Anderson Exploration Ltd.: Third Quarter Report & News Release.Business Editors CALGARY Calgary (kăl`gərē), city (1991 pop. 710,677), S Alta., Canada, at the confluence of the Bow and Elbow rivers. The largest city in Alberta and the fastest-growing major city in Canada, Calgary is a corporate, transportation, and financial , Alberta--(BUSINESS WIRE)--Aug. 9, 2001 For the nine months ended June June: see month. 30, 2001 Anderson Anderson, river, Canada Anderson, river, c.465 mi (750 km) long, rising in several lakes in N central Northwest Territories, Canada. It meanders north and west before receiving the Carnwath River and flowing north to Liverpool Bay, an arm of the Arctic Exploration (NYSE NYSE See: New York Stock Exchange :AXN AXN Accion (Spanish: Action) AXN Action Network AXN Autotask Extend Network )(TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :AXL.) announces excellent operating and financial results for the third quarter of fiscal 2001 ending June 30. Compared to the same quarter in fiscal 2000, gas sales volumes were up 25% and liquids sales volumes were up 58%. Cash flow and earnings from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the in the third quarter improved by 78% and 180% respectively compared to the third quarter of fiscal 2000. Oil and gas sales volumes were up over 10% from the second quarter of 2001, but cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses and earnings were down by 18% and 5% respectively due to reductions in commodity prices, particularly for natural gas which declined 31% quarter over quarter. In the nine month period, gas sales volumes increased by 25% and liquids sales volumes were up by 56% compared to the same period in 2000. Cash flow from continuing operations improved by 143% and earnings from continuing operations were up by 261%. Cash flow from operations for the nine month period was $1.26 billion ($9.64/share) and earnings were $564 million ($4.30/share). Notwithstanding the recent reduction in commodity prices, Anderson Exploration is obviously on track to experience a spectacular and record year in fiscal 2001.
HIGHLIGHTS
Three months Nine months
ended June 30 ended June 30
% %
2001 2000 Change 2001 2000 Change
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FINANCIAL
(in millions, except
per share amounts)
Total oil and gas
revenue $ 680.6 $ 382.7 78 $2,166.8 $ 925.9 134
Oil and gas
revenue, net of
royalties $ 528.5 $ 303.3 74 $1,663.8 $ 740.9 125
Cash flow from
operations $ 389.7 $ 218.6 78 $1,264.4 $ 524.1 141
Per common share
(basic) $ 2.96 $ 1.71 73 $ 9.64 $ 4.15 132
Earnings $ 190.4 $ 131.6 45 $ 564.3 $ 221.8 154
Per common share
(basic) $ 1.45 $ 1.03 41 $ 4.30 $ 1.75 146
Average shares
outstanding 131.5 128.2 3 131.2 126.2 4
Net oil and gas
capital
expenditures $ 195.2 $ 117.3 66 $ 802.0 $ 494.2 62
Long term debt $1,471.9 $1,278.5 15
Shareholders' equity $1,988.7 $1,464.3 36
OPERATING
Daily sales
Natural gas (Mmcfd) 835 668 25 753 601 25
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Light/medium crude
oil (Bpd) 33,103 23,803 39 30,878 22,647 36
Heavy crude
oil (Bpd) 17,205 5,806 196 12,632 5,061 150
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Total crude
oil (Bpd) 50,308 29,609 70 43,510 27,708 57
NGL (Bpd) 16,525 12,571 31 16,117 10,605 52
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Total liquids (Bpd) 66,833 42,180 58 59,627 38,313 56
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Average prices
Natural gas
($/Mcf) $ 6.49 $ 4.09 59 $ 7.86 $ 3.40 131
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Light/medium crude
oil ($/Bbl) $ 36.83 $ 39.81 (7) $ 39.40 $ 37.78 4
Heavy crude oil
($/Bbl) $ 16.81 $ 28.43 (41) $ 15.08 $ 26.98 (44)
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Total crude oil
($/Bbl) $ 29.98 $ 37.58 (20) $ 32.34 $ 35.80 (10)
NGL ($/Bbl) $ 33.01 $ 28.91 14 $ 36.87 $ 27.66 33
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Total liquids
($/Bbl) $ 30.65 $ 35.00 (12) $ 33.50 $ 33.55 -
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Wells drilled for
oil and gas
(gross wells)
Gas wells 40 15 167 334 233 43
Oil wells 39 50 (22) 153 131 17
Dry holes 11 9 22 113 80 41
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Total 90 74 22 600 444 35
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PRICES Natural gas prices in the quarter averaged $6.49 per thousand cubic feet, an increase of 59% over last year and a decrease of 31% from the second quarter of fiscal 2001. The average price for the first nine months of the year was $7.86 per thousand cubic feet. The average price for light and medium crude oil in the quarter decreased 7% from last year to $36.83 per barrel. Heavy oil prices were down 41% from the same quarter last year, averaging $16.81 per barrel, as the light to heavy oil differential widened considerably from last year. The light to heavy oil differential is expected to narrow in the fourth quarter as a result of a stronger asphalt asphalt (ăs`fôlt, –fălt), brownish-black substance used commonly in road making, roofing, and waterproofing. Chemically, it is a natural mixture of hydrocarbons. market, lower condensate condensate, matter in the form of a gas of atoms, molecules, or elementary particles that have been so chilled that their motion is virtually halted and as a consequence they lose their separate identities and merge into a single entity. prices and the possibility of OPEC OPEC: see Organization of Petroleum Exporting Countries. OPEC in full Organization of the Petroleum Exporting Countries Multinational organization established in 1960 to coordinate the petroleum production and export policies of its shutting in some heavy oil production. In the third quarter, 26% of Anderson Exploration's total liquids production and 8% of its barrel equivalent production was represented by heavy oil. Average NGL NGL - A dialect of IGL. prices increased 14% from the third quarter last year to $33.01 per barrel this year. In the first nine months of the year, the Company's overall liquids price averaged $33.50 per barrel and was substantially the same as last year.
Average Company Prices
Nine months ended June 30
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1997 1998 1999 2000 2001
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Natural Gas ($ per Mcf) 1.97 1.97 2.39 3.40 7.86
Crude Oil ($ per Bbl) 26.15 18.66 18.80 35.80 32.34
NGL ($ per Bbl) 26.24 17.74 13.62 27.66 36.87
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PRODUCTION/SALES Overall, third quarter sales increased 34% from the same period last year to 206,000 barrels of oil equivalent per day. Natural gas sales averaged 835 million cubic feet per day in the third quarter of fiscal 2001, an increase of 25% from the same quarter last year and 12% from the second quarter of fiscal 2001. The increase is due to the inclusion of a full quarter of production from the Numac acquisition completed in February February: see month. 2001, the inclusion of production from the Ulster Ulster, northernmost of the historic provinces of Ireland. Modern Ulster consists of nine counties. Six (Antrim, Armagh, Down, Fermanagh, Derry, and Tyrone) now make up Northern Ireland (see Ireland, Northern), which is often referred to as Ulster; the remaining acquisition completed in May 2000 and the tie in of new wells in several areas. For the nine month period, gas sales averaged 753 million cubic feet per day, a 25% increase over the same period last year. Total liquids sales of 66,833 barrels per day Barrels per day (abbreviated BPD, bbl/d, bpd, bd or b/d) is a measurement used to describe the amount of crude oil (measured in barrels) produced or consumed by an entity in one day. in the third quarter increased 58% from last year and 7% from last quarter. This increase can be attributed to the inclusion of the Numac and Ulster properties and a successful drilling program. Light and medium oil sales were 33,103 barrels per day in the third quarter, an increase of 39% from last year and 1% from the second quarter of fiscal 2001. Heavy oil sales were 17,205 barrels per day, an increase of 196% from last year and 41% from the second quarter of fiscal 2001. The increase in heavy oil sales reflects both the Numac acquisition and a successful Lloydminster Lloydminster (loid`mĭnstər), city (1991 pop. in Alberta, 10,042; in Saskatchewan, 7,241), on the Alta.-Sask. boundary, Canada. The city is chartered by both provinces. exploration and development program last fall. NGL sales were 16,525 barrels per day in the third quarter, an increase of 31% from last year and a 7% decrease from the second quarter of fiscal 2001. The decrease in NGL sales in the third quarter was due to the Shell Caroline Car·o·line adj. Relating to the life and times of Charles I or Charles II of England. [Medieval Latin Carol plant being shut in for two weeks in April and the Dunvegan Dunvegan (Gaelic: Dùn Bheagain) is a town on the Isle of Skye in Scotland. It is famous for Dunvegan Castle, seat of the chief of Clan MacLeod. The name Dunvegan is Scottish Gaelic for "small castle". plant being shut in for seven days in June for scheduled maintenance. Total liquids sales for the first nine months of the year were 59,627 barrels per day. OPERATIONS In the first nine months of fiscal 2001, Anderson Exploration's capital expenditures were $802 million, an increase of 62% from last year. Anderson Exploration participated in drilling 600 gross (440 net) wells for oil and gas compared to 444 gross (341 net) wells last year. The drilling resulted in 334 gas wells, 153 oil wells and 113 dry holes. During the third quarter, a total of 90 gross (63 net) wells were drilled, resulting in 40 gas wells, 39 oil wells and 11 dry holes. In the Deep Basin area, 17 wells were drilled in the third quarter, resulting in 15 gas wells and two dry holes. Tie ins of successful wells drilled in the first and second quarters, primarily in the Bilbo bil·bo 1 n. pl. bil·boes An iron bar to which sliding fetters are attached, formerly used to shackle the feet of prisoners. [Origin unknown.] and Wapiti wapiti (wŏp`ĭtē), large North American deer, Cervus canadensis, closely related to the Old World red deer. It is commonly called elk in America although the name elk is used in Europe to refer to the moose. areas, resulted in increased production from the area. Well operations commenced on the Elmworth major sour gas Sour gas is natural gas or any other gas mixture which contains significant amounts of hydrogen sulfide (H2S). According to this reference [1], natural gas is usually considered sour if there are more than 5. project which is scheduled to come on stream in mid fiscal 2002. In the Foothills area, Anderson Exploration is seeking EUB EUB Energy and Utilities Board (Alberta, Canada) EUB EU–Büro (Bundesministerium für Bildung und Forschung; German ministry of Science) EUB Electric Upright Bass EUB European Union Bank EUB Essential User Bypass approval to construct a 134 million cubic feet per day sweet gas plant at Narraway. Sales from the Narraway area, brought on stream through the South Wapiti gas plant in January January: see month. 2001, are currently averaging 35 million cubic feet of gas per day. A successful Blackstone Blackstone, river, c.50 mi (80 km) long, rising near Worcester, Mass., and flowing SE to Narragansett Bay at Providence, R.I. The river's clean water was a major factor in the early development of the area's textile industry. Unit infill in·fill n. 1. The use of vacant land and property within a built-up area for further construction or development, especially as part of a neighborhood preservation or limited growth program. 2. well at 7-33 is expected to commence production in mid August, adding 4 million cubic feet per day of net gas sales. In the Central and Southern Plains area of Alberta Alberta (ălbûr`tə), province (2001 pop. 2,974,807), 255,285 sq mi (661,188 sq km), including 6,485 sq mi (16,796 sq km) of water surface, W Canada. , 26 wells were drilled resulting in 16 oil wells and 10 gas wells. The drilling involved further development of the Cardium and Ellerslie Ellerslie is the name of several places:
n. 1. A ferryman. area, a successful program at Wimborne in the Leduc Leduc (ləd  k`), town (1991 pop. 13,970), central Alta., Canada, S of Edmonton. It is the center of the Leduc oil field (discovered 1947), which is now mostly depleted. reef and an
aggressive recompletion and workover program in the Clive CLIVEComputer-aided Learning in Veterinary Education. A consortium of six veterinary schools in the United Kingdom providing computer based learning in veterinary undergraduates courses. area. In addition, a development drilling plan was initiated at Elswick Elswick could be
North of 60(degrees), the Tuk 3D seismic program operated by Anderson Exploration and three 3D seismic programs operated by Petro-Canada Petro-Canada (TSX: PCA, NYSE: PCZ) is a Canadian oil and gas firm. Its headquarters are in the Petro-Canada Centre in Calgary, Alberta. History Petro-Canada was founded as a Crown Corporation in 1975 by an act of Parliament. were completed in the third quarter. The Company has received approval of its proposed offshore 3D seismic program in the shallow water See:
The triangle-shaped Yukon territory is bordered on the N by the Beaufort Sea of the Arctic Ocean, on the E by the Northwest Territories, , the Company completed its 2D seismic program. The Company's new northern drilling rig, AKITA Akita, city, Japan Akita (ä`kētä), city (1990 pop. 302,362), capital of Akita prefecture, NW Honshu, Japan, on the Sea of Japan. EQUTAK Rig #63 was recently commissioned and will be transported to Tuktoyaktuk and used initially on Anderson Exploration's Tuk 2 2001/2002 winter drilling program that will include two wells. The Company has signed an agreement to convert its 5% net profits interest to a 13% working interest in certain oil sands leases within the Surmont area. In doing so, it has also acquired an additional 133,120 gross acres of land. Effective July July: see month. 1, 2001, the Company has agreed to sell certain non-core producing oil and gas properties located in western Canada
Western Canada, commonly referred to as the West , as well as interests in several units and other minor properties. Proceeds from the sale will be approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $152 million. Third quarter production rates for these properties were approximately 5,200 barrels per day of oil and natural gas liquids and 6 million cubic feet per day of natural gas. The sale is expected to close in early September September: see month. . MANAGEMENT'S DISCUSSION AND ANALYSIS Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial Management's discussion and analysis ("MD&A") should be read in conjunction with the unaudited interim consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge for the nine months ended June 30, 2001 and the audited consolidated financial statements and MD&A for the year ended September 30, 2000. Earnings in the first nine months of the fiscal year increased 154% to $564.3 million compared to $221.8 million last year due to higher product prices and increased production while cash flow from operations increased 141% to $1,264.4 million compared to $524.1 million last year.
Cash Flow from Operations and Earnings
Nine months ended June 30
(millions of dollars)
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1997 1998 1999 2000 2001
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Cash Flow from Operations 298.3 223.6 273.0 524.1 1,264.4
Earnings 68.8 14.4 40.4 221.8 564.3
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Oil and gas revenues in the first nine months of the year increased 134% to $2.2 billion from $925.9 million last year. The following table shows the components of revenue for the first nine months of last year and this year, as well as the effect of changes in prices and volumes on revenue.
OIL AND GAS REVENUES
(millions of dollars) Gas Oil NGL Other Total
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Nine months ended
June 30, 2000 $ 560.3 $ 271.8 $ 80.4 $ 13.4 $ 925.9
Effect of change in
product price 733.9 (26.3) 26.7 - 734.3
Effect of increase in
sales volumes 321.4 138.6 55.1 - 515.1
Other - - - (8.5) (8.5)
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Nine months ended
June 30, 2001 $1,615.6 $ 384.1 $ 162.2 $ 4.9 $2,166.8
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In connection with the acquisition of Numac, the Company assumed certain obligations under commodity and transportation swap agreements. The impact of losses related to these contracts is not significant and is included in reported prices. Royalties have increased significantly this year to $503.0 million from $185.0 million last year. The increase is a direct result of the Company's increased sales volumes and a higher overall royalty rate due to substantially higher product prices. Royalties as a percentage of revenue have increased to 23% from 20% last year. Higher levels of activity in the industry as a result of the increases in product prices have resulted in cost pressures for goods, services and people. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. on a barrel of oil equivalent The barrel of oil equivalent (bboe, sometimes BOE) is a unit of energy based on the approximate energy released by burning one barrel of crude oil. The US Internal Revenue Service defines it as equal to 5.8 × 106 BTU [1]. 5. basis increased to $4.43 per barrel in the first nine months of the year from $3.76 per barrel last year. In the third quarter, operating expenses were $4.85 per barrel. Expenses in the quarter were higher than forecast due to higher than estimated costs for repair and maintenance activities conducted in the second quarter. This accounted for approximately $0.37 per barrel of oil equivalent of the increase in the quarter. In addition, expenses on recently acquired properties and expenses on non-operated properties have been higher than expected. In general, when compared to the previous year, operating expenses have increased due to the higher costs of electrical power, fuel and wages. The Company now expects total operating costs operating costs npl → gastos mpl operacionales to be approximately $310 million for the fiscal year. Market rates for electrical power have dropped since the second quarter, but have not been realized by the Company due to hedging arrangements entered into on deregulation Deregulation The reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry. Notes: Traditional areas that have been deregulated are the telephone and airline industries. of the electricity industry. Anderson Exploration has hedged its estimated net share of current power requirements for the calendar year of 2001 at an average price of $111.71 per megawatt meg·a·watt n. Abbr. MW One million watts. meg  a·watt hour. A portion of power
requirements for the calendar year 2002 has been hedged at a price of
$70.99 per megawatt hour and for the calendar year 2003 at a price of
$64.11 per megawatt hour. The June 2001 Alberta Power Pool Price for
electricity was $63.59 per megawatt hour.
NATURAL GAS AND NGL NETBACKS
Three months Nine months
ended June 30 ended June 30
(per mcf*) 2001 2000 2001 2000
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Sales revenue** $ 6.39 $ 4.16 $ 7.67 $ 3.52
Royalties (1.49) (0.86) (1.86) (0.72)
Operating costs (0.65) (0.48) (0.59) (0.48)
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Netback $ 4.25 $ 2.82 $ 5.22 $ 2.32
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* NGL converted to natural gas at 1 bbl (equals) 6 mcf.
** Excludes amortization of natural gas contract settlement payments,
straddle plant revenues, gains on brokered gas sales and other
gains/losses.
CRUDE OIL NETBACKS
Three months Nine months
ended June 30 ended June 30
(per bbl) 2001 2000 2001 2000
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Sales revenue $ 29.98 $ 37.58 $ 32.34 $ 35.80
Royalties (5.54) (7.83) (6.13) (7.08)
Operating costs (7.85) (7.52) (7.33) (7.28)
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Netback $ 16.59 $ 22.23 $ 18.88 $ 21.44
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General and administrative expenses in the first nine months of the year amounted to $53.4 million compared to $35.8 million last year. The increase is due to a higher number of employees this year because of increased activity, including the acquisition of Numac in February this year and the acquisition of Ulster in May last year. Interest expense in the first nine months of the year increased to $77.1 million from $35.6 million last year, due to an increase in the average outstanding long term debt as a result of the Numac and Ulster acquisitions. In March, the Company issued US$400 million of 6.75% senior unsecured Unsecured A loan or equity interest that is given without any guarantee of payment, performance, satisfaction or opportunity for return from the recipient. No property, interest or security is used as collateral in either a guarantee or a pledge. notes due in 2011. The proceeds from this issue, along with drawdowns of existing credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities , were used to repay the bridge facility obtained for the Numac acquisition. Depletion depletion n. when a natural resource (particularly oil) is being used up. The annual amount of depletion may, ironically, provide a tax deduction for the company exploiting the resource because if the resource they are exploiting runs out, they will no longer be able and depreciation expense in the first nine months of the year was $364.2 million compared to $216.7 million last year. On a barrel of oil equivalent basis, depletion and depreciation increased to $7.21 per barrel of oil equivalent from $5.71 per barrel last year. The increase is a result of the Numac and Ulster acquisitions, higher finding and development costs from last year and the adjustments to property, plant and equipment related to future income taxes. Income taxes increased substantially in the first nine months of the year to $364.9 million from $140.2 million last year due to higher pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta income. Current income taxes have increased to $52.1 million this year as higher revenues have outpaced capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. . Effective October October: see month. 1, 2000, Anderson Exploration retroactively ret·ro·ac·tive adj. Influencing or applying to a period prior to enactment: a retroactive pay increase. [French rétroactif, from Latin adopted the liability method of accounting for future income taxes, resulting in an increase in property, plant and equipment of $77.2 million, an increase in future income tax liabilities of $198.0 million and a charge to retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. of $120.8 million. The adjustment was principally due to the acquisition of Ulster in May 2000. On the acquisition of Numac, additional future income tax liabilities in the amount of $419.8 million were recorded to reflect asset book values acquired in excess of asset tax values. Effective April 1, 2001, the Alberta Government implemented a two percentage point decrease in the provincial income tax rate from 15.5% to 13.5%. The decrease had an immediate impact of reducing the future income tax liability by $57.0 million in the third quarter, and has reduced current income tax slightly. If the government proceeds with its intention to reduce the provincial corporate income tax rate to 8% over the next four years, the Years, The the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109] See : Time Company will record similar adjustments in subsequent years as the rate reductions are enacted. Capital expenditures in the first nine months of the year were $802.0 million compared with $494.2 million last year. In the nine month period, the Company spent $284.0 million on exploration activities in western Canada and $51.1 million on exploration activities North of 60(degrees). The Company also spent $332.1 million on development activities, $75.5 million on land acquisition and retention, $55.3 million on property acquisitions (net of dispositions of $5.6 million) and $4.0 million on corporate and other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. . The Company has entered into an agreement to dispose of To determine the fate of; to exercise the power of control over; to fix the condition, application, employment, etc. of; to direct or assign for a use. See also: Dispose certain non-core oil and gas properties for total proceeds of approximately $152 million, which will be applied to outstanding debt. The Company now expects to spend about $892 million in the field in fiscal 2001, $50 million more than previously estimated due to additional property acquisitions. In the first nine months of the fiscal year, the Company purchased 1,566,700 common shares under its Normal Course Issuer Bids at an average price of $28.14. An additional 150,100 shares have been purchased subsequent to June 30, 2001 at an average price of $25.95 per share. Anderson Exploration's financial obligations increased by $501.4 million in the nine months ended June 30, 2001. Long term debt increased by $345.0 million due to the Numac acquisition and the working capital deficiency A shortage or insufficiency. The amount by which federal Income Tax due exceeds the amount reported by the taxpayer on his or her return; also, the amount owed by a taxpayer who has not filed a return. increased by $156.4 million. However, the Company's financial obligations decreased by $223.3 million during the third quarter. Long term debt was reduced by $99.0 million due to debt repayments of $68.4 million and a strengthening Canadian/U.S. dollar exchange rate, which reduced the amount of U.S. dollar denominated debt payable. The working capital deficiency decreased by $124.3 million as invoices relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the winter drilling program were paid. The long term debt to cash flow ratio at June 30, 2001, based on cash flow from operations for the previous four quarters, decreased to 1.0 compared to 1.4 at September 30, 2000. This improvement was achieved even after financing the Numac acquisition and conducting the largest capital program in the Company's history. On July 31, 2001, the Company issued five year notes under its Medium Term Note program pursuant to a Short Form Shelf Prospectus A document, notice, circular, advertisement, letter, or communication in written form or by radio or television that offers any security for sale, or confirms the sale of any security. dated June 28, 2000. The Company issued $200 million of 6.55% unsecured, non-redeemable notes maturing August 2, 2006 through a group of Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. dealers. The notes were priced at $99.874 to yield 6.58%. Net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). will be used to repay existing bank debt. On May 10, 2001, the Company's shares began trading on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. under the symbol AXN. The Company's shares continue to trade on the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. under the symbol AXL. OUTLOOK Natural gas prices have steadily declined through the year since the very high prices realized in December December: see month. 2000 and January 2001. As a result of those price spikes spikes see peplomer. early in the year, considerable volume was taken out of the demand side of the continental natural gas equation. As well, near record gas well drilling Well drilling is the process of drilling a hole in the ground for the extraction of a natural resource such as ground water, natural gas, or petroleum. Drilling for the exploration of the nature of the material underground (for instance in search of metallic ore) is best described has added additional supply. As a result, injection into storage facilities in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. has exceeded expectations and we now expect storage to be essentially full at the beginning of the heating season. The net effect of all this is the decline in price. However, the basic fundamentals of the business in North America have not changed since supply and demand remain in delicate balance. Notwithstanding full storage, we do expect prices to firm somewhat as we approach the heating season. Our fourth quarter natural gas price will be the lowest quarterly price realized this year. For the remainder of the year, we expect oil prices to remain essentially where they are today. Sales volumes in the fourth quarter will be lower than the third quarter as a result of the property disposition that was effective July 1. We now expect sales volumes to average about 188,000 barrels of oil equivalent per day for fiscal 2001, slightly below previous estimates, due to weather delays and a recent pipeline rupture rupture, in medicine: see hernia. and fire at the non-operated South Wapiti gas plant. The South Wapiti incident occurred on July 26, 2001 and initially shut in approximately 89 million cubic feet per day of natural gas and 2,400 barrels per day of natural gas liquids production. Currently, there is approximately 45 million cubic feet per day of natural gas and 1,200 barrels per day of natural gas liquids shut in. The production is expected to be back on by late August 2001. While some projects have been delayed due to wet weather, the fourth quarter is still expected to be very busy in the field. In the Foothills, gas projects are expected to come on stream at Bighorn Bighorn, river, United States Bighorn, river, 461 mi (741 km) long, formed in W central Wyo. by the confluence of the Wind and Pop Agie rivers and flowing north to join the Yellowstone River in S Mont. and Moose Mountain Moose Mountain refers to:
area of constant cold. [Geography: WB, A:600] See : Coldness (language, music) Arctic - A real-time functional language, used for music synthesis. ["Arctic: A Functional Language for Real-Time Control", R.B. Class drilling rig for its upcoming operation in the Mackenzie Mackenzie, river, c.1,120 mi (1,800 km) long, issuing from Great Slave Lake, Northwest Territories, Canada, and flowing generally NW to the Arctic Ocean through a great delta. Between Great Slave Lake and Lake Athabasca it is known as the Slave River. Delta and shallow water Beaufort Sea. The Company has contracted the rig for four years in order to fulfill ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. its drilling commitments on its exploratory acreage in the area. The rig is being trucked from Edmonton to Hay River Hay River A river of northwest Canada rising in northeast British Columbia and flowing about 853 km (530 mi) generally northeast across northwest Alberta to Great Slave Lake in southern Northwest Territories. in the Northwest Territories Northwest Territories, territory (2001 pop. 37,360), 532,643 sq mi (1,379,028 sq km), NW Canada. The Northwest Territories lie W of Nunavut, N of lat. 60°N, and E of Yukon. and then barged down the Mackenzie River Mackenzie River River system, Northwest Territories, Canada. It flows northward from Great Slave Lake into the Beaufort Sea of the Arctic Ocean. Its basin, with an area of 697,000 sq mi (1,805,200 sq km), is the largest in Canada. for storage in Tuktoyaktuk until it is moved on the first location after freeze See abend. freeze - To lock an evolving software distribution or document against changes so it can be released with some hope of stability. Carries the strong implication that the item in question will "unfreeze" at some future date. up. We expect to drill two wells with the rig this winter and as well participate in two other wells operated by our partner on joint lands. The Company is proceeding with a preliminary fiscal 2002 capital budget of $1 billion which may be varied by 20% in either direction. The budget will be firmed up in November November: see month. and will be dependent on prices and industry costs at that time. Approximately $170 million of this capital has been allocated to the North of 60(degrees) exploration program. Our preliminary estimate of average sales volumes for 2002 are in the range of 190,000 to 210,000 barrels of oil equivalent per day. We look forward to completing fiscal 2001, which of course, will be by far our best year ever. At present we cannot predict that 2002 will beat 2001 financially because of the current outlook for commodity prices, but we do expect a very good year. Anderson Exploration will be conducting a conference call to review its financial and operating results today at 11:00 a.m. Mountain Daylight For other uses, see Daylight (disambiguation). Daylight or the light of day is the combination of all direct and indirect sunlight outdoors during the daytime (and perhaps twilight). Time (1:00 p.m. Eastern Daylight Time). The conference call and presentation slides will also be available via a live internet webcast from the Company's website. The conference call can be accessed by calling 1-888-209-3793 (toll free long distance) or 416-641-6696 (Toronto Toronto (tərŏn`tō), city (1998 est pop. 2,400,000), provincial capital, S Ont., Canada, on Lake Ontario. Toronto is the largest city in Canada and since the 1970s has been one of the fastest-changing cities in North America, experiencing area and outside North America) or by signing on to our live webcast from our website at www.axl.com. A replay of the conference call will be available until August 16, 2001 by calling 1-800-558-5253 and entering pass code 19336928. A replay of the internet webcast will be available until August 23, 2001 on the Company's website. DIVIDEND ANNOUNCEMENT On August 8, 2001, Anderson Exploration announced that it had declared de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. an initial semi-annual dividend of $0.16 per share on its common shares, payable October 1, 2001 to shareholders of record at the close of business on September 16, 2001. IN MEMORIAM In Memoriam Tennyson’s tribute to his friend, A. H. Hallam. [Br. Lit.: Harvey, 808] See : Grief On July 28, 2001, Ian Bayer passed away. Ian had been a director of Anderson Exploration for the last 18 years. Ian served on various committees of the Board of Directors over the years, including serving on the Audit Committee since the Company became public in 1988. His wise counsel will be greatly missed.
CONSOLIDATED BALANCE SHEETS
(unaudited)
(stated in millions of dollars)
June 30, September 30,
2001 2000
-------------------------
ASSETS
Current assets
Accounts receivable $ 258.6 $ 227.7
Inventories 17.0 17.8
-------------------------
275.6 245.5
Property, plant and equipment (notes 1 and 2) 5,592.2 3,728.1
-------------------------
$ 5,867.8 $ 3,973.6
-------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Bank indebtedness $ 19.5 $ 32.4
Accounts payable and accrued liabilities 433.5 272.9
Taxes payable 42.0 3.2
-------------------------
495.0 308.5
Long term debt (note 2) 1,471.9 1,126.9
Other credits (notes 1 and 2) 140.5 133.6
Future income taxes (notes 1 and 2) 1,771.7 841.1
-------------------------
3,879.1 2,410.1
-------------------------
Shareholders' equity
Share capital (note 3) 887.3 905.3
Retained earnings (note 1) 1,101.4 658.2
-------------------------
1,988.7 1,563.5
-------------------------
$ 5,867.8 $ 3,973.6
-------------------------
See selected notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
(stated in millions of dollars, except per share amounts)
Three months Nine months
ended June 30 ended June 30
2001 2000 2001 2000
-------------------------------------
Revenues
Oil and gas $ 680.6 $ 382.7 $2,166.8 $ 925.9
Royalties, net of ARTC of
$0.4 million
(2000 - $0.5 million) (152.1) (79.4) (503.0) (185.0)
-------------------------------------
528.5 303.3 1,663.8 740.9
-------------------------------------
Expenses
Operating 91.0 52.9 223.7 142.5
Depletion and depreciation 142.4 82.7 364.2 216.7
General and administrative 17.2 14.3 53.4 35.8
Interest 26.9 17.7 77.1 35.6
Future site restoration 6.5 4.8 16.2 13.6
-------------------------------------
284.0 172.4 734.6 444.2
-------------------------------------
Earnings from continuing operations
before taxes 244.5 130.9 929.2 296.7
-------------------------------------
Taxes
Current 3.4 (0.2) 52.1 7.3
Future (note 1) 50.7 63.0 312.8 132.9
-------------------------------------
54.1 62.8 364.9 140.2
-------------------------------------
Earnings from continuing operations 190.4 68.1 564.3 156.5
Earnings from discontinued
operations (note 5) - 63.5 - 65.3
-------------------------------------
Earnings $ 190.4 $ 131.6 $ 564.3 $ 221.8
-------------------------------------
Basic earnings per common share
From continuing operations $ 1.45 $ 0.53 $ 4.30 $ 1.24
From discontinued operations - 0.50 - 0.51
-------------------------------------
$ 1.45 $ 1.03 $ 4.30 $ 1.75
-------------------------------------
Diluted earnings per common share
From continuing operations $ 1.42 $ 0.52 $ 4.21 $ 1.23
From discontinued operations - 0.49 - 0.51
-------------------------------------
$ 1.42 $ 1.01 $ 4.21 $ 1.74
-------------------------------------
Weighted average number of common
shares outstanding (millions) 131.5 128.2 131.2 126.2
-------------------------------------
See selected notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(unaudited)
(stated in millions of dollars)
Nine months ended June 30
2001 2000
-------------------------
Retained earnings, beginning of period $ 658.2 $ 344.7
Retroactive adjustment to opening retained
earnings (note 1) (121.1) -
Earnings 564.3 221.8
-------------------------
Retained earnings, end of period $ 1,101.4 $ 566.5
-------------------------
See selected notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(stated in millions of dollars, except per share amounts)
Three months Nine months
ended June 30 ended June 30
2001 2000 2001 2000
-------------------------------------
Cash provided by (used in):
Operations
Earnings from continuing
operations $ 190.4 $ 68.1 $ 564.3 $ 156.5
Add (deduct) non-cash items:
Depletion and depreciation 142.4 82.7 364.2 216.7
Future site restoration 6.5 4.8 16.2 13.6
Future taxes 50.7 63.0 312.8 132.9
Other (0.3) - 6.9 -
-------------------------------------
Cash flow from continuing
operations 389.7 218.6 1,264.4 519.7
Cash flow from discontinued
operations (note 5) - - - 4.4
-------------------------------------
Cash flow from operations 389.7 218.6 1,264.4 524.1
Change in deferred revenue (2.1) (2.6) (7.2) (7.7)
Change in non-cash working
capital related to:
- continuing operations 37.2 (44.6) 126.7 (53.4)
- discontinued operations (note 5) - - - 0.9
-------------------------------------
424.8 171.4 1,383.9 463.9
-------------------------------------
Investments
Additions to property, plant
and equipment (196.5) (117.9) (807.6) (503.6)
Proceeds on disposition of
property, plant and equipment 1.3 0.6 5.6 9.4
Acquisition of Numac Energy Inc.
(note 2) - - (783.8) -
Acquisition of Ulster
Petroleums Ltd. - (550.1) - (550.1)
Proceeds on disposition of
Federated Pipe Lines Ltd.(note 5) - 103.3 - 103.3
Site restoration expenditures (2.7) (2.2) (8.2) (6.6)
Change in non-cash working
capital related to investments (124.9) (189.3) 27.7 (106.4)
Discontinued operations (note 5) - - - (0.2)
-------------------------------------
(322.8) (755.6)(1,566.3)(1,054.2)
-------------------------------------
Financing
Increase (decrease) in long
term debt (68.4) 538.3 209.3 589.1
Issue of common shares 10.8 33.1 26.1 41.8
Repurchase of common shares (7.7) - (44.1) (38.5)
Change in non-cash working
capital related to financing 4.0 - 4.0 -
Discontinued operations (note 5) - - - (5.8)
-------------------------------------
(61.3) 571.4 195.3 586.6
-------------------------------------
Increase (decrease) in cash 40.7 (12.8) 12.9 (3.7)
Cash position, beginning of period (60.2) (5.6) (32.4) (14.7)
-------------------------------------
Cash position, end of period $ (19.5)$ (18.4)$ (19.5)$ (18.4)
-------------------------------------
Basic cash flow from operations
per common share
From continuing operations $ 2.96 $ 1.71 $ 9.64 $ 4.12
From discontinued operations - - - 0.03
-------------------------------------
$ 2.96 $ 1.71 $ 9.64 $ 4.15
-------------------------------------
Diluted cash flow from
operations per common share
From continuing operations $ 2.90 $ 1.67 $ 9.43 $ 4.07
From discontinued operations - - - 0.03
-------------------------------------
$ 2.90 $ 1.67 $ 9.43 $ 4.10
-------------------------------------
See selected notes to consolidated financial statements.
Cash position includes cash net of current bank indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. . Current bank indebtedness includes outstanding cheques. The Numac acquisition amount represents the value assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. to property, plant and equipment of $933.5 million less debt, non-cash working capital deficiency and other obligations of $149.7 million assumed from Numac. SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Nine months ended June 30, 2001 (unaudited) The interim consolidated financial statements of Anderson Exploration Ltd. ("Anderson Exploration" or "the Company") have been prepared by management in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with accounting principles generally accepted in Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of . The interim consolidated financial statements have been prepared following the same accounting policies and methods of computation Computation is a general term for any type of information processing that can be represented mathematically. This includes phenomena ranging from simple calculations to human thinking. as the consolidated financial statements for the fiscal year ended September 30, 2000, except as described below. The disclosures included below are incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. to those included with the annual consolidated financial statements. The interim consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto there·to adv. 1. To that, this, or it. 2. Archaic In addition to that; furthermore. thereto Adverb Formal 1. to that or it 2. in the Company's annual report for the year ended September 30, 2000. NOTE 1 - CHANGE IN ACCOUNTING POLICY Effective October 1, 2000, the Company adopted the Canadian Institute of Chartered Accountants The Canadian Institute of Chartered Accountants (CICA) is the umbrella body for the Chartered Accountant profession in Canada and Bermuda. Membership of the CICA totals 70,000 Chartered Accountants and 8,500 students. accounting recommendations with respect to income taxes and employee future benefits. The new recommendations were applied retroactively without restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. of prior year financial statements. Under the new recommendations for income taxes, the liability method of tax allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as accounting is used. The change in policy resulted in an increase in property, plant and equipment of $77.2 million, an increase in future income tax liabilities of $198.0 million and a charge to retained earnings of $120.8 million. As a result of applying the liability method of tax allocation accounting, earnings at June 30, 2001 were increased by $57 million ($0.43 per share), representing the reduction in the future tax liability resulting from a reduction in the Alberta provincial corporate tax rate on April 1, 2001. As a result of the adoption of the new accounting recommendations relating to future employee benefits, a charge of $0.3 million was recorded against retained earnings with the corresponding liability reflected in the pension accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. . The effect of this change on earnings in the first nine months of fiscal 2001 was not significant. NOTE 2 - ACQUISITION OF NUMAC ENERGY INC inc - /ink/ increment, i.e. increase by one. Especially used by assembly programmers, as many assembly languages have an "inc" mnemonic. Antonym: dec. . Effective February 12, 2001, the Company acquired all of the outstanding shares of Numac Energy Inc. ("Numac"), an oil and gas production company for a cash consideration of $8.00 per share. The transaction has been accounted for using the purchase method with the results of operations included in these financial statements from the date of acquisition. Details of the acquisition are as follows:
($ millions)
Net assets acquired
Property, plant and equipment $ 933.5
Deferred financing costs 3.5
Working capital deficiency, including bank indebtedness
assumed of $1.5 million (12.4)
Long term debt assumed (135.7)
Pension and lease obligations assumed (6.6)
Future income tax adjustment to property,
plant and equipment 419.8
Future income taxes (419.8)
-----------
$ 782.3
-----------
Purchase price
Cash $ 773.3
Transaction costs 9.0
-----------
$ 782.3
-----------
The Company arranged a new $1 billion non-revolving bridge credit facility through a group of Canadian chartered banks Chartered Bank A financial institution whose primary roles are to accept and safeguard monetary deposits from individuals and organizations, and to lend money out. The details vary from country to country, but usually a chartered bank in operation has obtained government permission to finance the acquisition of Numac. The unsecured facility had a maturity date of October 1, 2002. On March 14, 2001, Anderson Exploration sold US$400 million principal amount of 6.75% senior unsecured notes due 2011 to purchasers in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . Net proceeds from the issue were used to repay a portion of the bridge facility. In March 2001, existing credit facilities were used to repay the remainder of the outstanding amount under the bridge facility, and the facility was cancelled can·cel v. can·celed also can·celled, can·cel·ing also can·cel·ling, can·cels also can·cels v.tr. 1. To cross out with lines or other markings. See Synonyms at erase. 2. .
NOTE 3 - SHARE CAPITAL
Authorized: Common shares: unlimited
Preferred shares: unlimited
Junior preferred shares, redeemable,
participating: unlimited
Issued:
Number of Amount
shares ($ millions)
-----------------------------
Common shares
Balance at September 30, 2000 131,526,926 $ 778.8
Issued for cash on exercise of
stock options 1,406,500 22.6
Issued for cash under employee stock
savings plan 110,461 3.5
Repurchase of shares under Normal Course
Issuer Bid (1,566,700) (9.3)
-----------------------------
Balance at June 30, 2001 131,477,187 795.6
-----------------------------
Contributed surplus
Balance at September 30, 2000 126.5
Repurchase of shares under Normal Course
Issuer Bid (34.8)
-----------------------------
Balance at June 30, 2001 91.7
-----------------------------
131,477,187 $ 887.3
-----------------------------
The Company has an employee stock option plan under which both employees and directors are eligible to receive grants. On February 13, 2001, the shareholders of the Company approved an amendment to the plan to increase the maximum number of common shares reserved for issuance thereunder by 6,300,000. At June 30, 2001, there were 11,662,820 common shares reserved for issuance under the plan of which 7,470,520 options with exercise prices between $13.15 and $34.05 were outstanding and exercisable at various dates to the year 2006.
Weighted-
Number average
of exercise
options price
---------------------------
Stock options outstanding at
September 30, 2000 6,466,771 $ 16.81
Granted 2,563,300 32.44
Exercised (1,406,500) 16.09
Cancelled (153,051) 21.23
---------------------------
Stock options outstanding at June 30, 2001 7,470,520 $ 22.21
---------------------------
Exercisable at June 30, 2001 2,776,069 $ 16.46
---------------------------
The Company also has a share appreciation rights plan, where employees are granted the right to receive cash payments from the Company, but not common shares. Other terms are similar to the employee stock option plan. At June 30, 2001, 1,538,438 rights with exercise prices between $17.75 and $34.05 were outstanding and exercisable at various dates to the year 2006. The weighted average exercise price of the rights was $23.06. Compensation expense of $7.1 million has been recorded in the nine months ended June 30, 2001 related to this plan. At June 30, 2001, 749,104 common shares were also reserved for issuance under the employee stock savings plan Stock Savings Plan In Canada, a plan wherein some provinces will provide a tax credit for provincial income taxes to residents who spend their income on certain investments. Notes: The purpose is to encourage residents to invest in the provincial economy. .
NOTE 4 - FINANCIAL INSTRUMENTS
The carrying values and estimated fair values of fixed rate long
term debt and the unrecognized gains (losses) on other financial
instruments are as follows:
At June 30, 2001 At September 30, 2000
Carrying Fair Carrying Fair
value value value value
-------------------------------------------
Fixed rate long term debt $ 873.1 $ 868.8 $ 488.0 $ 489.8
Unrecognized gains/(losses):
Interest rate swaps
on bank loans $ (6.3) $ (2.2)
Foreign currency swap (2.1) -
Oil and gas sales contracts (15.1) -
Power hedging contracts (22.1) -
NOTE 5 - DISCONTINUED OPERATIONS Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. On June 28, 2000, the Company sold its 50% interest in Federated Connected and treated as one. See federated database and federated directories. Pipe Lines Ltd. ("Federated"), a pipeline transportation company. Anderson Exploration's proportionate pro·por·tion·ate adj. Being in due proportion; proportional. tr.v. pro·por·tion·at·ed, pro·por·tion·at·ing, pro·por·tion·ates To make proportionate. interest in the results of operations of Federated is shown as discontinued operations in the consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: statements of earnings and cash flows. NOTE 6 - DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). "), which differ in some respects from GAAP in the United States. A description of the significant differences and a reconciliation of earnings on a Canadian GAAP basis to a U.S. GAAP basis, as applicable to the audited consolidated financial statements and notes at September 30, 2000 and 1999, is available on the Company's website at www.axl.com. NOTE 7 - FINANCIAL RATIOS The following financial ratios are provided in connection with the Company's medium term note program pursuant to a shelf prospectus dated June 28, 2000.
Interest coverage on long term debt:
Earnings(a) 12.1
Cash flow from operations(b) 17.0
Net asset coverage on long term debt (c):
Before deduction of future income taxes 3.6
After deduction of future income taxes 2.4
(a) Interest coverage on long term debt on an earnings basis is equal
to earnings before interest on long term debt and taxes divided by
interest on long term debt for the 12 months ended June 30, 2001.
(b) Interest coverage on long term debt on a cash flow from operations
basis is equal to cash flow from operations before interest on
long term debt and cash taxes divided by interest on long term
debt for the 12 months ended June 30, 2001.
(c) Net asset coverage on long term debt is equal to total assets less
liabilities (excluding long term debt) divided by long term debt
at June 30, 2001.
FORWARD LOOKING STATEMENTS This report contains certain forward looking statements within the meaning of the United States Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These statements relate to Anderson Exploration's business strategies, anticipated future production, outlook for oil and gas prices, expected costs, capital spending plans and estimated recoverable reserves. These forward looking statements involve known and unknown risks and uncertainties that include, among other things: the impact of both general economic and industry conditions, the volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the of oil and gas prices, changes in laws and regulations including environmental laws and regulations, market competition, availability of qualified personnel and equipment, currency and interest rate fluctuations, availability and cost of capital, operating performance and hazards
Hazards is an independent, union-friendly magazine based in Sheffield, England, which has won major international awards. inherent in exploration and production activities, the uncertainty of finding new reserves and the imprecision im·pre·cise adj. Not precise. im  pre·cisely adv. of reserve estimates, and other risks and
uncertainties as may be described in documents filed from time to time
with securities regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interestregulatory agency administrative body, administrative unit - a unit with administrative responsibilities in Canada and the U.S. Anderson Exploration's actual performance and financial results could differ materially from those expressed in, or implied by, these forward looking statements. These forward looking statements are based on information available at the time the statements are made. The Company assumes no obligation to update these forward looking statements to reflect new information or future events. NOTE TO U.S. READERS Anderson Exploration reports its sales volumes and reserve estimates in accordance with Canadian practices. These practices are different than those used by U.S. companies in reports and other materials filed with the Securities and Exchange Commission ("SEC"). The primary differences are: - Anderson Exploration reports gross sales Gross Sales A measure of overall sales that isn't adjusted for customer discounts or returns, calculated simply by adding all sales invoices, and not including operating expenses, cost of goods sold, payment of taxes, or any other charge. and reserve volumes prior to the deduction deduction, in logic, form of inference such that the conclusion must be true if the premises are true. For example, if we know that all men have two legs and that John is a man, it is then logical to deduce that John has two legs. of royalties and similar payments. In the United States, net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight and reserve volumes are reported after deduction of these amounts. - Anderson Exploration uses escalated prices and costs to estimate the quantity of reserves. In the United States, reserve estimates are calculated using prices and costs held constant at amounts in effect at the date of the reserve report. - Anderson Exploration discloses estimates of probable reserves. The SEC generally prohibits the inclusion of estimates of probable reserves in filings made with the SEC by U.S. companies. As a consequence, Anderson Exploration's sales volumes and reserve estimates may not be comparable to those made by U.S. companies subject to SEC reporting and disclosure requirements. Anderson Exploration has prepared its financial statements in accordance with Canadian generally accepted accounting principles. Thus, they may not be comparable to the financial statements of U.S. companies. As supplementary information for U.S. readers, sales volumes, net of royalties, are provided below:
Three months Nine months
ended June 30 ended June 30
2001 2000 2001 2000
----------------------------------------
Gas (Mmcfd) 641 530 571 477
----------------------------------------
Light/medium crude oil (Bpd) 26,363 18,739 24,764 18,073
Heavy crude oil (Bpd) 14,893 4,697 10,610 4,140
----------------------------------------
Total crude oil (Bpd) 41,256 23,436 35,374 22,213
NGL (Bpd) 12,686 9,964 12,226 8,427
----------------------------------------
Total liquids (Bpd) 53,942 33,400 47,600 30,640
----------------------------------------
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