharingcontract partners, more than US$ 100 million was investedin seismic and drilling programs. The greater part of thisinvestment was for the drilling of an exploration well to adepthof12,700ft.RepsolYPFandpartnersdrilledthiswellinoffshoreblock30,
in theWestTapirprospect, inApril2008.Althoughthewellwasnotacommercialsuccess,itprovidedcrucialinformationtoproceedwithfutureprograms.
The second strategic goal I would like to highlight isthe expansion of our existing refining capacity and thediversificationofourproductportfolio.ThebasicengineeringdesignwasawardedtoCB&ILummusandthecontractwassignedonJuly21,2008.In addition, contracts with technology suppliers (licensors)for the refining processes were signed. Major upcomingmilestonesfor2009arethestartofsitedevelopmentinJuly,andthetenderingforthedetailedEngineering,Procurement&ConstructioncontractoftherefineryinSeptember2009.Thecompletionoftherefineryexpansionisscheduledfortheendof2012.ThisprojectwillhaveamajorimpactonthecompanyandontheeconomyofSuriname,mainlyasaresultofimportsubstitutionofmotorfuels.
The third strategic goal is to formulate a policy regardingrenewableenergyandtheconclusionofaportfoliooffeasibilitystudies. In 2008, several options of producing bio-fuels inSuriname were evaluated. While renewable energy sourcesholdgreatpromiseforthefuture,onlyfeasibleprojectsbasedonproventechnology,willbeconsideredbyStaatsolie.
Finallythefourthstrategicgoalistobuildarobustorganizationenabling us to create our own future. To support this goal,the development of the Human Resources (HR) functionwas intensified in 2008. Amongst others, the completion of thedesignofanewPerformanceManagementSystemmustbe mentioned. In 2009 a pilot will be conducted to test thefunctionalityofthesystem.Late 2008 the preparation of a new HR Strategy & HRDevelopmentPlan started,whichwillbeconcluded in2009andwhichwillbemorecloselyalignedwithour‘Vision2020’andtheCorporateStrategicPlan.
Although we face major difficulties in the year ahead, due to theglobaleconomicrecession,IamconvincedthatStaatsoliecanstanduptothechallengesofthefuture.
On behalf of my fellow Directors, I would like to take thisopportunity to thank all our customers and other externalrelations that contributed to the success of Staatsolie in thepastyear.IwouldalsoliketospeciallythanktheShareholder,the members of the Supervisory Board, our employees andcontractors,whosededicationandeffortshaveresultedinyetanothersuccessfulyearforStaatsolie.
Confidence in Our Own Abilities!
Paramaribo,April2009M.C.H.WaaldijkManagingDirector
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Board of Executive Directors. From left to right: G. Sairras, Deputy Director Production & Development; B. Nuboer, Refining & Marketing Director; M. Waaldijk, Managing Director; I. Kortram, Finance
Director; W. Dwarkasing, Deputy Director Exploration & Petroleum Contracts
III. Operational Performance 2008 & Work Program 2009
Financial Performance
Inmanyrespects,2008hasbeenthebestyearinthehistory of Staatsolie. Gross revenues of US$ 575.9millionwererecorded,anincreaseof71%comparedwith the US$ 336.5 million turnover of 2007.Thisexceptionalresultwasachievedthroughacombinationof high oil prices, increased oil production andtrading activities. The average net price per barrelfor Saramacca Crude and its derivatives increasedto US$ 78.89 per barrel in 2008 from US$ 56.43perbarrelin2007,anincreaseof40%.Profitbeforetaxes amounted to US$ 359.8 million compared toUS$228.3millionin2007,anincreaseof58%.Theresultingreturnonequityincreasedto69%from58%in2007.
Contributions to the government budget over 2008will amount to US$ 247.7 million, an increase of55% compared to 2007; US$ 121.9 million for taxobligationsandUS$125.8millionasdividend.Totalinvestment expenditures on cash basis amounted toUS$ 85.8 million, of which US$ 60.1 million wasfor production development and US$ 25.7 millionfor downstream activities and other projects. Theentire investment program was financed from thecompany’soperatingcashflow.
Upstream
Crude Production
In2008,Staatsolieproduced5.90millionbarrelsofSaramacca Crude which is just below the target of5.93 million barrels. Production increased by 8.5%compared to 2007; the main contributing factorbeing the higher than projected production fromolder wells in the Tambaredjo field. A total of 99new development wells were drilled, of which 85werecompletedintoproductionwells,while14wereplugged and abandoned. Further, five (5) strattestwellsfrom2007weretakenintoproduction.Atyear-end,atotalof1,188wellswereinproduction.Theadditionofnewproductionwellsresultedinanincreaseoffluidproduction.Averagewatercontent,
however, remained around 78% as a result of amodest decline of old wells and low water contentof new wells. Several programs were implementedto improve and expand water and oil separation.Primarilygasinsteadofcrudeoilwasusedforheatingtheemulsion,therebysaving21,000barrelsofcrudeoilonanannualbasis. Inaddition,anumberof in-depth investments were made to upgrade theTA58planttodealwiththeincreasingwaterproduction.
In September 2008 a polymer injection pilot projectwas implemented in the Sarah Maria South area inthe Tambaredjo field. Polymer flood is an enhancedoil recovery method whereby a polymer solutionis injected into the reservoir with the objective ofefficiently displacing the oil in the direction of thewellbore.
Reservoir Studies
Inadditiontothe2008DevelopmentDrillingProgramten (10)strattestwells, six (6) in theCalcuttaFieldand four (4) in the Tambaredjo Field were drilled.The main objectives of the strattest and productiontestdrillingprogramsweretoidentifyandprioritizefuturereservoirswithintheTambaredjo,TambaredjoNorth West and Calcutta fields and to identifythe 2009 development areas. Due to their goodsanddevelopmentandoilsaturationproperties, twostrattest wells were drilled in the Tambaredjo fieldand were converted into development wells. Thesewells have delineated some potential developmentlocations, which have been included in the 2009development-drilling program for the Tambaredjofield.Inaddition,severalstudieswerecarriedouttoimproveproductionperformance in theTambaredjoandCalcuttafields.
Staatsolie plans to start full-scale productiondevelopment of the Tambaredjo North West field in2010.Toassureanoptimaldepletionofthefield,itisnecessarytodeviseacost-effectivefielddevelopmentplan taking into consideration the Health, Safety &Environmental(HSE)constraints,andthecompany’sstrategic crude production goal. In conjunction with
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Financial Highlights 2008
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Equity to debt ratio in %
Current ratio in % Annual crude production x 1 million bbls
Dividends x US$ 1 million
Return on equity in %
HalliburtonLandmarks,aspecializedconsultingfirm,Staatsolie’s staff is currently developing the field-development plan. This project started in November2008andisscheduledforcompletioninApril2009.
Theremainingprovenreserves(P90)atyear-end2008were82.3millionbarrels:56.6millionbarrelsintheTambaredjofield;6.2millionbarrelsintheCalcuttafield; and 19.5 million barrels in the TambaredjoNorth-Westarea.Inaddition,totalprobablereserves(P50-P90)wereestimatedat10.9millionbarrels.
Exploration
Challengingexplorationobjectiveshavebeenset inStaatsolie’sStrategicPlan2008-2012.During fiscalyear 2008, an Exploration Strategy 2008-2012 wasdevelopeddetailingprogramstoachievethestrategicobjectives. In the period indicated, approximatelyUS$ 85.0 million will be spent on an explorationprogramtoestablishaminimumof64millionbarrelsofadditionalreserves.
The2008appraisalandexploration-drillingprogramconsistedof35wells:seven(7)inNickerie;eight(8)in Tambaredjo South and Calcutta South; ten (10)inWegnaarZeeEast;andten(10)inCommewijne.Of this program, 18 were drilled in 2008. Oil wasencountered in four (4) wells in the Weg naar ZeeEastareaandtwo(2)wellsintheCommewijnearea.Evaluationoftheseresultsisstillinprogress.
The2Dregionalseismicsurveyof540kmstartedinNickerie and will continue eastwards. The contractfor thisprogramwasawarded toGeokinetics, for atotalbudgetofUS$25.0million.
For the first time the District of Commewijnehas been included in Staatsolie’s coastal plainexplorationprogram.ExplorationdrillingstartedinJuly2008.Sofar,eight(8)wellshavebeendrilledwith oil indications in two (2) wells. The resultsso far indicate that therecouldbemorePetroleumSystems at play in the on- and offshore Surinameacreage.The exploration program in Commewijneis scheduled to continue through 2009 with a ten(10)wellsprogram.
Downstream
Refinery
TheRefinery’s2008totalproductionof2.54millionbarrelswas3%higherthanitstargeted2.46millionbarrels. A throughput of 7,592 barrels per stream-daywasrealized,comparedwiththetargetof7,350barrels. In 2008, the production was 4% lowerthan the 2007 realization of 2.65 million barrels.The production mix consisted of Staatsolie Diesel,AsphaltBitumenandvariousgradesofFuelOil.
Availability was relatively low at 91.3% due tothe third Turnaround Testing & Inspection (T&I).The T&I was executed from August 15 throughSeptember11,2008asscheduled.
The basic design phase of the Staatsolie RefineryExpansion Project was awarded to CB&I Lummus.Signing of the contract took place in July 2008 atStaatsolie’smainoffice;thecontractbudgetbeing12.4millionEuros.Thedurationof thedesignphasewillbenearly18months.TheFront-EndDesignPhase3(FED3)willbethefinalpreparatoryphasebeforebidsgooutfortheconstructionphase.IntheFED3,CB&ILummusInc.willdevelopthebasicdesign,executionplanandbudgetforconstruction.Thenewrefineryhastobeoperationalbytheendof2012andwillproducediesel,gasoline,fueloil,andbitumen,mainlyforthelocalmarketandsulfuricacidforexport.
Marketing
The net realized product price for 2008 was US$78.89 per barrel, which is 75% higher than thebudgetedpriceofUS$45.00perbbl.SalesinforeigncurrencyamountedtoUS$504.0million,whilesalesinSurinamesedollarsamountedtotheequivalentofUS$71.8million.In December 2008 oil prices fell below US$ 31.00per barrel due to the financial crisis in the USA, aworsening global economy, and as a consequencea serious decline in energy demand. With majoreconomiessuchastheUSA,Japan,UKandGermanyinrecession,itisnotlikelythatoilpriceswillincreasedramatically in the near future. In December 2008,
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OPECannouncedacutinproductionby2.2millionbarrelsadayinanattempttostabilizeoilprices.
In the reporting year, excluding trading activities,approximately 5.3 million barrels of petroleumproducts,weresold:2.0millionbarrelsinexportsand3.3millionbarrelsinlocalsalesandbunkering.Salesweredistributedasfollows:38%forexports,14%forbunkering,and48%tovariouslocalindustries.
In 2008, a 43% increase in export volumes wasrealized. Export shipments to Guyana Power &Light and Curoil (Curaçao) started slowly in 2007andcontinued in2008witha shareof51% in totalexport volume. Additionally, shipments were madetoBarbadosandTrinidad.Comparedwith2007therewasadecreaseinthelocalsalesvolume,mainlyduetolowerdemandsfromthefishingindustryandlocalutilitycompany,N.V.EBS.
Paradise Oil Company N.V.
In2008,ParadiseOilCompany(POC)asoperatorofthe Uitkijk and Coronie Blocks continued with thedrillingprogramoftheremainingfive(5)explorationwells in the Uitkijk Block. Of this program, one (1)well was drilled and the results were encouraging.Asecondwell iscurrentlyinprogress.Dependinguponthese results, an appraisal program will be executed(phase2).Drillingoffive(5)explorationwellsintheCoronieBlockwillstartinthesecondquarterof2009.
Staatsolie Power Company Suriname TheproductiontargetforStaatsoliePowerCompanySuriname(SPCS)for2008wassetat61,000MWhof electrical energy, anticipating a normal inflowofwaterintotheVanBlommensteinHydro-powerLake.However, lake levels remainedat ahistorichigh, resulting in a limited generation of 3,000MWhelectricalpower.Atcritical times,however,SPCS proved its value by continueing to supplyelectricity to Paramaribo. SPCS operated at fullcapacity,supportingEBSinfulfillingtotalenergydemand during its planned maintenance work on
both161kVlinesfromAfobaka,aswellasduringmaintenanceworkonthehydroelectricpowerplantatAfobaka and the N.V. EBS 161 kV sub-stationatMenckendam.Gross sales toEBSamounted toUS$6.7million.
Corporate Services
Human Resource Management
In order to improve occupational healthcare of ourcompany, an Occupational Health Advisor wasrecruitedin2008.ThisconsultantwillassistStaatsoliewith the implementation of policies regarding ourageing workforce, by identifying work-relateddisorders.
In 2008, our first Personnel Satisfaction Survey wasconducted. Our employees were able to indicate theextenttowhichtheyweresatisfiedwithmatterssuchasworkingconditions,corporatecultureandpolicies,andStaatsolie’sHumanResourceManagement.Personnelsatisfaction appears to be at a reasonably high level.ForamoreeffectiveexecutionoftheambitiousVision2020,theconsultant,whoprovidedsupportduringthesurvey,madeseveralrecommendations.
ThedesignofanewPerformanceManagementSystemwas completed in 2008. With the new PerformanceManagement System, production-related andcompetencydevelopmentobjectivesfortheindividualemployeeswillbederivedfromthecompanyobjectives.Assessment and coaching will be based on theseindividual objectives as well as the extent to whichtheemployeedemonstratestherequiredbehavior.Thepilotwillbeexecutedduringthefirstpartof2009.
At the end of 2008, the development of a long-termstrategicanddevelopmentplan for theHumanResource (HR) function started. The plan will bederived from Staatsolie’sVision 2020 and StrategicPlan. The new HR Strategy and Development planwillbedeliveredin2009.
Within the framework of Staatsolie’s increasingflexibility and job rotation, approximately 40% ofthe Division Managers were transferred into new
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functions. This was the case for the divisions ofCorporatePlanning,HumanResourceManagement,Finance Administration, Procurement, InformationCommunication Technology (ICT), RefineryOperations and Health, Safety, Environment &Quality(HSEQ).
Health, Safety, Environment and Quality (HSEQ)
In2008,Staatsolieachievedseveralimportantsafetymilestones.Thefirstbeinganexcellentoverallrecordof453continuousdaysofworkwithoutasingle‘LostTimeInjury’,followedbyToutLuiFautOperationssurpassingthemilestoneof1,000safeworkingdayswithoutanylossofworkinghours.
Inthetablebelowsomeincidentstatisticsareincludedfor2008and2007.
FirstaidInjuries
LosttimeInjuries
Vehicleaccidents
Oilspills>1barrel
2008 11 5 69 342007 17 2 77 21
The total number of incidents for 2008 was 187,which is 13% higher than the number of incidentsthat occurred over the same period in 2007. Thetotal number of oil spills was 77. The majority ofthespills(56%)werespillsoflessthanonebarrel,while 8% were more than ten (10) barrels. Thetotalnumberofvehicleaccidentswas69;lessthanthe year before when 77 vehicle accidents wererecorded.In2009,anongoing‘SafeDriverTrainingProgram’ will be executed tailored to the specificSurinamesetrafficsituation.
HSE risk identification and assessment of companyactivities continued in 2008. The objective of thisprocess was to identify and analyze all significantHSErisksassociatedwithcompanyactivities,sothatmeasures can be initiated and implemented to pro-actively prevent accidents. HSE risk identificationis of essence for the ISO14001/OHSAS 18001developmentprocess.
Environmental Impact Assessments (EIAs) wereexecuted for the 2008 Regional Onshore 2Dseismic acquisition program and the Commewijneexploration-drillingprogram.Regardingtheonshore2D seismic acquisition program, stakeholders’meetings were held for the government agenciesand the communities of Coronie, Nieuw Nickerie,Paradise,GrootHenarandWageningen.
With regard toquality,emphasiswasputon furtherenhancing the continuously improving processesof the company. In this context a pilot project wassuccessfully carried out within the ProcurementdivisionandRefiningOperationsdivisionstoselect,train and install improvement teams for continuousimprovementofthequalityprocesses.
Management Information, Procurement and Financing
In 2008, PricewaterhouseCoopers executed an EDP(Electronic Data Processing) audit to evaluate theintegrity of the purchasing business application,the security of its underlying IT infrastructure, andto identify potential security risks. No significantintegrity and security risks were found. This auditwas necessary as Staatsolie’s Purchasing Agent inMiami (MMI) recently implemented two majorimprovements to this system, namely electronicapprovalofpurchasingdocumentsandremoteaccessusingnewtechnologies.SecuredremoteaccesstotheDataStreamapplicationwas introduced to allow Staatsolie Managers toapprove / authorize purchases when they are outof office. This functionality has already noticeablyreducedoverheadtimeduringtheFED3phaseoftheRefineryExpansionProject.
In2008,representativesofProcurementandInternalAuditingexecutedanauditofourPurchasingAgents,IDSCOandMMIintheUSA,todeterminewhetherpurchasesonbehalfofStaatsoliecompliedwith thePurchasingPolicyandProcedures(PPP).Nomaterialdeviationswerefound.
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Automated fluid treatment for separation of oil, gas and water
Corporate Image & Social Responsibility
In2008,fortysustainable-developmentprojectsweresupportedbyStaatsolieintheareasofeducation,cul-ture&sports,health,andbenefitsfortheunderprivi-leged.AtotalofUS$1.5millionwasgranted.
The Staatsolie Foundation for CommunityDevelopment was formally established on February25, 2009. This Foundation will secure a moreindependentsupportofdevelopmentprojectsforthebenefitofourcommunity.
Institutional Activities
Thefocusofourinstitutionalactivitiesduring2008wasonthedrillingofWestTapirIinoffshoreBlock30.Thewellwasatechnicalsuccess,butnocommercialitywasestablished.Thewellwaspluggedandabandonedatadepthof12,700 feet. In2009,Repsoland itspartnersNoble Energy and Petro Hunt will execute differentstudiestofullyevaluatetheresultsofWestTapirI.
In offshore Block 31, phase 2 of the explorationprogramstartedinMay2008.MaerskOiloptednottocontinueandasof thisdateTeikokuOilhasa100%interest in this block and will act as the operator. InOctober2008,amergerbetweenTeikokuOilandInpextookplace,resultinginTeikokuSurinamebecominga100% subsidiary of Inpex. This company plans toexecutea1,600km²3DsurveyinApril2009.
InoffshoreBlock32,StaatsoliegrantedNobleEnergyanextensionofsix(6)monthsforphase1.InMay2009theyarerequiredtoinformStaatsolieastowhetheritwillenterintophase2oftheexplorationperiod.
Murphyoilhasa100%interestinoffshoreBlock37andhasexecuteda1,500km²3Dseismicprogram.ItisanticipatedthatdataacquisitionwillbecompletedbytheendofMarch2009.
Onshore, the consortium Paradise Oil/Tullow Oilstarted finalized its phase 1 drilling program of ten(10)explorationwellsintheUitkijkBlockinJanuary2009.ExplorationoperationintheCoronieBlockisexpectedtostartinthesecondhalfof2009.
OnNovember18,2008the4thInternationalBiddingRoundwaslaunched.Afterin-depthstudies,offshoreblocks43 and44were selected for an internationaltender (Bidding Round). The objective is to attractqualifiedpartnerstoexploretheseblocksattheirowncostandrisk.TheBiddingRoundwillbeclosedonMay19,2009.
OnDecember5,2008,Surinamemadeitssubmissionto the Commission on the Limits of the ContinentalShelf (CLCS), as set out in article 76 of the UnitedNationsConventionontheLawoftheSea(UNCLOS).Accordingtothisarticle,coastalstateshavetherighttosubmittheirclaimsuntilMay12,2009,establishingtheouterlimitsoftheirContinentalShelf.
TheCLCSwilldiscussSuriname’ssubmissionduringits 24th session in August 2009. If granted, thiswill imply an extension of approx. 83,000 km² ofSuriname’sseaarea.
Participation and Acquisitions
In 2008, Staatsolie acquired the remaining shares ofVentrinPetroleumLtd.inTrinidad&Tobago,ownedbyAICBarbadosLtd.Withthispurchase,Staatsolie’sinterestinVentrinPetroleumLtd.increasedto98.4%.This gave Staatsolie the additional flexibility ofenforcingtheexecutionofvariousprogramsatVentrin.The focus on performance improvement was furtherincreased.To this end a new management team wasappointedandanewbusinessplandeveloped.Inordertoenablethecompanytoimplementthebusinessplan,financialrestructuringwasimplemented.Thefinancialresultsimprovedconsiderablycomparedto2007.
International Activities
Staatsolie participated in several international andregionalconferences.In May, Staatsolie attended the 2008 InternationalOil Spill Conference in Savannah, Georgia, USA.Participantsfrom80countriesattendedthetechnicalsessions. This conference provides a forum forprofessionals from the international community,the private sector, government and non-government
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organizations to highlight and discuss innovationsandbestpracticesacrossthespectrumofprevention,preparedness,response,andrestoration.In June 2008, Staatsolie attended the 19th WorldPetroleumCongressinMadrid,Spain.Thiscongressis the largest international gathering in the oil andgas industry where governments, national andinternational oil companies and representatives ofinternationalinstitutionsmeettodiscussthefutureoftheindustry.
Simultaneously, Staatsolie participated in theWorld Petroleum Exhibition, where participantswere informed of Suriname’s offshore and onshorepetroleumactivitiesanditsfutureplans.
The 8thAnnual Energy Caribbean Conference washeld in December 2008 in Trinidad. Staatsolie pre-sentedaprogressreportofits2008-2009InternationalBiddingRound.
In October 2008, Staatsolie participated in the 38thAnnualGeneralMeeting,ConferenceandExhibitionof the Caribbean Shipping Association (CSA) inTrinidad.ThisConferenceprovidesa regional forumfortheshippingindustry,inwhichmattersrelevanttothegrowthanddevelopmentoftheCaribbeanshippingindustryarediscussed.In2009,Surinamewillhostthe39thAnnualGeneralMeetingoftheCSA.
Work Program 2009
Commercial
In linewith theStrategicPlan2008-2012, thefocusin2009willbeon:• Continuedaccelerationoftheexplorationprograms
onshoreandoffshore;• Preparations for the infrastructuraldevelopments
inTambaredjoNorthWest;• FinalizingoftheFrontEndDesignPhase3ofthe
RefineryExpansionProject;• Crudeproductionsustainingprogram;• Institutionalstrengtheningofthecompany.
The total investment budget for 2009 amounts toUS$ 127.8 million, of which US$ 95.5 is reserved
for the Upstream Operations; US$ 28.9 million fortheDownstreamOperations;andUS$3.4millionforgeneralprojects.Thecrudeproductiondevelopmentprogramfor2009isbasedonaproductiontargetof5.9millionbarrels.Thisprogramincludesthedrillingof73wellsintheTambaredjofield,and53wellsintheCalcuttafield.In addition, ten (10) stratigraphic test wells will bedrilled in 2009 to determine the most prospectiveareas for future drilling within the developed area.Operationswillbeconductedwith three (3)drillingrigs:two(2)forthewetlandareasandone(1)forthedry-landarea.
AtotalofUS$29.3millionisbudgetedforthe2009explorationprogram.This includes the continuationoftheregional2Dseismicsurveycoveringanareaof390kmintheonshorecoastalareaofSuriname,foranamountofUS$16.1million.For2009anappraisaland exploration drilling program of 33 wells isplanned,consistingoffive(5)wellsinNickerie,five(5) wells in Coronie, ten (10) wells in Coesewijne,five(5)wellsinWegnaarZeeandeight(8)wellsinCommewijne.Additionally, five (5) appraisal wellswill be drilled in Weg naar Zee, including two (2)productiontestwells.
TheaveragethroughputoftheRefineryisscheduledfor7,350barrelsperstreamday(BPSD),resultinginan annual production target of 2.68 million barrelsandanavailabilityof98.6%.
Theworldrecession,whichstartedin2008,causedamajordropinoilprices.ItisexpectedthatStaatsoliewill face depressed oil prices throughout 2009.However, the fundamentals of the oil and gasindustry are sound, and it is expected that priceswillpickupagain.AsofJanuary2009,theupdatepriceforecastofPIRAfortheno6,3%SulfurFueloilisUS$42.80perbarrel.In 2009, the execution of the refinery expansionFED3 phase will be continued, which will includebasic engineering, site development (early work)andpre-Engineering,Procurement andConstructionactivities. A total amount of US$ 13.2 million isbudgetedfor2009.
15
Institutional
Theinstitutionalactivitiesfor2009are:1. StrengtheningofthePetroleumContractsdivisionto
complywiththecommitmentsfromtheincreasingnumberofProductionSharingContracts(PSCs);
2. Completion of the structure of the NationalPetroleumDatabaseonSurinamepetroleumdata;
3. Monitoringofthepetroleumactivitiesintheoffshoreblocks 30 (Repsol YPF), 31 (Teikoku Suriname),32 (Noble) and 37 (Murphy Oil) and the onshoreblocksUitkijkandCoronieoperatedbyPOC;
4. Managing the open petroleum acreage andpromotion of the exploration opportunities andavailableoffshoreblocksinSurinameinaccordancewith the corporate strategy, culminating in theinternationalBiddingRound2009;
5. ContinuedsupportfortheCommissionontheLimitsof the Continental Shelf session on Suriname’sclaim to extend the Continental Shelf from 200nauticalmilestomaximum350nauticalmiles.
Corporate Services
Aselectionof2009objectivesforCorporateServicesisincludedbelow:1. Pilot phase of the Performance & Competence
ManagementProgram;2. Reviewof theFinanceDirectorateorganizational
structureandimplementationoffindings;3. ImplementationoftheCorporateInformationPlan;4. Implementation of a cost accounting system to
bettermonitorcostefficiency;
5. FormalizationandimplementationofaCorporateGovernanceCodeanddevelopmentofanIntegralRiskManagementSystem;
6. Development and implementation of a TreasuryManagement System and execution of theInvestmentPolicy.
'WEMCO' Water Treatment Unit to reduce oil content in waste water
IV. Technology
Staatsolieisinanexpansionanddiversificationmode.Applicationoftechnologyplaysanimportantroleinthe executing strategy. Some major developmentsin the application of technology in Upstream andDownstreamarebrieflydescribed.
Upstream
Exploration
Effective integration of exploration techniques inthe search for oil in the Suriname-Guyana Basinis themajor focusforaneffective identificationofprospectiveareas.
The integrated use of 2D seismic and aeromagneticdata can result in early identification of prospectiveareas in oil and gas exploration, since a significantelementoftheprospectivityliesinstructuralelements
inthesubsurface,suchasfaultsandbasementblocks.Theseelementsarebestidentifiedonaregionalscaleusingaeromagneticdata,while2Ddeliversvalidationontopofstratigraphicinformation.
The software for processing and interpretingaeromagneticdatahasmadeasignificantleapforwardduring recent years. Based on these developments,Staatsoliedecidedtoreprocesstheaeromagneticdataacquiredsomeyearsago,inthecoastalarea.ThisapproachwasalsospurredbythisapplicationandsubsequentoilfindsintheRedSea,wherewellsweresuccessfullydrilledbasedonaeromagneticdata.
Sincesomeaeromagneticdata isnon-proprietary it isreadilyavailable,enablingevaluationofacreagebeyondourterritories.Thispresentsfutureopportunitiesintheneighbouringcountries.Intheendtheapproachresultsinamorefocusedexplorationeffortandmoreeffectiveuseofexplorationdollarsbyloweringtherisks.
Regional 2D Seismic Survey
1�
3D-Data Visualization Room
In March 2009, a 3D-data visualization room waslaunchedintheSaraMariaofficeswiththeobjectivetovisualizereal-timeExploration&Productiondatainanydesiredshapeforoptimaldecision-making.
Thedatavisualizationroomcontainsalargedisplaywhichallowsviewerstogetabetterunderstandingofstructural subsurfaceand spatialdata, and improvestheunderstandingofthehydrocarbonreservoirs.
Thisroomalsofacilitatesmulti-disciplinaryteamstoview,discussandinterpretdatafromvarioussourceson a single large screen. This will result in faster,betterinterpretationsanddecisionmaking.
Crude Production
Overthelastfiveyears,severaltechnicalinnovationshave been implemented in the crude productiondevelopment and in the production operations
activities.Thenatureoftheseinnovationsspansoverawiderangeofbenefitsfromimprovementsincost,efficiency and safety, to increases in reserves andproduction. Some of these innovations are still in atestingstage,whileothersarealreadybeingappliedon a field-wide scale. The results already showincreasesinproduction.
It is a real challenge tohandleup to86,000barrelsperdayoffluid(16,000barrelsperdayoiland70,000barrels per day water) from approximately 1,200wells, through an extended piping system of morethan500km.Treatmentofthefluidtoobtainsaleablecrudeof less than1%water, requiresapplicationofadvanced technology for the separation of gas andwaterinseveralstages.
Uniqueproductionprotocols,real-timemeasurementsand updated automation are necessary to obtainoptimization of such a large number of individualwellsinanextendedareaofmorethan170km².
3D-Data Visualization Room
19
Challenges in development of shallow reservoirs of heavy oil and the need for technical innovations
Challenges start in the exploration program whenproduction tests are necessary to determine theproducibility of the oil and to establish additionalreserves.
Accuratedataareneeded todetermine if the foamyheavy oil can be produced, even at relativelylow production rates. The main challenge in thedevelopmentofnewandexistingfieldsistominimizedevelopmenttime,wellcosts,costfor infrastructureand liftingcosts.Twosignificant improvementscanbehighlighted:
• In2005,theintroductionofwetlandoperationsinnew swamp areas, reduced preparation time fordevelopmentandenvironmentalimpact;
• In 2006, the use of “AMKA” electrical cablesfor the extension of low voltage lines reducedinstallation time, resulted in longer life-span andlowercosts.
Production optimization of individual wells is thefirststeptoobtainadequateprimaryrecoveryandtodeterminetheneedforEOR(EnhancedOilRecovery)andIOR(ImprovedOilRecovery).
Technicalinnovationsinclude:• Introductionofmultiphaseflowmetersandelectric
submersiblepumps;• RemotewellmonitoringintheCalcuttaFields;• IntroductionofSurfaceReadOut(SRO)gauges.
With the focus on increasing the recovery rate ofexisting wells, a Pilot Polymer Flooding InjectionProjectwasimplementedinSeptember2008withtheultimateobjectivetoincreasetherecoveryrateoftheTambaredjooilfieldby10-12%.
Technicalinnovationswithrespecttofluidhandling,crudetreatmentandpipelineoperationsincluded:• The installation of 'WEMCO' unit for water
treatmenttoupgradethetreatmentfacilityintermsofdeliveringcleanerwatertotheenvironmentandsubsequentlyreducingenvironmentalimpact;
• The use of HDPE (High Density Poly Ethylene)pipingforflowlinesandheaderscreatedareductionin oil spills caused by corrosion and erosion, thusloweringcostsandenvironmentalimpact.
Downstream
Refining Maintenance Management System
The profitability and safety of oil refineries highlydependonasafeandreliableoperationofprocessingandsupportingequipment.AtourToutLuiFaut(TLF)refinery,maximizingup-timeandproperfunctioningofheaters,vessels,pumpsandpipingsystems,isanimportantrequirementtomaximizeproductvolumeswhile maintaining product specifications. Properfunctioningofamaintenancemanagementsystemiscrucialforachievingthisobjective.
During the first few years of operations, efforts attherefineryfocusedonsafety,processmanagement,product quality and equipment operation. A basicmaintenance management system was implementedbased on preventive and reactive maintenance toimprovetheavailabilityofequipment.Duringthelastfiveyears,emphasisslowlystartedtoshiftandtheconceptofreliabilityassurancewasintroduced,the DataStream D7i software was fully implementedand the system was upgraded to a ComputerizedMaintenanceManagementSystem(CMMS),integratedplanning,scheduling,materialsupply,jobmonitoring,historicaldatagatheringandcostcontrol.
Predictive activities were added to preventive andreactive maintenance and average availability ofequipmentimprovedto90%.
Staatsolie Diesel
Improving product quality to meet customerexpectation is a continuous process in the TLFRefineryOperations.Inadditiontocostandreliabilityofsupply,maintainingandimprovingproductqualityisofgreat importance in the supplyof the fuels, toconsolidateandexpandmarketshare.
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Wetland Operations
ThequalityofStaatsolieDieselhassteadilyimprovedover the last few years through adjustments inprocessparametersandtheuseofadditives.Inclosecollaboration with our suppliers several additives,based on the latest technologies, were tested in ourlaboratoryandintroducedintheproductionprocess.As a result product stability improved and cleanercombustion quality and better product odour wereachieved. Driven by these results, domestic marketshare increased, product reputation improved, andrevenuesfromdieselsalesincreased.
Sulfur Measurements
The full range of products produced by the TLFRefinery isaccompaniedbyaCertificateofQuality(COQ). Among the most critical parameters tobe determined is the sulfur content. A new sulfuranalyzer,basedonX-rayfluorescencespectroscopy,wasinstalled,usingimprovedtechnology.Enhancedsulfur measurements are obtained, reducing testingtime from hours to minutes, thereby reducing costsandimprovingefficiencyandaccuracy.
Marketing
Sincethestart-upoftheTLFRefinery,theavailabilityof HeavyVacuum Gasoil (HVGO) or IFO-120 waspresented as an alternative to our customers, usingpremiumdieselintheirprocesses.Staatsolieprovidedassistance in the modification of the combustionsystemstofacilitatetheshiftfromdieseltoIFO-120,thereby significantly lowering the total fuel cost tothecustomer.
Supply of fuel (bunkering) to ocean-going ships isconsidereda specialmarket segment in the salesofoilproducts.Theavailabilityofawiderangeoffuelsandanaround-the-clockoperation,365daysperyear,isanimportantcharacteristicofthismarket.
Staatsolie’s TLF operations commenced developingthe sale of oil products to ocean-going ships in2000.TheStaatsolie IVandStaatsolieVoil barges
were modified, marine personnel was trained andthe Transport Organization was transformed into aBunkeringOrganization.
Staatsolie bunker barges supply the majority ofships visiting the harbours along the SurinameRiver. By entering the bunker market, Staatsoliefurtherincreaseditsprofitmargin.
Staatsolie Power Company Suriname (SPCS)
The continuous endeavour to lower costs throughenergy consumption reduction in processing plantsis common practice. These benefits can becomesubstantial when synergies between adjacent plantsare explored and energy reduction opportunitiesare identified. Such an opportunity was identifiedbetweenStaatsolie’sRefineryOperationsandSPCSattheTLFsite.
In2006,aco-generationsystemwasinstalledat theSPCSpowerplant,producingelectricityforthegridand process steam for the refinery. The installedreciprocating engines are fed by very heavy fuel(700 centistokes) from the refinery. As such, fuelconsumption and costs have been lowered andannual carbon dioxide emissions of the refineryhavebeenreduced.
Currentlynoenvironmentallegislationexistswhichimposes environmental standards on companiesconstructing thermal power plants in Suriname.By adopting World Bank standards in the designof theSPCSpowerplant,abenchmarkwasset forthe construction of thermal power plants. Duringthe design process of the SPCS facility in 2005,additional investments were approved for noiseabatementandreductionofairpollution.ThepowerplantnowfullyadherestotheinternationalstandardssetbytheWorldBank.
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Fina
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200
8
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1. Consolidated Balance Sheet as of December 31, 2008 (after distribution of earnings)
V. Consolidated Financial Statements
xUS$1,000Assets Notes 2008 2007CurrentassetsCashandcashequivalents 4.2.1 303,058 125,512Short-terminvestments 4.2.2 14,941 13,734Accountsreceivable 4.2.3 44,546 59,839Inventories 4.2.4 19,415 13,713Prepaidexpensesandothercurrentassets 4.2.5 5,461 4,908
387,421 217,706
Investments 4.2.6Pensionplan 57 8,177
57 8,177
Property,plantandequipment 4.2.7OilpropertiesEvaluatedproperties 171,784 159,918Pipelines 2,855 3,132
174,639 163,050Refinery 23,910 27,664Powerplant 17,794 19,609Other fixed assets 28,539 26,142ParadiseOilAssets 42 23Ventrinassets 2,564 -
247,488 236,488Projectsinprogress 44,158 27,049
291,646 263,537
Totalassets 679,124 489,420
Paramaribo,April23,2009
TheBoardofExecutiveDirectorsM.C.Waaldijk,ManagingDirectorI.E. Kortram,FinanceDirectorB.F. Nuboer, Refining & Marketing Director
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xUS$1,000Liabilities Notes 2008 2007CurrentliabilitiesAccountspayable 4.2.8 6,605 8,704Bankoverdraft 4.2.9 448 -Accruedliabilities 4.2.10 149,015 66,135Incomeandothertaxes 4.2.11 28,289 32,985 184,357 107,824
ProvisionsDeferredincometaxes 4.2.12 46,255 37,415Provisionfordismantlementandabandonment 4.2.13 59,418 52,505Provision for pensions & other post retirement benefits 4.2.14 5,868 5,946Provisionforpensionplan 4.2.15 522 - 112,063 95,866
MinorityinterestVentrin 4.2.16 2 -
Stockholders’equity 4.2.17Sharecapital(SRD1parvalue5,000,000sharesissuedandoutstanding) 12,104 12,104Generalreserve 360,984 259,051Appropriatedreserve‘CommissieRehabilitatieenuitbreidingSportfaciliteiten’ 5,248 5,960
Appropriatedreserve‘StaatsolieFoundationforCommunityDevelopment’ 1,000 -
Unrealizedgainsandlossesshort-terminvestments 11,596 10,390Netothercomprehensiveincome (8,230) (1,775) 382,702 285,730
Totalstockholders'equity&liabilities 679,124 489,420
Paramaribo,April23,2009
TheSupervisoryBoardS. Marica ActingChairmanR.S. Adhin MemberR.K.Pahladsingh MemberF.T. Kasantaroeno Member
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2. Consolidated Income Statement 2008
xUS$1,000 Notes 2008 2007Revenuesfrom Production & Refining 434,558 310,054Tradingactivities 134,597 24,600Electricenergy 6,683 1,778Inventoryvariation 3,003 639Otherrevenues 75 1,230
578,916 338,301Less:export-,transport-andsalescosts (13,969) (6,424)Netrevenues 4.3.1 564,947 331,877
Explorationexpensesincludingdryholes (5,366) (3,963)Productionexpenses (26,141) (20,216)Refinery expenses (10,679) (8,148)Depreciation 4.3.2 (36,242) (34,266)Otheroperationalcosts 4.3.3 (99,530) (27,011)Operatingincome 386,989 238,273
Generalandadministrativeexpenses (24,155) (13,287)Impairmentofequityinvestment (7,379) (377)Financialincome 4,411 3,688Earningsbeforetax 359,866 228,297
Incometaxcharge (129,232) (81,622)Othertaxes (157) -Earningsaftertax 230,477 146,675MinorityinterestVentrin 16 -Net profit 230,493 146,675
Paramaribo,April23,2009
TheBoardofExecutiveDirectors TheSupervisoryBoardM.C.Waaldijk,ManagingDirector S. Marica,ActingChairmanI.E. Kortram,FinanceDirector R.S. Adhin,MemberB.F. Nuboer, Refining & Marketing Director R.K. Pahladsingh, Member F.T. Kasantaroeno,Member
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3. Consolidated Cash Flow Statement 2008
xUS$1,0002008 2007
Cash flow from operational activitiesNetearnings 230,492 146,675Depreciation 36,242 34,266Distributionofearningsexcl.additiontogeneralreserve (130,917) (84,409)(De)increaseinincomeandothertaxes (4,696) 20,826(De)increaseinaccountspayable (2,099) 3,569Increaseinbankoverdraft 448 -Increaseinaccruedliabilities 82,879 28,916De(in)creaseinreceivables 14,741 (30,571)Increaseininventories (5,701) (2,236)Cash flow from operational activities 221,389 117,036
Cash flow from investment activitiesInvestmentinproperty,plantandequipment (64,689) (62,755)Disinvestmentinproperty,plantandequipment 335 -Decreaseinequityinvestment - 377Increaseinshort-terminvestments (1,206) (3,616)Cash flow from investment activities (65,560) (65,994)
Cash flow from financial activitiesIn(de)creaseinprovisionforpensionplan 8,641 (1,357)Increaseinprovisionfordismantlementandabandonment 6,913 8,052Decrease in provision for pensions & other post retirement benefits (78) (692)Increaseindeferredincometaxes 8,840 6,408In(de)creaseingeneralreserve 2,360 (2,930)(De)increaseinappropriatedreserve‘CommissieRehabilitatieenuitbreidingSportfaciliteiten’ (712) 5,960Increaseinappropriatedreserve‘StaatsolieFoundationforCommunityDevelopment’ 1,000 -Decreaseinnetothercomprehensiveincome (6,455) (756)Increaseinunrealizedgainsandlossesshort-terminvestment 1,206 3,616IncreaseinminorityinterestVentrin 2 -Cash flow from financial activities 21,717 18,301
Net cash flow 177,546 69,343Cashandcashequivalentsatendofpreviousyear 125,512 56,169Cashandcashequivalentsatendofcurrentyear 303,058 125,512
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4. Notes to the Consolidated Financial Statements
4.1 Accounting Principles - Balance Sheet and Income StatementGeneralStaatsolieMaatschappijSurinameN.V.(Staatsolie)isanintegratedoilcompanyincorporatedintheRepublicofSuriname.Theintegratedactivitiesincludeexploration,production,refining,marketinganddistributionofoilproducts.Inaddition,theStaatsoliePowerCompanycommencedcommercialoperationsin2006.
Staatsolie has a wholly owned subsidiary, ‘Paradise Oil Company’ (POC), incorporated in the Republic ofSuriname.Furthermore,Staatsoliehasamajority interest inVentrinPetroleumCompanyLimited.Ventrin isabunkeringcompanyincorporatedintheRepublicofTrinidadandTobago.In2008,Staatsolie’sinterestof30%inVentrinwasincreasedto98.4%.Theamountpayableforthesesharesisincludedintheaccruedliabilities.
Principles of consolidationTheconsolidatedfinancialstatementsarepreparedinaccordancewithGenerallyAcceptedAccountingPrinciplesintheUnitedStatesofAmerica(US-GAAP)fortheoilandgasindustriesinparticular.TheconsolidatedandthefinancialstatementsofStaatsoliearepresented.ThefinancialdataofStaatsolieanditssubsidiariesaretakenintoconsolidationundereliminationofinter-companybalances,salesandpurchases.Minorityinterestsarepresentedseparatelyintheconsolidatedfinancialstatements.
Currency translationThe US-dollar is the reporting currency. Foreign currency transactions as well as Surinamese dollar (SRD)transactionsaretranslatedatapplicablebuyingratesderivedfromexchangeratespublishedbythe‘CentraleBankvanSuriname’.Attheendofthefiscalyear,monetaryitemsinforeigncurrencyaretranslatedintoUS-dollarsattheapplicableyear-endexchangerate.Theyear-endexchangeratefortheSurinamesedollarandtheEurointheyearunderreviewwasUS$1=SRD2.71,US$1=Euro0.71andUS$1=6.25TT.
Exploration and production developmentThe company utilizes the successful efforts method to account for expenditure incurred on exploration andproduction. On this basis, exploration costs incurred (drilling costs and material fixed assets) are initiallycapitalized,pendingoutcomeof the technicalfindingsof theexplorationeffort. If thedrillingoperation isnotcommerciallysuccessful,thecapitalizedcostsarechargedinfulltotheexpenseaccountafterdeductionofanyresidualvalue.Allotherexplorationcosts,includinggeologicalandgeophysicalexpenses,areexpensed.
Capitalizedcosts relating to investments in theoil field, includingproductive landproperties, aredepreciatedbasedontheUnitofProductionMethod(UPM).TheUPMfactorisderivedfromtheyearlyoilproductionandtherelatedprovendevelopedoilreserves.
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Specific principlesBalance sheet
Short-terminvestmentsShort-terminvestmentsarestatedatmarketvalue.Themarketvalueofsharesisderivedfromthevaluequotedby the ‘Effectenbeurs van Suriname’ (Stock Exchange of Suriname), while the value of the ‘Powisie Goldcertificates’isderivedfromthesellingandbuyingpricequotedbythe‘CentraleBankvanSuriname’(CentralBankofSuriname).
AccountsreceivableReceivablesarerecordedattheirnominalvalueand,ifnecessary,anallowanceismadefordoubtfulaccounts.
InventoriesCrudeoilandrefinedproducts’ inventoriesatyear-endarevaluedat thelowerofeithercostormarketvalue.Costcomprisesalldirectpurchasecosts,attributableoperatingexpenses–includingdepreciation-andallocatedoverhead.Drillingsuppliesandothermaterialsarerecordedattheweightedaveragecostpriceorlowermarketvalue.Thecostpriceconsistsofthepurchasepriceplusasurchargeforimportandtransportationcosts.If necessary, a provision for obsolete inventory is taken into consideration and deducted from the inventory.Orderedgoodshavebeenrecordedatpurchasevalueandonlythegoodsthatareintransitatbalancesheetdatearerecordedonthebalancesheet.
Investments
EquityinvestmentsEquityinvestmentsareaccountedforusingtheequitymethod.
PensionplanTheinvestmentinthepensionplanregardstheprepaidpensionbenefitrelatedtothepensionplanmanagedbythe‘StichtingPensioenfondsvoorWerknemersvanStaatsolieMaatschappijSurinameN.V.’.ThedeterminationoftheprepaidpensionbenefitisbasedonanindependentactuarialevaluationusingtheUS-GAAPguidelines.Inthecaseofanaccruedpensioncost,thisisrecordedunder'Provisionforpensionplan'.
BackservicecostsInaddition,investmentsinpensionplanalsocomprisethepriorservicecostsrelatedtotheinsuredpensionplanrecordedatcontractvalueandtobeamortizedovertheparticipants’remainingserviceperiod.
Property, plant and equipment
OilpropertiesThecostsofproductiondevelopmentsuchasdrilling,testingandcompletionofdevelopmentwellsarecapitalized,notwithstandingifthesewellsaresuccessfulornot.Capitalizedcostsconsistofthepurchasepriceofmaterialsandservices, includingthecompany’s internalservices.Capitalizedcostsforwells,equipmentandproductionfacilitiesaredepreciatedusingtheunitofproductionmethod.
Refinery, Power plant, Paradise Oil and other fixed assetsTherefinery,powerplant,assetsParadiseOilandotherfixedassetsarevaluedatcostoracquisitionprice.Thecapitalizedcostsoftheseassetsaredepreciatedonastraight-linebasis,takingintoaccounttheestimatedusefullifetimeoftheassets.
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VentrinassetsThecapitalizedcostsoftheseassetsaredepreciatedonthereducingbalancemethod.
Current liabilities
Thisrelatestoshort-termobligationsoflessthanoneyear,whicharerecordedattheirnominalvalues.
Provisions
DeferredincometaxesThisrelatestothedifferencebetweenthecommercialandfiscalcalculationofprofitsandtheresultingdifferenceintaxposition.
ProvisionfordismantlementandabandonmentThis provision regards the expected costs of the dismantlement of the production field, the related productionfacilities,thepipelines(Saramacca-ToutLuiFaut-Paranam),therefineryandthepowerplant.Thecalculationofthisprovisionisbasedonthecashvalueoftheestimatedfullcost,takingintoaccountanadjustmentforinflation.
Annually,aportionoftheexpectedcostsofdismantlementandabandonmentisexpensed.Theallocationofthecostforrelatedproductionfacilities,forexampleproductionfields,isbasedontheunitofproductionmethod.Theallocationofthecostsfortheothertangiblefixedassetsisbasedonthestraight-linemethod.Theperiodforallocationisbasedontheexpectedmomentofdismantling.
ProvisionforpensionsandotherpostretirementbenefitsThisprovisionincludestheunfundedaccruedpensionbenefitrelatedtothehealthcareplanandtheinsuredpensionplan.ThedeterminationofthisprovisionisbasedonanindependentactuarialevaluationusingtheUS-GAAPguidelines.
Income statement
RevenuesNetoilrevenuesconsistofthesalesofgoods,electricenergyandtradeactivitiesafterdeductionofdiscounts,exportcharges,etc.Revenuesarerecognizedintheyearinwhichthegoodsaredeliveredandserviceshavebeenrendered.
Thedifferencebetween theopeningandclosing inventorybalanceof finishedproducts forsaleaswellas forinternaluseisrecordedas‘Inventoryvariation’.
Profitsaretakenintoconsiderationatthemomenttheyarerealized;lossesaretakenintoconsiderationintheyearinwhichtheyareforeseen.
ExpendituresExpendituresarevaluedaccordingtotheabovementionedvaluationprinciplesandareexpensedintheyearincurred.
Allcostsrelatingtoproduction,includingmaintenanceandrepairofproductionequipment,areaccountedforasproductioncosts(‘liftingcosts’)andareexpensedasincurred.Thecostsofthetradeactivitiesandelectricenergyarerecordedas‘Otheroperationalcosts’.
IncometaxIncometaxesarecomputedonthefinancialresultsasshownintheincomestatement.
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4.2 Notes to the Consolidated Balance Sheet as of December 31, 2008 (All tables x US$ 1,000, unless indicated otherwise)
Current assets4.2.1 Cash and cash equivalents
2008 2007Cashatforeignbanks 178,310 111,949Cashatlocalbanks 124,335 13,475Totalbankbalance 302,645 125,424Pettycash 413 88
303,058 125,512
4.2.2 Short-term investments2008 2007
PowisieGoldcertificates 13,698 12,742Shares 1,243 992
14,941 13,734
4.2.3 Accounts receivable2008 2007
Accountsreceivableinforeigncurrency(net) 43,253 54,959AccountsreceivableinSurinameseDollars(net) 1,293 4,880
44,546 59,839
4.2.4 Inventories 2008 2007Petroleumproducts 6,913 5,680Materialsandsupplies(net) 5,051 4,497OrderedGoods 7,451 3,536
19,415 13,713
4.2.5 Prepaid expenses and other current assets2008 2007
LoanandinterestN.V.EBSregarding‘SubstationTLF’ 1,788 1,675Prepaidinsurancecosts 907 686Receivablesregardinginterestindeposits 732 553Otherprepaidexpenses 2,034 1,994
5,461 4,908
4.2.6 Investments TheamountofUS$57,228regardsthebackservicepensioncosts.
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Investment in wells and equipmentThe2008depreciationrateof0.13(2007:0.16)fortheTambaredjofieldand0.22fortheCalcuttafield(2007:0.14)isbasedontheUnitofProductionMethod,whichiscalculatedbyusingthequotientoftheannualproductionandtheprovendevelopedreserveplustheproductioninthecurrentfiscalyear.
Staatsolie’s oil producing properties are primarily obtained through concessions provided by the Surinamesegovernment.Theyhavealsobeenacquiredthroughadecreeinlongleaseorthroughthepurchaseoftherighttolonglease.Regardingtheseconcessions,thegovernmentdecidedbydecreeinJune1988thattherewillbenoretributionontheproducedoilfromtheStaatsolieoilfields.
Wellsandequipment2008 2007
Wellsandequipment 346,444 321,530Capitalizedcostfordismantlement 53,404 46,567
399,848 368,097Less:Accumulateddepreciation (228,064) (208,179)
171,784 159,918
PipelinesThepipelinefacilitiesthattransportfueloilfromToutLuiFauttoParanamwereputintouseinJuly2000.Thispipelineisdepreciatedonastraight-linebasisoveraperiodof15years.
RefineryTherefineryassetsaredepreciatedonastraight-linebasis.Therefineryunitsandlandimprovementaredepreciatedat a rate of 6% per year, while the distributed control system and the crude storage tanks are depreciated atrespectively8%and20%annually.
Refinery assets comprise the following:2008 2007
Landandlandimprovement 1,666 1,666Crudedesaltingandvacuumunit,visbreakerunit,tankfarmenutilities 62,778 62,997Distributedcontrolsystem 1,825 1,821Crudestoragetanks 3,884 3,537Capitalizedcostfordismantling 4,225 3,965
74,378 73,986Less:Accumulateddepreciation (50,468) (46,322)Total refinery assets 23,910 27,664
Power plantThepowerplantassetsaredepreciatedonastraight-linebasis.Thebuildingsandproductionhallaredepreciatedatrespectively5%and10%,inventoryat33⅓%,tankbatteryat20%,powerhouseequipmentat5%to50%,otherunitsaredepreciatedat5%to20%annually.
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Powerplant’sassetscomprisethefollowing:2008 2007
Buildingsandproductionhall 3,212 3,212Steamboilersandmetering 1,148 1,148Yard 300 300Fieldequipment 3,530 3,530Fueltreatment 248 248Electricinstallation 1,601 1,601Inventory 134 117Powerhouseequipment 9,979 9,979Tankbattery 768 768Capitalizedcostfordismantling 643 920
21,563 21,823Less:Accumulateddepreciation (3,769) (2,214)Totalpowerplantassets 17,794 19,609
OtherfixedassetsWiththeexceptionoffreeholdestate,propertiesoutsidetheproductionfieldarebeingamortizedonastraight-linebasis,basedontheexpendituresincurredinacquiringthelongleaseandonthetermsofthelease.Freeholdestatesarenotdepreciated.
The annual depreciation percentage for buildings is 10%, telecommunication equipment 20%, dock TLF 4%andoil tanker10%.Drillingmachinery andheavyequipment aredepreciated annually at 20%, transportationequipmentat33⅓%andofficefurniture,fixturesandsimilarassetsat50%.Whereapplicablearesidualvalueistakenintoconsideration.
Movementinotherfixedassetsisasfollows:
Bookvalue01-01-08
Investment2008
Depreciation2008
Bookvalue12-31-08
Properties&DockTLF 9,150 1,623 (148) 10,625Buildingsandinstallations 5,302 3,583 (1,304) 7,581Oiltankers 979 173 (127) 1,025Drillingmachinery,heavyequipmentandtransportationequipment 8,993 695 (3,516) 6,172Office furniture, fixtures and tools 1,718 4,365 (2,947) 3,136
26,142 10,439 (8,042) 28,539
ParadiseOilCompanyTheParadiseOilCompanyassets,regardinventoryandaredepreciatedonastraight-linebasisat33⅓%.
ParadiseOilCompany‘sassetscomprisethefollowing:2008 2007
Inventory 74 32Less:Accumulateddepreciation (32) (9)TotalParadiseOilcompanyassets 42 23
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VentrinassetsThe ventrin assets are annually depreciated on the reducingbalancemethod.The inventory are depreciated at12.5%to25%,communicationequipmentandcomputersat25%,machinesat5%,landandbuildings2%.
Movementinbunkerassetsisasfollows:
Balance01-01-08
Depreciation2008
Bookvalue12-31-08
Inventory 108 (48) 60Communicationequipmentandcomputers 143 (83) 60Machines 1,333 (362) 971Landandbuildings 1,664 (191) 1,473
3,248 (684) 2,564
ProjectsinprogressThisrelatestouncompletedprojects,includingself-constructionprojects,ofwhichtheexpendituresarecapitalizeduponcompletion.
Themovementoftheprojectsinprogressisasfollows:2008 2007
BalanceasofJanuary1 27,049 30,024Capitalizedcosts 62,021 58,394
89,070 88,418Less: reclassification to
-wellsandequipment (26,903) (43,841)- refinery (588) (30)- other fixed assets (8,042) (13,773)-expense (7,753) (3,725)-dividend* (1,626) -
BalanceasofDecember31 44,158 27,049
*)TheprepaidcostsfortheextensionoftheExclusiveEconomicZonearesubstractedfromdividend.
Current liabilities4.2.8 Accounts payable
2008 2007Accountspayableinforeigncurrencies 4,935 7,114AccountspayableinSurinamesedollars 1,670 1,590
6,605 8,704
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4.2.9 Bank overdraftVentrinhasanoverdraftfacilityofUS$448,134.Thefacilityloansaccrueinterestat9.5%andadditionalinterestof5%iftheoverdraftexceedsUS$448,134.Theadditionalischargedontheexcessamount.
4.2.10 Accrued liabilitiesAccruedliabilitiesrelatetoliabilitiesotherthantosuppliersofgoodsandservicesforproduction.Thesedebtsareasfollows:
2008 2007Cashdividend 116,692 58,326Payablesregardingtheimportoffueloil 17,825 316Allowancespayabletomanagementandpersonnel 4,162 3,221PayablesAICregardingtheacquisitionofsharesVentrin 4,000 -Payablesregardingconsultancyandotherservices 3,271 2,040Othershorttermprovisions 1,752 1,073Salesexpenses 912 145Otherpayables 401 113Maintenance costs to be paid for the refinery - 901
149,015 66,135
4.2.11 Income and other taxes 2008 2007
Incometax 35,575 36,745Othertaxesandsocialsecurity (7,286) (3,760)
28,289 32,985
Provisions4.2.12 Deferred income taxesMovementsin2008inthedeferredincometaxeswereasfollows:
2008 2007BalanceasofJanuary1 37,415 31,007Movementdueto:Difference between commercial and fiscal calculation of profit 12,471 6,833Less: result of unrealized financial gains from investments for pension plan (3,631) (425)BalanceasofDecember31 46,255 37,415
4.2.13 Provision for dismantlement and abandonmentProvisionfordismantlementandabandonmentcomprisesthefollowing:
2008 2007Productionfieldin2008:1,188wells(2007:1,098wells) 50,654 44,166Productionfacilities:SaramaccaandpipelinetoTLF 3,897 3,454RefineryandpipelinetoParanam 4,225 3,965Powerplant 642 920
59,418 52,505
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4.2.14 Provision for pensions and other postretirement benefits2008 2007
Unfunded accrued pension benefits insured pension plan 645 463Unfunded accrued pension benefits health care plan 5,223 5,483
5,868 5,946
4.2.15 Provision for pension planTheprovisionforpensionplanofUS$521,892regardsanaccruedpensioncostrelatedtothepensionplanforemployees.PensionsandotherpostretirementbenefitsStaatsoliemaintains3planswithregardtopensionsandpostretirementbenefits:• Thepensionplan for employees,which ismanagedby the ‘StichtingPensioenfondsvoorWerknemersvan
StaatsolieMaatschappijSurinameN.V.’;• Theinsuredpensionplan;• Theunfundedhealthcarebenefitplanforretiredpersonnel.
Theseplanscanbespecifiedasfollows:
Pension benefits Insuredpensionbenefits
Post-retirementhealthcare
2008 2007 2008 2007 2008 2007Benefit obligation as of December 31 (42,234) (29,615) (645) (463) (8,906) (8,230)FairvalueofplanassetsasofDecember 41,712 37,692 - - 3,683 2,74831FundedstatusasofDecember31 (522) 8,077 (645) (463) (5,223) (5,482)
(in%) Pension benefits Insuredpensionbenefits
Healthcare
Actuarialassumptions 2008 2007 2008 2007 2008 2007Actuarialdiscountrate 5.8 6.0 5.9 6.0 6.0 6.0ExpectedreturnonplanassetsAdjustment for inflation and salary developmentsRate of benefit increase
6.56.52.5
6.56.02.5
-5.0
-
-4.5
-
---
--
-
Theexpectedincreaseofmedicalcostisratedat5.5%annually.
Pension benefits Healthcare2008 2007 2008 2007
Employer’scontribution 2,140 1,893 - -Employee’scontribution 713 635 - -Benefits paid 162 129 43 21
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Pension Benefits Insured Pension benefits Post-retirementhealthcare
asofDecember31 2007 2008 2009 2007 2008 2009 2007 2008 2009
Servicecosts (1,711) (1,877) (2,582) (20) (23) (32) (436) (534) (537)Interestcosts (1,415) (1,777) (2,428) (20) (28) (37) (345) (491) (509)Returnonassets 2,180 2,530 2,803 - - - 178 239UnrecognizedTransitioncost
(21)
(21)
(21)
(19)
(15)
(9)
(121)
(121)
(121)
UnrecognizedPriorServiceCost - - (176)
(17)
(13)
(6) - - -
UnrecognizedGains/Losses - - (66) 9
5 -
(58) (113) (92)
NetPensioncosts (967) (1,145) (2,470) (67) (74) (84) (960) (1,081) (1,020)
InvestmentsPensionFund1)
2008 % 2007 %
Realestate 11,007 29 10,224 29Securities 7,584 20 9,033 25Mortgageloans 19,236 51 16,161 46
37,827 35,418
1)Thesegmentationofinvestmentsofthe‘StichtingPensioenfonds’isrestrictedtotheguidelinesofthe“CentraleBankvanSuriname”.
4.2.16 Minority interest VentrinTheamountofUS$2,414regardstheminorityinterestof1.6%inVentrininnameofEntechLimited.
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4.2.17 Stockholders equity
In2008,thestockholders’equityconsistsofthefollowing:
1)Annually, an amount of US$ 500,000 is allocated for environmental risks.As of December 31, 2008, theappropriatedreserveforenvironmentalriskamountedtoUS$4.5million.
2)AnadditionalamountofUS$1millionhasbeenallocatedforcommunitydevelopmentprojects.
3) Net other comprehensive income is specified as follows:
BalanceasofJanuary1 (1,775)
Unrecognizedtransitioncost 157Unrecognizedpriorservicecost (2,991)Unrecognizedgains/losses (7,252)
(10,086)Deferredincometax 3,631BalanceasofDecember31,2008 (8,230)
Commonstock
Generalreserve
Appropriatedreserve Unrealizedgainsandlossesshortterminvestments
Netothercompre-hensiveincome3)
Total
CommissieRehabiltatieenUitbreidingSportfaciliteiten
StaatsolieFoundationforCommunityDevelopment2)
BalanceasofJanuari1 12,104 259,051 5,960 10,390 (1,775) 285,730
Equity movements:Transferfromearnings2008 99,573 99,573Prepaid pension benefits 2008 1,843 1,843Appropriatedreserveforenvironmentalrisk1) 500 500
Consolidationdifference 274 274CommonstockPOC (259) (259)Withdrawal (712) (712)Allocation 1,000 1,206 (6,455) (4,249)
BalanceasofDecember31 12,104 360,982 5,248 1,000 11,596 (8,230) 382,700
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ThedifferenceofUS$199,878betweenthestockholders’equityandtheconsolidatedstockholdersequityregardsthefollowing:• ThenegativenetcapitalvalueofUS$258,543ofPOC,regardsthecumulativenegativeresultof2006,2007and
2008;basedonthis,theequityinvestmentisvaluedatnil.ThenetlossofPOCamountstoUS$120,970.• TheeliminationofStaatsolie’sprofitfromsalestoVentrintotheamountofUS$347,238,accordingtothe
ending-stockasofDecember31,2008.• AdjustmentofthedividendofUS$225,274andtaxesofUS$180,629asaresultofthefactslistedabove.
Off-balancecommitmentsandcontingenciesIn2008,theoff-balancecommitmentsandcontingenciesconsistofthefollowing:
2009 2010-2013 Total
Long-termsalescontracts (225,663) (225,663) (451,326)Operationallease 1,440 1,388 2,828Claims 1,194 - 1,194Orderedgoods,notshipped 51,297 - 51,297Studygrants 450 802 1,252Total (171,282) (223,473) (394,755)
Thefollowingevents,afterthebalancesheetdate,aredisclosed:• InMarch2009,Staatsoliehasacquireda5.96%equityinterestin‘Hakrinbank’.Withthistheequityinterest
in‘Hakrinbank’increasedto6.27%.
• Aspart of the refinery expansion project, Staatsolie has entered into contractual obligations in 2008 withLicense and Engineering companies to the amount of US$ 25 million. Besides, there will be contractualobligationswithotherserviceprovidersamountingtoUS$7.8million.Mostofthesecontractswiththeserviceproviderswillbesignedin2009.Thesecontractsare:
Contract AllocationandtermsCB&ILummmusB.V. 18,400 FrontEndDesign3;5yearsChevronLummusGlobalLLC 3,300 EngineeringandLicenceHydrocrackerunit;10yearsHaldorTopsoeA/S 1,200 EngineeringandLicenseSulfuricAcidunit;10yearsGrimmEngineering 800 Units of the new Refinery; 5 yearsHaldorTopsoeA/S 800 EngineeringandLicenseHydrogenunit;10yearsCB&ILummmusB.V. 500 EngineeringandLicenceVisbreakerunit;15years
25,000
Otherserviceproviders*)
Consultancy ‘Patfinder’ 400EnvironmentalImpactstudy 370Soil Investigation Refinery 120SiteDevelopment 7,000
7,890
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4.3 Notes to the 2008 Consolidated Income Statement (x US$ 1,000, unless indicated otherwise)
4.3.1 Net revenues per product 2008 2007
x1,000bbls x1,000bblsLocalrefinedproducts 5,343 434,558 5,403 310,054Tradingactivities 1,481 134,597 395 24,600Electricenergy - 6,683 - 1,778Totalgrossrevenues 6,824 575,838 5,798 336,432
Net revenue local refined products after deduction ofdirectsalescosts,includingelectricenergy - 561,869 - 330,008Othersalesrelatedrevenue- inventorychangeoilstock- otherrevenues
--
3,00375
--
6391,230
Netsalesrevenue 6,824 564,947 5,798 331,877
4.3.2 DepreciationThebreakdownofthedepreciationexpensesisasfollows:
2008 2007Wellsandequipment 21,748 22,974Oilpipelines 363 928Refinery 4,401 4,200Powerplant 1,555 1,568Other fixed assets 8,042 4,587ParadiseOilCompany 23 9Ventrinassets 110 -
36,242 34,266
4.3.3 Other operational costsThebreakdownoftheotheroperationalcostsisasfollows:
2008 2007TradingactivitiesStaatsolie 58,565 24,602Importedpetroleumproductsforblending 2,490 169Electricenergy 543 2,190ParadiseOil 160 50TradingactivitiesVentrin 37,772 - 99,530 27,011
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xUS$1,000Assets 2008 2007CurrentassetsCashandcashequivalents 300,833 125,508Short-terminvestments 14,941 13,734Accountsreceivable 45,100 59,839Inventories 18,194 13,695Prepaidexpensesandothercurrentassets 13,377 5,080
392,445 217,856
InvestmentsPensionplan 57 8,177Equityinvestment 148 -
205 8,177
Property,plantandequipmentOilpropertiesEvaluatedproperties 171,784 159,918Pipelines 2,855 3,132
174,639 163,050Refinery 23,910 27,664Powerplant 17,794 19,609Other fixed assets 28,539 26,142
244,882 236,465Projectsinprogress 44,158 27,049
289,040 263,514
Totalassets 681,690 489,547
1. Balance Sheet as of December 31, 2008 (after distribution of earnings)
VI. Financial Statements Staatsolie
Paramaribo,April23,2009
TheBoardofExecutiveDirectorsM.C.Waaldijk,ManagingDirectorI.E. Kortram,FinanceDirectorB.F. Nuboer, Refining & Marketing Director
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xUS$1,000Liabilities 2008 2007CurrentliabilitiesAccountspayable 6,487 8,686Accruedliabilities 149,206 66,181Incomeandothertaxes 31,016 33,035 186,709 107,902
ProvisionsDeferredincometaxes 46,272 37,420Provisionfordismantlementandabandonment 59,418 52,505Provision for pensions & other post retirement benefits 5,868 5,946Provisionforpensionplan 522 - 112,080 95,871
Stockholders’equitySharecapital(SRD1parvalue5,000,000sharesissuedandoutstanding) 12,104 12,104Generalreserve 361,183 259,095Appropriatedreserve‘CommissieRehabilitatieenuitbreidingSportfaciliteiten’ 5,248 5,960Appropriatedreserve‘StaatsolieFoundationforCommunityDevelopment’ 1,000 -Unrealizedgainsandlossesshort-terminvestments 11,596 10,390Netothercomprehensiveincome (8,230) (1,775) 382,901 285,774
Totalstockholders'equity&liabilities 681,690 489,547
Paramaribo,April23,2009
TheSupervisoryBoardS. Marica ActingChairmanR.S. Adhin MemberR.K.Pahladsingh MemberF.T. Kasantaroeno Member
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2. Income statement 2008
xUS$1,000 2008 2007Revenuesfrom Production & Refining 473,921 310,054Tradingactivities 58,096 24,600Electricenergy 6,683 1,778Inventoryvariation 2,618 639Otherrevenues 75 1,230
541,393 338,301Less:export-,transport-andsalescosts (14,447) (6,424)Netrevenues 526,946 331,877
Explorationexpensesincludingdryholes (5,366) (3,963)Productionexpenses (25,945) (20,128)Refinery expenses (10,679) (8,617)Depreciation (36,109) (34,257)Otheroperationalcosts (61,762) (26,492)Operatingincome 387,085 238,420
Generalandadministrativeexpenses (23,468) (13,287)Impairmentofequityinvestment/goodwill (8,356) (377)Financialincome 4,930 3,688Earningsbeforetax 360,191 228,444
Incometaxcharge (129,357) (81,675)Net profit 230,834 146,769
Paramaribo,April23,2009
TheBoardofExecutiveDirectors TheSupervisoryBoardM.C.Waaldijk,ManagingDirector S. Marica,ActingChairmanI.E. Kortram,FinanceDirector R.S. Adhin,MemberB.F. Nuboer, Refining & Marketing Director R.K. Pahladsingh, Member F.T. Kasantaroeno,Member
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3. Notes to Staatsolie balance sheet
The accounting principles used for the consolidated financial statements are also applicable for the financialstatementsofStaatsolie.Statedbelowarethespecificnotesapplicableforthefinancialstatementsregardingtheequityinvestmentandtheshareholdersequityinthebalancesheet.
Equity InvestmentThisaccountregardsthemajorityinterestinassociatedcompanies.Equity investments are accounted for using the equity method. Staatsolie has a majority interest in VentrinPetroleum Company Limited. Ventrin is a bunkering company incorporated in the Republic of Trinidad andTobago.In2008,Staatsolie’sinterestof30%inVentrinwasincreasedto98.4%.Theamountpayableforthesesharesisincludedintheaccruedliabilities.
ParadiseOilCompany(POC)isawhollyownedsubsidiaryofStaatsolieandisdomiciledinSuriname.In2008,POChasanegativenetassetvalueofUS$258,543andthereforetheparticipationwasvaluedatnil.ThenetlossofPOCin2008amountedUS$120,970.
Shareholders’ equityThedifferencebetweencorporateandconsolidatedshareholders’equityisdisclosedonpage40.
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1. Auditors’ report
ReportonthefinancialstatementsWe have audited the accompanying financialstatements2008ofStaatsolieMaatschappijSurinameN.V., Paramaribo, which comprise the balance sheetasatDecember31,2008,thecashflowstatementandtheprofitandlossaccountfortheyearthenendedandthenotes.
Management’sresponsibilityManagement is responsible for the preparation andfair presentation of the financial statements and forthepreparationofthemanagementboardreport,bothin accordance with accounting principles generallyaccepted in the United States of America. Thisresponsibility includes: designing, implementing andmaintaininginternalcontrolrelevanttothepreparationand fair presentation of the financial statements thatare free from material misstatement, whether due tofraud or error; selecting and applying appropriateaccountingpolicies;andmakingaccountingestimatesthatarereasonableinthecircumstances.
Auditors’responsibilityOur responsibility is to express an opinion on thefinancialstatementsbasedonouraudit.Weconductedour audit in accordance with auditing standardsgenerally accepted in the United States ofAmerica.Those standards require thatwecomplywithethicalrequirementsandplanandperformtheaudittoobtainreasonableassurancewhetherthefinancialstatementsarefreefrommaterialmisstatement.
An audit involves performing procedures to obtainaudit evidence about the amounts and disclosures
in the financial statements. The procedures selecteddepend on the auditor’s judgment, including theassessment of the risks of material misstatement ofthe financial statements, whether due to fraud orerror. In making those risk assessments, the auditorconsiders internal control relevant to the entity’spreparation and fair presentation of the financialstatements in order to design audit procedures thatare appropriate in the circumstances, but not for thepurposeofexpressinganopinionontheeffectivenessoftheentity’sinternalcontrol.Anauditalsoincludesevaluating theappropriatenessofaccountingpoliciesused and the reasonableness of accounting estimatesmadebymanagement,aswellasevaluatingtheoverallpresentationofthefinancialstatements.
Webelievethat theauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforourauditopinion.
OpinionIn our opinion, the financial statements referred toabove present fairly, in all material respects, thefinancialpositionofStaatsolieMaatschappijSurinameN.V. as of December 31, 2008 and the result forthe year then ended in accordance with accountingprinciples generally accepted in the United States ofAmerica.
Furthermore,wereport,totheextentofourcompetence,that the management board report is consistent withthefinancialstatements.
Paramaribo,April6,2009TjongAHungAccountants
Accountants
T j o n g A H u n g i s a n a s s o c i a t e d f i r m o f P r i c e w a t e r h o u s e C o o p e r s
VII. Other Information
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2. Distribution of earningsArticlesofassociationDistribution of earnings takes place in accordancewithArticle28of the articlesof association,whichstipulates that net earnings reflected in the balancesheet and incomestatement, adoptedby theAnnualGeneral Meeting, is placed at the disposal of theGeneralMeetingofShareholders.
2008distributionofearningsIn2008,anetprofitwasrealizedofUS$230.5million.Management proposed a cash dividend of 55%, anaddition to the appropriated reserve for ‘StaatsolieFoundation for Community Development’, profitsharingformanagementandpersonnel,areserveforenvironmental risks and the remaining balance tobe added to the general reserve. This proposal wasadoptedat thegeneralmeetingof shareholdersheldonApril23,2009.
3. Adoption of Financial Statements of the preceding fiscal year
The 2007 Financial Statements were adopted at theGeneral Meeting of Shareholders held on June 26,2008 and included Management's proposal for theappropriationofthe2007profit.
Staatsolie Maatschappij Suriname N.V.StateOilCompanyofSurinameDr.Ir.H.S.Adhinstraat21P.O.Box4069,FloraParamaribo,SurinamePhone:(597)499649Fax:(597)491105Website:www.staatsolie.com
ExplorationrigSovereignExplorerinBlock30offshoreSuriname.InApril2008,RepsolYPFandpartnersdrilledtheWestTapirexplorationwell.
In-lineinspectionSaramacca-ToutLuiFautpipeline
HedwigdelaFuente,HubertHermelijn,MarcWaaldijkandStaatsoliePublicRelations
ArtSabinaDesign&PrintingNV
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