CanArgo Energy Corporation: Third Quarter Results Announced.GUERNSEY Guernsey (gûrn`zē), island, 25 sq mi (65 sq km), in the English Channel, second largest of the Channel Islands. Guernsey bailiwick (2005 est. pop. 65,000) includes Alderney, Sark, Herm, Brechou, Jethou, and smaller islands. , Channel Islands -- CanArgo Energy Corporation ("CanArgo") (AMEX AMEX See: American Stock Exchange :CNR See riser card. CNR - Communication and Network Riser ) (OSE OSE - Open Systems Environment :CNR) today announced its unaudited results for the nine-month period ended September September: see month. 30, 2004. A summary of these results is attached. For the nine-month period ending September 30, 2004, Operating Revenue operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. 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 was $7,446,862 compared to $5,495,482 for the same period of 2003, an increase of 36%. In the third quarter of 2004, Operating Revenue from Continuing Operations was $2,007,838 compared to $2,078,553 for the second quarter of 2004. A Net Loss of $2,548,789 was reported for the three-month period ending September 30, 2004 compared to a Net Income of $313,718 for the three-month period ending September 30, 2003 and a Net Loss of $2,475,178 for the nine-month period ending September 30, 2004 compared to a Net Loss of $697,080 for the nine-month period ending September 30, 2003. The Net Loss for the three-month ending September 30, 2004 was affected by additional Selling, general and administrative and Other Expenses. Selling, general and administrative expenses were $1,602,902 in the third quarter of 2004 compared to $503,328 in the third quarter of 2003. The increase in Selling, general and administrative expenses was caused primarily by additional internal costs associated with the successful global public offering which closed during the period and which raised $33,404,893 net of costs to finance primarily our development and appraisal activities in Georgia Georgia, country, Asia Georgia (jôr`jə), Georgian Sakartvelo, Rus. Gruziya, officially Republic of Georgia, republic (2005 est. pop. 4,677,000), c.26,900 sq mi (69,700 sq km), in W Transcaucasia. . Other Expenses of $1,242,780 were recorded in the third quarter of 2004 compared to Other Expenses of $3,941 in the third quarter of 2003. During the third quarter of 2004, Other Expenses included expenses relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the accounting treatment of warrants attached to loan agreements and accrued liabilities Accrued liabilities are liabilities which have occurred, but have not been paid or logged under accounts payable during an accounting period; in other words, obligations for goods and services provided to a company for which invoices have not yet been received. in respect of a potential insurance retention following the N100 well blow out at the Ninotsminda Ninotsminda (Georgian: ნინოწმინდა, Armenian: Նինոցմինդա field during the period. Net cash provided by financing activities of $35,175,708, primarily due to the successful global public offering, and Net cash generated by operating activities of $758,586 for the nine-month period ending September 30, 2004 contributed to an overall Net increase in cash and cash equivalents of $30,834,693. As of September 30, 2004 we had total cash and cash equivalents of $34,306,945, which will be used to progress our capital programs. On the production and development front in Georgia work continues on the preparation of wells on the Ninotsminda and Samgori fields for the planned Under Balanced Coiled Tubing Coiled tubing refers to metal piping, normally 1" to 2" in diameter, used for interventions in oil and gas wells, which comes spooled on a large drum. The main benefits over wireline are the ability to pump chemicals through the coil and the ability to push it into hole rather than Drilling ("UBCTD") program with Weatherford International Weatherford International Ltd (NYSE: WFT) is one of the world's largest diversified upstream oilfield service companies. Weatherford provides services ranging from directional drilling, open and cased-hole wireline logging to underbalanced systems expertise, drilling, , and the shipping of the necessary equipment to Georgia. The coil, spool and power stand, together with ancillary Subordinate; aiding. A legal proceeding that is not the primary dispute but which aids the judgment rendered in or the outcome of the main action. A descriptive term that denotes a legal claim, the existence of which is dependent upon or reasonably linked to a main claim. equipment is now constructed and is currently being shipped to Georgia where it is expected to arrive later this month. The equipment will then be mobilised to the first of the planned wells, which is anticipated to commence operations in early December December: see month. . Significant work is underway at several well locations to prepare for the arrival of the UBCTD equipment. These include the N100, N22 and N30 wells on the Ninotsminda field, which are currently shut-in shut-in n. A person confined indoors by illness or disability. adj. 1. Confined to a home or hospital, as by illness. 2. Disposed to avoid social contact; excessively withdrawn or introverted. , and three wells on the Samgori Field, including the recently drilled S302 (Lizi #1) well. This preparation work includes the drilling of new vertical pilot holes, sidetracking existing wells, and cutting of casing windows for the horizontal horizontal /hor·i·zon·tal/ (hor?i-zon´t'l) 1. parallel to the plane of the horizon. 2. occupying or confined to a single level in a hierarchy. horizontal parallel to the plane of the horizon. wellbores. The final choice of the first well for the UBCTD program will be made in the next two weeks. The newly drilled Samgori S302 vertical well reached total depth of 2,370 metres (7,776 feet), some 85 metres (279 feet) into the Middle Eocene reservoir reservoir (rĕz`əvôr, -vwär), storage tank or wholly or partly artificial lake for storing water. Building an embankment or dam to preserve a supply of water for irrigation is an ancient practice; India and Egypt have many old and , having encountered the reservoir significantly above the highest prognosed oil-water contact, with substantial mud (MultiUser Dungeon, MultiUser Dimension, MultiUser Dialogue) Interactive games played by several people at a time on the Internet. losses indicating permeability permeability /per·me·a·bil·i·ty/ (per?me-ah-bil´i-te) the property or state of being permeable. per·me·a·bil·i·ty n. 1. The property or condition of being permeable. 2. , and with oil being recovered from the well. This well has been drilled as a pilot hole for up to three multilateral mul·ti·lat·er·al adj. 1. Having many sides. 2. Involving more than two nations or parties: multilateral trade agreements. horizontal well bores which will be completed as part of the UBCTD program. CanArgo Rig rig see cryptorchid. #2 which drilled the well has now been moved to the Ninotsminda N30 well to prepare that well for the UBCTD program. The appraisal of the Manavi Manavi is a village in the Georgian province of Kakheti. It is famous for its yellowish green wine, Manavis Mtsvane. In Georgia, wine drinking is central to the culture and is especially recommended for long celebrations. Cretaceous Cre·ta·ceous adj. 1. Of or belonging to the geologic time, system of rocks, and sedimentary deposits of the third and last period of the Mesozoic Era, characterized by the development of flowering plants and ending with the sudden extinction oil discovery is moving ahead. Additional equipment has been sourced to re-commence drilling on the Manavi M11Z well, where, as previously reported, over-pressured swelling swelling /swell·ing/ (swel´ing) 1. transient abnormal enlargement of a body part or area not due to cell proliferation. 2. an eminence, or elevation. clays in the section above the reservoir have caused significant drilling problems. We anticipate this equipment arriving in Georgia later this month and will recommence Re`com`mence´ v. i. 1. To commence or begin again. 2. To begin anew to be; to act again as. He seems desirous enough of recommencing courtier. - Johnson. v. t. 1. To commence again or anew. drilling operations in early December. Once we have reached the top of the reservoir section the well will be fully tested and completed using the UBCTD unit. We have requested mobilisation n. 1. Mobilization. Noun 1. mobilisation - act of marshaling and organizing and making ready for use or action; "mobilization of the country's economic resources" mobilization of the drilling rig planned for the M12 and M13 wells, with the intention of commencing the Manavi M12 appraisal well in March/April 2005. Drilling will re-commence on the Norio MK72 well in early 2005 once a drilling crew becomes available either from the M11Z well, or from one of the wells in the UBCTD program. Dr. David Robson See Robson cache. , President of CanArgo commented, "Our program in Georgia is moving ahead, both in terms of the under-balanced coiled tubing drilling, and our appraisal program on Manavi. Our drill crews and technical personnel are working very hard to ensure that wells are prepared for the UBCTD unit when it arrives later this month, and I am personally looking forward very much to seeing the commencement and the results of this exciting program - the first time such technology has been applied in this region. The sidetracking of Manavi M11 has proved difficult, particularly with the difficult drilling conditions in the section above the reservoir, but with the new equipment we are currently mobilising to Georgia we are hopeful that we can make good progress on completing this important well. We are currently involved in an extremely busy period of activity in Georgia, and we should be seeing the results of this work during the first quarter of next year." CanArgo is an independent oil and gas exploration and production company with its oil and gas operations currently located in the Republic of Georgia and the Caspian area. The matters discussed in this press release include 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. , 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 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 a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , and Section 21E of the Securities Exchange Act of 1934, as amended. The Company cannot give assurance that the results will be attained at·tain v. at·tained, at·tain·ing, at·tains v.tr. 1. To gain as an objective; achieve: attain a diploma by hard work. 2. .
CANARGO ENERGY CORPORATION AND SUBSIDIARIES
Financial Statements (Unaudited)
Consolidated Condensed Balance Sheets
September 30, December 31,
2004 2003
-------------------------------
(Unaudited) (Audited)
Cash and cash equivalents $ 34,306,945 $ 3,472,252
Accounts receivable 32,021 161,772
Inventory 166,379 468,793
Prepayments 950,383 961,588
Assets held for sale 12,022,788 10,346,077
Other current assets 898,354 206,532
-------------------------------
Total current assets $ 48,376,870 $ 15,617,014
Capital assets, net (including
unevaluated amounts of $30,267,886
and $25,937,794 respectively) 69,561,767 57,668,233
Other Intangible assets 433,376 -
Investments in and advances to oil
and gas and other ventures - net 15,610 75,000
-------------------------------
Total Assets $ 118,387,623 $ 73,360,247
-------------------------------
-------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable - trade $ 810,373 $ 483,282
Advance from joint venture partner - 773,146
Loans payable 1,500,000 102,179
Other liabilities 6,244,576 5,473,823
Income taxes payable 10,500 97,500
Accrued liabilities 1,898,523 349,487
Liabilities held for sale 5,664,693 4,447,706
-------------------------------
Total current liabilities $ 16,128,665 $ 11,727,123
Long term debt 748,878 -
Provision for future site restoration 162,500 152,000
Minority interest in subsidiaries 2,929,616 4,772,683
-------------------------------
Total Liabilities $ 3,840,994 $ 4,924,683
-------------------------------
-------------------------------
Commitments and contingencies
Stockholders' equity:
Common stock, par value $0.10;
authorized - 300,000,000 shares;
shares issued and outstanding -
195,132,089 at 2004 and
105,617,988 at 2003 19,513,208 10,561,798
Capital in excess of par value 184,495,890 146,401,804
Deferred compensation expense (3,171,026) -
Accumulated other
comprehensive income (deficit) 163,768 (146,463)
Accumulated deficit (102,583,876) (100,108,698)
-------------------------------
Total stockholders' equity $ 98,417,964 $ 56,708,441
-------------------------------
Total Liabilities and
Stockholders' Equity $ 118,387,623 $ 73,360,247
-------------------------------
-------------------------------
CANARGO ENERGY CORPORATION AND SUBSIDIARIES
Financial Statements (Unaudited)
Consolidated Condensed Statements of Operations
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
--------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Operating Revenues
from Continuing
Operations:
Oil and gas
sales $ 2,007,838 $ 2,468,029 $ 7,446,862 $ 5,271,874
Other - 26,000 - 223,608
--------------------------------------------------
2,007,838 2,494,029 7,446,862 5,495,482
--------------------------------------------------
Operating Expenses:
Field operating
expenses 457,663 384,954 1,690,623 1,082,929
Direct project
costs 591,454 266,378 1,218,589 690,508
Selling, general
and
administrative 1,602,983 503,328 3,728,290 1,908,212
Non cash stock
compensation
expense 158,446 - 158,446 276,507
Depreciation,
depletion and
amortization 458,832 1,064,489 2,265,877 2,360,280
Impairment of oil
and gas properties 64,552 - 64,552 -
Impairment of oil
and gas ventures 75,000 - 75,000 -
Gain (loss) on
disposition of
subsidiary - - (335,014) -
--------------------------------------------------
3,408,930 2,219,149 8,866,363 6,318,436
--------------------------------------------------
Operating Loss from
Continuing
Operations (1,401,092) 274,880 (1,419,501) (822,954)
--------------------------------------------------
Other Income
(Expense):
Interest, net (408,259) (15,168) (664,645) (21,047)
Other (834,521) (74,832) (933,241) (86,162)
Equity income
from investments - 86,059 - 129,089
--------------------------------------------------
Total Other
Income (Expense) (1,242,780) (3,941) (1,597,886) 21,880
--------------------------------------------------
Loss from
Continuing
Operations Before
Minority Interest
and Taxes (2,643,872) 270,939 (3,017,387) (801,074)
Minority interest
in loss (income)
of consolidated
subsidiaries (301) - - 23
--------------------------------------------------
Loss from
Continuing
Operations (2,644,173) 270,939 (3,017,387) (801,051)
Net Income (Loss)
from Discontinued
Operations, net
of taxes and
minority
interest 95,384 42,779 542,210 62,681
Cumulative effect
of change in
accounting
principle - - - 41,290
--------------------------------------------------
Net Income (Loss) $ (2,548,789) $ 313,718 $ (2,475,178) $ (697,080)
--------------------------------------------------
--------------------------------------------------
Weighted average
number of common
shares
outstanding
- Basic 120,589,698 99,117,076 113,468,383 97,949,613
--------------------------------------------------
- Diluted 120,589,698 102,675,849 113,468,383 97,949,613
--------------------------------------------------
Basic Net Income
(Loss) Per Common
Share - Before
Cumulative Effect
of Change in
Accounting
Principle
- from continuing
operations $ (0.02) $ 0.00 $ (0.03) $ (0.01)
- from discontinued
operations $ 0.00 $ 0.00 $ 0.00 $ 0.00
- cumulative effect
of change in
accounting
principle, net
of Income tax $ - $ - $ - $ 0.00
--------------------------------------------------
Net Income (Loss) Per
Common Share -
Basic $ (0.02) $ 0.00 $ (0.02) $ (0.01)
--------------------------------------------------
Diluted Net Income
(Loss) Per Common
Share - Before
Cumulative Effect
of Change in
Accounting Principle
- from continuing
operations $ (0.02) $ 0.00 $ (0.03) $ (0.01)
- from discontinued
operations $ 0.00 $ 0.00 $ 0.00 $ 0.00
- cumulative effect
of change in
accounting
principle, net
of Income tax $ - $ - $ - $ 0.00
--------------------------------------------------
Net Income (Loss)
Per Common Share -
Diluted $ (0.02) $ 0.00 $ (0.02) $ (0.01)
--------------------------------------------------
Other Comprehensive
Income:
Foreign currency
translation 90,708 11,811 310,231 (12,270)
--------------------------------------------------
Comprehensive
Income (Loss) $ (2,458,081) $ 325,529 $ (2,164,947) $ (709,350)
--------------------------------------------------
--------------------------------------------------
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