CanArgo Announces Preliminary Year End Results.Business Editors OSLO, Norway--(BUSINESS WIRE)--March 1, 2003 CanArgo Energy(OTC Bulletin Board OTC Bulletin Board An electronic quotation listing of the bid and asked prices of OTC stocks that do not meet the requirements to be listed on the NASDAQ stock-listing system. :GUSH) (OSLO STOCK EXCHANGE Oslo Stock Exchange An exchange founded in 1819 and trading stocks, bonds, and stock options that is considered the options market of Norway. :CNR See riser card. CNR - Communication and Network Riser ) CanArgo Energy Corporation (OSE OSE - Open Systems Environment : CNR, OTCBB OTCBB See OTC Bulletin Board (OTCBB). : GUSH) is pleased to report preliminary results for the year ended December 31, 2002. CanArgo's preliminary net loss for the year ended December 31, 2002 was $5.3 million ($0.06 per share) down from $13.2 million ($0.16 per share) for 2001. Preliminary operating revenues operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. (excluding refining refining, any of various processes for separating impurities from crude or semifinished materials. It includes the finer processes of metallurgy, the fractional distillation of petroleum into its commercial products, and the purifying of cane, beet, and maple sugar revenues) improved by 22% for the year ended 31 December, 2002, reflecting improved oil and gas sales and additional other income from provision of drilling services in Georgia. There was no refining revenue during the year following suspension of activity in 2001. Excluding write-down of oil and gas properties 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. , CanArgo's preliminary net Operating Loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. 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 for the year ended December 31, 2002 was $3.4 million down from a net Operating loss from Continuing Operations of $4.9 million for the year ended December 31, 2001. A further improvement would be expected in 2003 as the effects of a cost reduction programme implemented in the last quarter of 2002 become apparent. Based on preliminary reserve estimates for the Ninotsminda Field, CanArgo has recorded a write-down of oil and gas properties of $1.6 million. In 2002, CanArgo increased its interest in the Norio and North Kumisi Production Sharing Agreement Production sharing agreements (PSAs) are used primarily to determine the share a private company will receive of the natural resources (usually oil) extracted from a particular country. ("Norio") from 50% to 64.2% through a farm-in to the MK72 exploration well and capitalisation n. 1. same as capitalization. Noun 1. capitalisation - writing in capital letters capitalization writing - letters or symbols that are written or imprinted on a surface to represent the sounds or words of a language; "he turned the paper of debt. As a result of the finalisation n. 1. same as finalization. Noun 1. finalisation - the act of finalizing finalization mop up, windup, completion, culmination, closing - a concluding action of respective equity interest, CanArgo's interest was adjusted to reflect its share of the carrying net asset value of Norio, and 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 US accounting rule SAB SAB Spontaneous abortion. See Abortion. 51, CanArgo has recorded a "non-operating" loss of $0.4 million in other expenses. During the year, CanArgo approved plans to sell its 50% interest in its retail operation, CanArgo Standard Oil Products (CSOP CSOP Company Share Option Plan CSOP Combat Security Outpost CSOP Crew Systems Operating Procedures (NASA) CSOP Commission to Study the Organization of Peace CSOP Certified Securities Operation Professional ), and 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 its mobile 3 megawatt meg·a·watt n. Abbr. MW One million watts. meg  a·watt duel duel, prearranged armed fight with deadly weapons, usually swords or pistols, between two persons concerned with a point of honor. The duel may have originated in the wager of battle, an early mode of trial in which an accused person fought with his accuser under fuel power plant (generator). The
proceeds from these sales will provide finance for Georgian and
Ukrainian development projects. The assets and liabilities of CSOP and
the generator have been classified as "Assets held for sale"
and "Liabilities held for sale" for all periods presented. The
results of operations of CSOP have been classified as discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: , net of taxes and minority interest for all periods presented. Review of Operations The Company's main production asset is the Ninotsminda field in Georgia. Net annual oil production after local taxes from Ninotsminda to CanArgo for 2002 was 189,987 barrels with field production currently being stable. Drilling has now commenced on a new horizontal well N4H. The well is being drilled into the central area of the Middle Eocene reservoir, which is more highly fractured, and where production rates in the past have been higher. It is being deviated between the N4 and N49 wells that have been two of the field's better producers in the past. The Ninotsminda Field is a fractured reservoir, which is best exploited through horizontal drilling a drilling machine having a horizontal drill spindle. See also: Horizontal , as demonstrated by the previous horizontal well, N98H. The N4H well is currently horizontal and it is planned to drill the horizontal section for a total distance of some 740 metres. In 2002, following the withdrawal of the US power company AES from CanArgo's exploration programme, it was decided to suspend the two exploration wells, MK72 and M11, focusing the Company's resources on increasing oil production through horizontal drilling on Ninotsminda, and finding new partners for the exploration programme. Initial interest has been positive and the company is optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that suitable partners will be found. The Norio oil exploration well (MK72), was cased at a depth of 2,932 metres in the Lower Sarmatian. The well is targeting a large structure in the Middle Eocene, which is potentially an analogue (electronics) analogue - (US: "analog") A description of a continuously variable signal or a circuit or device designed to handle such signals. The opposite is "discrete" or "digital". of the nearby Samgori oilfield, from which some 180 million barrels of oil have been recovered at production rates up to 70,000 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. . A velocity survey was performed at the current depth to allow a review and calibration calibration /cal·i·bra·tion/ (kal?i-bra´shun) determination of the accuracy of an instrument, usually by measurement of its variation from a standard, to ascertain necessary correction factors. of seismic data in the drilled section, with the current interpretation predicting the target zone at approximately 4,200 metres. CanArgo successfully increased its equity interest in CanArgo Norio Ltd, the subsidiary which owns the license to the Norio Block, from 50% to 64.2% through its funding of well MK72 to date. Also, CanArgo Norio Limited has successfully won the tender for the oil and gas exploration and production rights to Block XIG XIG Expanded Interceptive Guardians (Tbilisi) and Block XIH (Rustavi) in Eastern Georgia. The Production Sharing Agreement is currently being negotiated. The Manavi gas exploration well (M11) was cased at a depth of 4,182 metres at the top of the Middle Eocene. The well is targeting a large structure in the Cretaceous with the potential for over 1 trillion cubic feet of gas 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. . The initial testing programme on the N100 exploration oil discovery was completed. Although oil was recovered, production rates were deemed to be non-commercial at this stage. The Company is still considering several options to enhance productivity, including fracture fracture, breaking of a bone. A simple fracture is one in which there is no contact of the broken bone with the outer air, i.e., the overlying tissues are intact. In a comminuted fracture the bone is splintered. stimulation of the well in light of the positive results of injectivity testing and data obtained whilst drilling. Additionally, the well could provide a potential site for a future horizontal sidetrack following the results of well N4H, the new horizontal well. N100 has now been suspended sus·pend v. sus·pend·ed, sus·pend·ing, sus·pends v.tr. 1. To bar for a period from a privilege, office, or position, usually as a punishment: suspend a student from school. pending further technical review. The well was drilled to 4,927 metres reaching total depth in the Lower Eocene / Paleocene section. In October 2002 CanArgo announced that it has agreed binding terms for the sale of its interest in its Georgian gasoline gasoline or petrol, light, volatile mixture of hydrocarbons for use in the internal-combustion engine and as an organic solvent, obtained primarily by fractional distillation and "cracking" of petroleum, but also obtained from natural gas, by station business, CanArgo Standard Oil Products ("CSOP"), for a cash consideration of US$ 4 million. A US investment company has agreed to purchase CanArgo's entire holding in CSOP, with legal ownership being transferred once all funds are received. Under the terms of the agreement a non-refundable deposit of $1 million has been paid with the balance of $3 million due in August, 2003. The sale of CSOP provides a significant investment return on the disposal of this non-core asset, which represents only a small part of CanArgo's asset base. CanArgo's investment to date in CSOP has been US$ 1.94 million, made since April 2000, with the majority of funds being invested during 2001. In Ukraine in September 2002 CanArgo announced that it has agreed terms with Ukrnafta, the Ukrainian State Oil Company, on revisions to the existing Joint Investment Production Activity ("JIPA JIPA Journal of the International Phonetic Association JIPA Justice Information Policy Assistance ") Agreement for the 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. development of the Bugruvativske Field, and has also reached agreement with a local Ukrainian oil company on the terms of a farm-in to the JIPA. Under the terms of the farm-in agreement, CanArgo's Ukrainian partner will invest approximately $3 million in the Bugruvativske field over the course of the next 7 months in order to drill two new horizontal wells and they will bear the financial risk under the JIPA during this period. The first investment was made in December 2002. CanArgo can match up to the $3 million invested by its partner, prior to 31 December 2003, and if it does so in full would own a 34.5% interest in the JIPA. In west Ukraine oil production remains steady at approximately 470 barrels per day (plus associated gas) from the Stynawske oilfield following the initial workover programme carried out by the joint venture Boryslaw Oil Company (BOC (Bell Operating Company) One of 22 companies that was formerly part of AT&T and later organized into seven regional companies. See RBOC. ). CanArgo has now been fully repaid the loan it guaranteed to fund this programme. BOC is currently in negotiations with the Ukrainian licensing authorities concerning a forward work programme for the field, and an extension to the licence agreement. CanArgo has also recently announced that, following its participation in the first International Bid Round in Syria, it has won exclusive rights to negotiate a Production Sharing Contract (PSC (Public Service Commission) Same as PUC. ) for Block XIX in southern Syria
Southern Syria is the southern region of modern-day Syria. It includes the region of Hauran, and the governorates of Daraa, As Suwayda, and Quneitra. . These negotiations have now commenced, and award of the PSC is subject to satisfactory conclusion of these negotiations and ratification The confirmation or adoption of an act that has already been performed. A principal can, for example, ratify something that has been done on his or her behalf by another individual who assumed the authority to act in the capacity of an agent. of the PSC by the Syrian Parliament. The block comprises 6,000 km2 of under-explored acreage in the Sirhan Basin in the south of the country, bordering Jordan. There are two oil and gas plays in the block, one Paleozoic and one Mesozoic; these plays have been successfully exploited in both western Iraq and more recently in neighbouring north-eastern Jordan. On the successful signing of the PSC it is planned to acquire seismic data during an initial period in order to identify leads prior to committing to an exploration drilling programme. CanArgo is seeking suitable partners to work with on this PSC. Dr David Robson, Chairman and Chief Executive Officer of CanArgo Energy Corp said, "2002 has been a challenging year but we are pleased at the value we have realised by selling our holding of CSOP, increasing our equity in Norio, progressing our Ukrainian production projects and moving ahead with further development activity on Ninotsminda. The funds from the sale of CSOP will make a significant cash boost to the company, allowing us to invest further in our core business of oil and gas production. Current production from Ninotsminda is steady, and we look forward to increasing this production through our horizontal programme. In the latter part of 2002 we began implementing a cost reduction programme in the UK and in Georgia, and further reductions will be implemented shortly. We expect to see the effects of this cost-cutting in the second quarter of 2003 with a significant reduction in G&A costs, direct project costs and field 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. . The agreements on the Ukrainian Bugruvativske project allow this project to be progressed with outside investment, and with our partner bearing the initial financial risk. We will continue to seek farm-in partners for our two high potential exploration wells that we have suspended. These remain very good prospects. Additionally the Syria project offers us the chance to diversify diversify To acquire a variety of assets that do not tend to change in value at the same time. To diversify a securities portfolio is to purchase different types of securities in different companies in unrelated industries. our asset base and expand into a prolific hydrocarbon-producing area." CanArgo Energy Corporation is an independent oil and gas exploration and production company. CanArgo's principal oil and gas operations are located in the republic of Georgia and Ukraine. The matters discussed in this press release include forward looking statements, which are subject to various risks, uncertainties and other factors that could cause actual results to differ materially from the results anticipated in such forward looking statements. Such risks, uncertainties and other factors include the uncertainties inherent in oil and gas development and production activities, the effect of actions by third parties including government officials, fluctuations in world oil prices and other risks detailed in the Company's reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission. The forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. are intended to help shareholders and others assess the Company's business prospects and should be considered together with all information available. They are made in reliance upon the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company cannot give assurance that the results anticipated herein will be attained.
CanArgo Energy Corporation
Preliminary Results for the Year and Three Month Period Ended
December 31 December, 2002
Consolidated Statement of Operations
Expressed in United States dollars
Unaudited Unaudited
-------------------------- --------------------------
Three Months Ended Twelve Months Ended
December 31, December 31, December 31, December 31,
2002 2001 2002 2001
------------ ------------ ----------- ------------
Operating Revenues
from
Continuing
Operations:
Oil and gas
sales $ 1,003,351 $ 147,393 $ 4,163,201 $ 3,967,078
Refining - 614,117 - 2,595,763
Other 14,588 608,032 1,412,741 608,032
------------ ------------ ----------- ------------
1,017,939 1,369,542 5,575,942 7,170,873
------------ ------------ ----------- ------------
Operating Expenses:
Field operating
expenses 396,614 1,974 1,537,917 1,568,011
Purchases of crude
oil and products - 1,123,547 - 1,451,083
Refinery operating
expenses - (55,794) - 791,139
Direct project costs 270,380 363,593 1,428,638 1,300,423
Selling, general and
administrative 948,310 1,052,880 3,652,262 3,741,826
Depreciation,
depletion and
amortization 715,594 725,505 2,316,921 3,249,962
Impairment of oil
and gas
properties 1,600,000 7,300,000 1,600,000 7,300,000
Impairment of
other assets - 3,859,795 - 3,859,795
Loss on disposition
of assets 10,725 16,130 10,725 16,130
------------ ------------ ----------- ------------
3,941,623 14,387,630 10,546,463 23,278,369
------------ ------------ ----------- ------------
Operating Loss from
Continuing
Operations (2,923,684) (13,018,088) (4,970,521) (16,107,496)
------------ ------------ ----------- ------------
Other Income (Expense):
Interest, net 703 (4,614) 32,413 642,216
Other 69,538 (113,527) (654,850) (74,796)
Equity income from
investments (50,425) (234,292) 86,059 (160,000)
------------ ------------ ----------- ------------
Total Other Income
(Expense) 19,816 (352,433) (536,378) 407,420
------------ ------------ ----------- ------------
Net Loss Before
Minority
Interest (2,903,868) (13,370,521) (5,506,899) (15,700,076)
Minority interest in
income (loss) of
consolidated
subsidiaries 10,286 1,954,500 7,986 2,138,163
------------ ------------ ----------- ------------
Net Loss from
Continuing
Operations $ (2,893,582)$(11,416,021) $ (5,498,913) $(13,561,912)
------------ ------------ ----------- ------------
------------ ------------ ----------- ------------
Net Income (Loss)
from
Discontinued
Operations,
net of taxes and
minority interest (2,178) 214,559 171,212 343,566
----------- ------------ ----------- ------------
Net Loss (2,895,760) (11,201,462) (5,327,701) (13,218,346)
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
Other Comprehensive
Income:
Foreign currency
translation (93,270) - 4,668 -
----------- ------------ ----------- ------------
Comprehensive
Loss $ (2,989,030)$(11,201,462) $ (5,323,033) $(13,218,346)
------------ ------------ ----------- ------------
------------ ------------ ----------- ------------
Weighted average
number of common
shares
outstanding 97,356,206 92,008,446 96,643,744 83,869,579
------------ ------------ ----------- ------------
Net Loss Per Common
Share -
Basic and Diluted
- from continuing
operations $ (0.03)$ (0.12)$ (0.06) $ (0.16)
- from
discontinued
operations $ (0.00) 0.00 $ 0.00 0.00
----------- ------------ ----------- ------------
Net Loss Per
Common Share -
Basic and
Diluted $ (0.03)$ (0.12)$ (0.06) $ (0.16)
----------- ------------ ----------- ------------
Consolidated Balance Sheet
Expressed in United States dollars
Unaudited
-------------------------------
As of
December 31, December 31,
2002 2001
------------ ------------
Cash and cash equivalents $ 1,598,304 $ 5,891,038
Assets held for sale 8,095,947 $ 6,355,036
Other current assets 879,834 $ 4,811,115
Capital assets 59,702,525 $ 52,535,420
Investments in and advances to oil
and gas and other ventures - net 459,308 $ 719,308
------------ ------------
Total Assets $ 70,735,918 $ 70,311,917
------------ ------------
------------ ------------
Liabilities held for sale 2,351,965 $ 1,177,174
Other current liabilities 2,637,041 $ 1,289,682
Provision for future site restoration 122,290 $ 64,290
Minority interest in subsidiaries 3,519,342 $ 1,981,191
Stockholders' equity 62,105,280 $ 65,799,580
------------ ------------
Total liabilities and stockholders'
equity $ 70,735,918 $ 70,311,917
------------ ------------
------------ ------------
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