Canadian 88 Energy Corp.: New Direction Yields Dramatic Turnaround in Fourth Quarter 2000.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)--May 10, 2001 Company Returns To Profitability as Long Term Debt Reduced to $29 million
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Three Months ended Year ended
December 31 December 31
2000 1999 2000 1999
FINANCIAL ($mm)
Oil and gas revenue 50.6 26.4 125.2 104.9
Cash flow from operations 22.5 6.1 35.5 31.8
Net earnings (loss) for
the period 2.3 (8.1) (9.7) (6.5)
PER SHARE ($)
Cash flow from operations 0.18 0.06 0.28 0.30
Net earnings (loss) for the
period 0.02 (0.08) (0.08) (0.06)
Average number of shares
outstanding (millions) 127.1 106.0
PRODUCTION
Natural gas (mmcf/d) 74.1 95.7 81.3 103.0
Crude oil and liquids (mb/d) 2.0 2.4 2.2 2.7
Oil equivalent @ 6:1 (mboe/d) 14.4 18.4 15.8 19.9
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During fourth quarter 2000, 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. 88 (TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :EEE EEE eastern equine encephalomyelitis. EEE eastern equine encephalomyelitis. .)(AMEX AMEX See: American Stock Exchange :EEE) demonstrated the initial results of its dramatic team effort to redirect re·di·rect tr.v. re·di·rect·ed, re·di·rect·ing, re·di·rects To change the direction or course of. n. A redirect examination. re the Company and put it on a sound financial and operating footing. The principal objective was to create value from its existing asset base. Early in the year, the management team adopted a new strategy to address debt levels, flagging production and the impact of a crippling crip·ple n. 1. A person or animal that is partially disabled or unable to use a limb or limbs: cannot race a horse that is a cripple. 2. A damaged or defective object or device. tr.v. natural gas hedging program. "Canadian 88 clearly had reached a position by March 2000 where decisive action had to be taken," says President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Joseph Pritchett Pritch·ett , Sir V(ictor) S(awdon) 1900-1997. British writer of novels, literary criticism, and most notably, short stories. III. "I am delighted to report that our employees rose to the challenge, coming together as a team to overcome numerous risks and re-establish re-establish Verb to create or set up (an organization, link, etc.) again re-establishment n a solid base for value growth." The Company reported fourth quarter cash flow of $22.5 million and net earnings of $2.3 million a and cash flow of $35.5 million and a loss of $9.7 million for the full year. Earnings and cash flow for the year were impacted by: - the turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. and upgrading program at the Olds Gas Plant, which shut in approximately 26 mmcf/d of sales gas and 770 b/d b/d abbr. barrels per day of NGLs from September September: see month. 5 until October October: see month. 7; - the divestment divestment to strip one's investment from an entity. of non-core properties and associated production of 1,320 boe/d - plant capacity limitations which shut in 4 mmcf/d of sales gas at Wildcat Hills The Wildcat Hills are an escarpment between the North Platte River and Pumpkin Creek in the western Nebraska Panhandle. Located in Banner, Morrill, and Scotts Bluff counties, the high tableland between the streams has been eroded by wind and water into a region of forested buttes, ; - the natural gas hedge that reduced cash flow to approximately $1 million in October and consumed con·sume v. con·sumed, con·sum·ing, con·sumes v.tr. 1. To take in as food; eat or drink up. See Synonyms at eat. 2. a. approximately $67 million of annual cash flow before it expired ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. on October 31, 2000; - the positive impact of a financial swap initiated in May 2000, which added $8.5 million for the full year. Fourth quarter revenue climbed almost 100 percent to $51 million from $26 million for the same period a year earlier, bringing annual revenues to $125 million from $105 million in 1999. The Company completed a $50 million issue of subordinated notes to Duke Capital Partners LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control on November November: see month. 16, 2000, which was used to repay a portion of the $215 million senior credit facility finalized See finalization. in July July: see month. 2000. Despite severe financial constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. throughout the year, the Company was able to use proceeds of asset sales to reduce long term debt to $ 29 million, net of proceeds from the sale of Waterton and Caroline assets subsequent to year end. Fourth quarter production averaged 74.1 mmcf/d of sales gas and 2,044 b/d of crude oil and natural gas liquids to total 14,394 boe/d (natural gas converted at 6:1), reflecting the start-up Start-up The earliest stage of a new business venture. of the Olds plant during October following the one-month turnaround and upgrade. This was up slightly from the third quarter, but down from the same period in 1999, reflecting asset sales, shut in volumes at Wildcat Hills and a significant volume decrease at Waterton. Total production for 2000 averaged 81.3 mmcf/d of gas and 2,217 b/d of oil and NGLs, equaling 15,767 boe/d. During the quarter, the Company divested 1,320 boe/d of production associated with non-core asset sales and at year end had approximately 607 boe/d of shut in production due to infrastructure constraints. Total production in 1999 averaged 103 mmcf/d of natural gas and 2,714 b/d of oil and NGLs or 19,880 boe/d. In 2000, the Company moved decisively to expand its exploration reach while reducing its risk exposure by seeking partners for its exploration plays. The level of interest expressed by industry and the participation of 15 partners in 22 joint venture projects reflects the efforts of management to rebuild relationships in the oil and gas community. In addition to the 13 Company-operated wells drilled in the fourth quarter, the strategy enabled participation in 16 non-operated wells in the quarter. Despite the financial constraints imposed by debt service costs and the natural gas hedge, the Company participated in 48 wells in 2000, of which 20 were company-operated, with an overall success rate of 80 percent. On October 10, 2000, the Board of Directors established a Special Committee to review strategic alternatives and identify opportunities to enhance shareholder value. Following extensive review, the Board elected to proceed with a sale of the Company, opening data rooms for interested parties on November 27, 2000. The Special Committee and its advisors, CIBC World Markets CIBC World Markets is the investment banking division of the Canadian Imperial Bank of Commerce. It helps governments, large companies, and other large institutions obtain capital and credit and is a primary dealer in U.S. Treasury securities. and Credit Suisse First Boston Credit Suisse First Boston was originally the trading name of the Financière Crédit Suisse-First Boston, a London-based 50-50 investment banking joint venture formed in 1978 between the First Boston Corporation and Credit Suisse. , are continuing the process of maximizing shareholder value. SUBSEQUENT EVENTS On February 27, 2001, Canadian 88 announced that it had entered into a purchase and sale agreement with Hunt Oil Company of Canada, Inc. to sell the Company's Waterton and Caroline assets for $176 million, effective January 1, 2001. The transaction was closed on April 27, 2001. Proceeds of the sale were applied to reduce the Company's long term debt, dramatically reducing debt service costs. On April 26, 2001, the Board of Directors received an unsolicited un·so·lic·it·ed adj. Not looked for or requested; unsought: an unsolicited manuscript; unsolicited opinions. unsolicited Adjective proposal from Canadian Superior Energy Inc. regarding a potential merger of the two companies. On May 9, 2001, the Board rejected the merger proposal, noting that it did not offer enhanced liquidity or 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. value for Canadian 88 shareholders. OPERATIONS REVIEW During 2000, as part of its plan to redirect the Company, Canadian 88 management determined that a significant departure from past operating practices were required. "We developed a balanced risk program that included production optimization optimization Field of applied mathematics whose principles and methods are used to solve quantitative problems in disciplines including physics, biology, engineering, and economics. , re-entries and workovers, low risk development and step-out drilling and leveraged high impact exploration," says Soheil Asgarpour, Executive V.P. and COO (Cell Of Origin) See mobile positioning. . "Central to the program was the objective of re-establishing a strong base of producing reserves with low finding and development cost and reduced operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. ." Olds The Olds area (100% W.I.) continues to provide significant cash flow and growth opportunities. During the fourth quarter, the area contributed 28.6 mmcf/d of sales gas and 839 b/d of oil and natural gas liquids to average 5,605 boe/d. Average total production for 2000 was 25.9 mmcf/d of gas, and 748 b/d of oil and NGLs, equaling 5,062 boe/d or 35 percent of the Company's total volumes for the year. The Olds Gas Plant was shut down from September 5 to October 7 to complete a plant turnaround and sulphur Sulphur, city, United States Sulphur, city (1990 pop. 20,125), Calcasieu parish, SW La.; inc. 1914. It is a trade center for an area producing natural gas, oil, and timber as well as sorghum, soybeans, cattle, and crawfish. recovery enhancement program. This resulted in one of the most efficient plants in Alberta, meeting or exceeding all regulations that would apply to any similar plant built in 2001. Drilling, workover and production optimization projects during the year demonstrated significant multi-zone potential and increased activity in the fourth quarter provided momentum going into 2001. A September well at the 2-24 location that encountered Pekisko and Viking formations was dually completed and put on production in October at a combined rate of 4.1 mmcf/d of raw gas and 70 b/d of NGLs. Two wells drilled in the fourth quarter at 15-28 and 15-36 were brought on production in early 2001, adding 10 mmcf/d of raw gas and associated liquids (1,216 boe/d) and 5 mmcf/d of raw gas and associated liquids ( 667 boe/d). In addition, three sweet, shallow gas wells added production capability of 5 mmcf/d of raw gas and associated liquids ( 667 boe/d). Three Hills Three Hills volumes averaged 7.4 mmcf/d of sales gas and 357 b/d of oil and NGLs for combined fourth quarter production of 1,590 boe/d. Full-year production averaged 7.3 mmcf/d of sales gas and 344 b/d of oil and NGLs, totaling 1,561 boe/d. This low-operating-cost core property has significant multi-zone sweet gas potential. In 2001, the Company will perforate per·fo·rate v. 1. To make a hole or holes in, as from injury, disease, or medical procedure. 2. To pass into or through (a body structure or tissue). adj. Having been perforated. 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. wells to test bypassed formations, which could lead to additional development drilling. Chedderville/Ricinus During the fourth quarter, the area contributed 15.6 mmcf/d of sales gas and 374 b/d of natural gas liquids to total 2,974 boe/d. Total 2000 production averaged 16.4 mmcf/d of gas, and 394 b/d of oil and NGLs for a combined average production of 3,127 boe/d. Waterton/Castle River Waterton production averaged 19.0 mmcf/d of sales gas and 56 b/d of NGLs for combined fourth quarter production of 3,222 boe/d. Full year production averaged 23.3 mmcf/d of sales gas and 70 b/d of NGLs, totaling 3,953 boe/d. Early in 2000, Canadian 88 deepened the 8-24 well and put it on production. Prior to commencement of the Strategic Review Process the Company had planned to re-drill the existing 4-18 shut-in well to increase Devonian production and horizontally re-enter re·en·ter also re-en·ter v. re·en·tered, re·en·ter·ing, re·en·ters v.tr. 1. To enter or come in to again. 2. To record again on a list or ledger. v.intr. two wells to access Mississippian reserves. This activity was deferred and the property was subsequently divested. Exploration JV Canadian 88 entered into 22 joint venture agreements with 15 different operators in 2000 to leverage both its land and the high natural gas price environment. The results of the drilling program were below expectations but validated val·i·date tr.v. val·i·dat·ed, val·i·dat·ing, val·i·dates 1. To declare or make legally valid. 2. To mark with an indication of official sanction. 3. the strategy of accelerating drilling while reducing financial exposure and spreading exploration risk. During the fourth quarter, Canadian 88 participated in 16 non-operated wells resulting in 15 cased wells and one dry hole. The Company maintains a gross overriding (programming) overriding - Redefining in a child class a method or function member defined in a parent class. Not to be confused with "overloading". royalty in four of the successful wells and an average 26 percent working interest in the other 11 wells. Management's strategy extended to high-risk high-risk adjective Referring to an ↑ risk of suffering from a particular condition Infectious disease Referring to an ↑ risk for exposure to blood-borne pathogens, which occurs with blood bank technicians, dental professionals, dialysis unit , high-reward prospects. Partners paid 70 percent of the capital cost to drill, complete and tie in a well to test a Wabamun/ Mississippian thrust sheet in the Castle River area. Canadian 88 maintained a 55 percent working interest in the well, which encountered significant Mississippian pay but no Devonian gas and 45 percent of this play was subsequently divested to Hunt Oil. Partners also assumed all of the costs of drilling and casing the 12-9 Ram River well (41.7% W.I.) to test a large Devonian Swan swan, common name for a large aquatic bird of both hemispheres, related to ducks and geese. It has a long, gracefully curved neck and an extremely long, convoluted trachea which makes possible its far-carrying calls. Hills reef prospect. The well encountered gas in two zones but was uneconomic. A follow-up follow-up, n the process of monitoring the progress of a patient after a period of active treatment. follow-up subsequent. follow-up plan well is planned for late 2001 to test current interpretation of the well results and seismic data which suggests the possibility of a much thicker pay interval in both zones at a second location. East Coast Offshore Canadian 88 holds four exploration licenses covering over 1.5 million acres in waters 500 feet to 9,200 feet deep located approximately 200 kilometres (130 miles) south of Halifax in the evolving deepwater East Coast exploration play offshore Nova Scotia Nova Scotia (nō`və skō`shə) [Lat.,=new Scotland], province (2001 pop. 908,007), 21,425 sq mi (55,491 sq km), E Canada. Geography . In April 2000, Kerr-McGee Corporation, which has the deepwater expertise required to drill and develop such a project, acquired a 50 percent interest in and became operator of these leases for a cash consideration of $15.2 million, replacement of work commitment promissory notes promissory note, unconditional written promise to pay a certain sum of money at a definite time to bearer or to a specified person on his order. Promissory notes are generally used as evidence of debt. and assumption of $2.2 million of future seismic processing costs. The companies are interpreting data from a 3,470 square kilometre Square kilometre (U.S. spelling: square kilometer), symbol km², is a decimal multiple of the SI unit of surface area, the square metre, one of the SI derived units. 1 km² is equal to:
pref. Middle: midbrain. 2000 and expect to finalize fi·nal·ize tr.v. fi·nal·ized, fi·nal·iz·ing, fi·nal·iz·es To put into final form; complete or conclude: "They have jointly agreed ... a drill site in mid-2001 and drill an exploration well in early 2002. Reserves Proved reserves proved reserves The quantity of minerals expected to be recoverable under current economic and operating conditions. The amount of proved reserves is important in valuing the stock of a company with significant holdings in natural resources. were 110.5 mmboe on January 1, 2000 compared to 37.0 mmboe on January 1, 2001. The change primarily reflects the impact of the sale of 59.2 mmboe associated with divested properties including Waterton and Caroline. Annual production of 6.0 mmboe offset proved additions of 5.1 mmboe. Reserve revisions accounted for 13.6 mmboe of the decrease. The revisions largely result from reduced proved undeveloped reserve estimates in the Olds field where the Company's independent engineering consultants reduced both the number of locations and the estimated reserves per well. Proved producing reserves at Olds actually increased year-over-year and production from previously producing wells exceeded the consultants year 2000 projections by approximately 16 percent. While management acknowledges the conservative stance of its consultants, it is encouraged by the results of two recent Olds wells, which are above Company projections and above what the external consultants 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. for an average well in the field. If production from these wells is indicative of results from planned drilling programs, the Company believes that reserve estimates for the Olds field will improve. FINANCIAL REVIEW "With debt at unacceptable levels and cash flows depressed by our out-of-the-money out-of-the-money Used to describe a call option with a strike price above the price of the underlying asset or a put option with a strike price below the price of the underlying asset. natural gas hedge, we were faced with significant financial risk," says Executive V.P. and CFO See Chief Financial Officer. Don Gardner Don Gardner is an American rhythm and blues drummer and vocalist. Born in Philadelphia, Gardner had formed his own group, the Sonotones, in 1953, but teamed up with Dee Dee Ford in the early 1960s to have his biggest successes. . "In this very difficult environment, we took dramatic steps and emerged from 2000 with improved financial strength and flexibility." The Company reported cash flow of $22.5 million and earnings of $2.3 million for the fourth quarter and cash flow of $35.5 million and a loss of $9.7 million for full-year 2000. All but $1 million of fourth quarter cash flow was generated following the expiry of the natural gas hedge on October 31, 2000. Without the hedge, cash flow would have exceeded $32 million in the fourth quarter and would have been approximately $94 million for the full year. Fourth quarter results also reflected the start-up of the Olds Gas Plant, which began on October 5, 2000. Fourth quarter royalty expense, at $14.6 million was up significantly year over year, reflecting higher provincial reference prices. Full-year royalty expenses totaled $33.1 million, up from $17.9 million in 1999. Operating costs operating costs npl → gastos mpl operacionales were $7.5 million for the quarter and $28.6 million for the full year, essentially flat year-over-year. 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 amortization expenses totaled $13.1 million in the fourth quarter and $ 41.3 million for the full year. Fourth quarter G&A costs of $2.7 million brought full year G&A costs to $7.0 million, down slightly from 1999, reflecting on-going cost controls. Interest expense increased slightly year-over year to $5.7 million in the fourth quarter and $20.6 million for the full year, reflecting higher rates and financing fees paid in connection with the July 19, 2000 closing of a $215 million senior credit facility and the issue of $50 million of subordinated notes in the fourth quarter. Full-year asset sales totaled $43.7 million, including the sale of $28.5 million of non-core assets and the sale of 50 percent of the Company's East Coast land position to Kerr-McGee Corporation for $15.2 million. The Company used a portion of the proceeds from these sales to pay down long term debt, which totaled $ 29 million net of assets held for resale resale n. selling again, particularly at retail. In many states a "resale license" or "resale number" is required so that the state can monitor the collection of sales tax on retail sales. RESALE. at year end. 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. during the quarter totaled $19.6 million, bringing full-year expenditures to $64.7 million. OUTLOOK Last year was clearly a turnaround year for Canadian 88, as management and staff worked to improve the Company's financial position, focus the asset portfolio, accelerate drilling programs, increase production and upgrade facilities and infrastructure. Consequently, the Company is in a much stronger position than at the beginning of 2000. The sale of assets for $43.7 million during 2000 and of the Company's assets in the Waterton and Caroline areas for $176 million effective January 1, 2001, allowed Canadian 88 to pay down debt, strengthen its balance sheet and focus on growing value from core assets. The increased operating and financial flexibility allows Canadian 88 to efficiently exploit its asset portfolio and move opportunistically to expand core holdings through strategic acquisitions of properties and/or companies. As a result of its increased financial flexibility, Canadian 88 increased the pace of its drilling program in the fourth quarter that carried into 2001. To date, the Company has participated in 23 wells (16 operated) with greater than 80 per cent success. Areas of focus include shallow gas and uphole zones in the Olds and Three Hills areas, Basal basal /ba·sal/ (ba´s'l) pertaining to or situated near a base; in physiology, pertaining to the lowest possible level. ba·sal adj. 1. Quartz quartz, one of the commonest of all rock-forming minerals and one of the most important constituents of the earth's crust. Chemically, it is silicon dioxide, SiO2. gas at High River, and Belly belly /bel·ly/ (bel´e) 1. abdomen. 2. venter (1). bel·ly n. 1. See abdomen. 2. The stomach. 3. The womb; the uterus. River gas in the new Medallion core area in southern Alberta Southern Alberta is a region located in the Canadian province of Alberta. As of the year 2004, the region's population was approximately 272,017[1][2]. . In addition, throughout the first quarter, the Company drilled a large-bore step-out well on an updip location within the Blackstone/Swan Hills gas field that is expected to reach TD late in the second quarter. Two non-operated wells, previously producing 3 mmcfe/d net to the Company, were shut in during the first quarter of 2001. The two wells are expected to be back on production in June. Despite these two wells being shut in, fourth quarter 2000 and first quarter 2001 production levels, both net of Waterton and Caroline, were essentially unchanged. Wells drilled during the first quarter of 2001 which tested at 6 mmcfe/d are expected to be on production by July 1st. The debottlenecking of the Olds field, (described below) is anticipated to add 3 mmcfe/d by July 1st, 2001. Early in 2001, the Company initiated a debottlenecking program to increase processing efficiencies at the Olds Gas Plant and add field compression to allow production of gas currently backed out by new highly-pressured wells which were tied in early in the year. The decision to direct more capital to finding and developing quick connect, shallow, sweet gas should increase throughput The speed with which a computer processes data. It is a combination of internal processing speed, peripheral speeds (I/O) and the efficiency of the operating system and other system software all working together. 1. capacity within the current sulphur restrictions at the Olds Plant. "Due to the mature nature of the Western Canadian Sedimentary Basin The Western Canadian Sedimentary Basin (WCSB) is a vast sedimentary basin underlying 1.4 million square kilometres (550,0000 sq. mi.) of Western Canada including southwestern Manitoba, southern Saskatchewan, Alberta, northeastern British Columbia and the southwest corner of the and the dramatic consolidation of the oil and gas industry, Canadian 88 remains one of the few mid-sized Canadian producers with both concentrated core producing areas and highly prospective exploration blocks," notes Pritchett. "The Company's large operated gas fields at Olds and Three Hills have strategic infrastructure, significant development opportunity and exploration upside potential Upside potential The amount by which analysts or investors expect the price of a security may increase. upside potential The potential price or gain that may be expected in a security or in a security average, generally stated as the dollar . In addition, quality prospective exploration locations in Alberta and offshore Nova Scotia can support an aggressive, leveraged exploration program. The turbidite tur·bi·dite n. A sedimentary deposit formed by a turbidity current. turbidite A sedimentary deposit formed by a turbidity current. sand prospects on Canadian 88's offshore leases are similar to huge reserves being found in analogous analogous /anal·o·gous/ (ah-nal´ah-gus) resembling or similar in some respects, as in function or appearance, but not in origin or development. a·nal·o·gous adj. deepwater reservoirs elsewhere in the world. Exploration drilling, currently planned for early 2002, provides outstanding growth potential." Headquartered in Calgary, Alberta, Canada, Canadian 88 Energy Corp. (EEE) is an independent public oil and gas Company with shares listed on the Toronto and American Stock Exchanges This is a list of American stock exchanges. Stock exchanges in Latin America (where Spanish and Portuguese prevail) use the term Bolsa de Valores, meaning 'bag' or 'purse' of 'values'. . Forward Looking Information This release contains statements that constitute 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. within the meaning of Section 27A of the Securities Act of 1993 and Section 21 of the Securities Exchange Act of 1934 and are subject to the safe harbour provisions of those sections and the 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. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties including those described in our filings with Canadian and U.S. securities commissions, and that the actual results or developments may differ materially from those in the forward-looking statements as a result of various factors. We have based these forward-looking statements on information currently available and disclaim dis·claim v. dis·claimed, dis·claim·ing, dis·claims v.tr. 1. To deny or renounce any claim to or connection with; disown. 2. To deny the validity of; repudiate. 3. any intention or obligation to update or revise any forward-looking statement.
Three Months Ended Year Ended
December 31 December 31
----------- -----------
2000 1999 Change 2000 1999 Change
---- ---- ------ ---- ---- ------
Financial:
($000's except per
share amounts)
Production
Revenues $ 50,574 $26,421 91% $125,189 $104,979 19%
Cash Flow from
Operations $ 22,541 $ 6,093 270% $ 35,460 $ 31,776 12%
Net earnings
(loss) $ 2,281($ 8,088) 128% ($ 9,680)($ 6,454) -50%
Per Share
Cash Flow from
Operations $ 0.18 $ 0.06 200% $ 0.28 $ 0.30 -7%
Net earnings
(loss) $ 0.02 ($ 0.08) 125% ($ 0.08)($ 0.06) -33%
Average Common
Shares 127,118 106,032 20%
Operational:
Production
Volumes:
Crude oil (b/d) 321 554 -42% 457 550 -17%
Natural Gas
Liquids (b/d) 1723 1932 -11% 1760 2164 -19%
Oil & NGL's (b/d) 2044 2486 -18% 2217 2714 -18%
Natural gas
(mmcf/d) 74.1 95.7 -23% 81.3 103.0 -21%
Sulphur (lt/d) 649 489 33% 568 662 -14%
Sales Prices:
Crude Oil ($/bbl)$ 32.68 $ 29.50 11% $ 34.97 $ 22.06 59%
Natural Gas
Liquids ($/bbl) $ 45.15 $ 27.85 62% $ 38.70 $ 20.50 89%
Oil & NGL's
($/bbl) $ 43.19 $ 28.20 53% $ 37.93 $ 20.82 82%
Natural Gas
($/mcf) $ 6.22 $ 2.19 184% $ 3.12 $ 2.18 43%
Sulphur ($/lt) $ 4.61 $ 6.37 -28% $ 6.88 $ 5.14 34%
Capital Expenditures:
Net Property
Acquisition 0 0 0 0
Exploration &
Development 16,866 21,668 -22% 44,379 87,556 -49%
Plants &
Facilities &
Prod equ. 1,156 750 54% 12,224 12,192 0%
Land & Lease 1,607 399 303% 8,125 4,734 72%
------------------------------------------------
$ 19,629 $22,817 -14% $ 64,728 $104,482 -38%
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---------------- ------------------
CANADIAN 88 ENERGY CORP.
Consolidated Balance Sheets
December 31, 2000 and 1999
(In thousands of dollars)
-------------------------------------------------------------------
2000 1999
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Assets
Current assets
Accounts receivable $ 23,845 $ 15,400
Prepaid expenses and deposits 8,690 7,531
Assets held for resale 170,175 -
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202,710 22,931
Other assets 6,871 7,547
Oil and gas assets 404,583 554,295
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$ 614,164 $ 584,773
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Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accrued liabilities $ 34,547 $ 31,152
Current portion of long-term debt 170,155 -
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204,702 31,152
Long-term debt 29,000 255,000
Provision for future site restoration 2,588 1,831
Future income taxes 68,080 20,532
Shareholders' Equity
Share capital 307,951 256,935
Retained earnings 1,843 19,323
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309,794 276,258
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$ 614,164 $ 584,773
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CANADIAN 88 ENERGY CORP.
Consolidated Statements of Operations and Retained Earnings
Years ended December 31, 2000 and 1999 (In thousands of dollars,
except per share amounts)
Three Months Ended Year Ended
December 31 December 31
2000 1999 2000 1999
(unaudited) (audited)
Revenue
Oil and gas $ 50,574 26,421 125,189 104,979
Royalties, net of Alberta
royalty tax credit (14,621) (5,832) (33,085) (17,877)
--------- -------- -------- --------
35,953 20,589 92,104 87,102
--------- -------- -------- --------
Expenses
Operating 7,482 7,562 28,568 29,534
Depletion, depreciation
and amortization 13,101 18,744 41,283 41,566
Interest on long-term debt 5,737 4,850 20,611 16,400
General and administrative 2,683 1,480 7,046 7,106
Restructuring costs - (275) 4,104 506
--------- -------- -------- --------
29,003 32,361 101,612 95,112
--------- -------- -------- --------
Operating earnings (loss)
before income taxes and
non-controlling interest 6,950 (11,772) (9,508) (8,010)
Income Taxes
Current 379 469 1,472 1,370
Future (reduction) 4,290 (3,586) (1,300) (2,532)
--------- -------- -------- --------
4,669 (3,117) 172 (1,162)
--------- -------- -------- --------
Earnings (loss) before
non-controlling interest 2,281 (8,655) (9,680) (6,848)
Non-controlling interest in
loss of Prize Energy Inc. - 567 - 394
--------- -------- -------- --------
Net earnings (loss) 2,281 (8,088) (9,680) (6,454)
Retained earnings (deficit),
beginning of period (438) 34,250 19,323 32,740
Change in accounting policy - - (7,800) -
Dividend of interest in
Prize Energy Inc. - (6,839) - (6,839)
Cost of shares repurchased in
excess of carrying value - - - (124)
--------- -------- -------- --------
Retained earnings,
end of period 1,843 19,323 1,843 19,323
--------- -------- -------- --------
--------- -------- -------- --------
Earnings (loss) per share $0.02 $(0.08) $(0.08) $(0.06)
--------- -------- -------- --------
CANADIAN 88 ENERGY CORP.
Consolidated Statements of Cash Flows
Years ended December 31, 2000 and 1999 (In thousands of dollars,
except per share amounts)
Three Months Ended Year Ended
December 31 December 31
2000 1999 2000 1999
(unaudited) (audited)
Cash provided by (used in)
Operations
Net earnings (loss) $ 2,281 (8,088) (9,680) (6,454)
Actual site restoration
costs incurred (7) (410) (192) (410)
Items not involving cash
Depletion, depreciation
and amortization 13,101 18,744 41,283 41,566
Future income taxes
(reduction) 4,290 (3,586) (1,300) (2,532)
Amortization of loan
placement fees included
in interest expense 2,876 - 2,876 -
Restructuring costs - - 2,473 -
Non-controlling interest in
loss of Prize Energy Inc. - (567) - (394)
--------- -------- -------- --------
Funds from operations 22,541 6,093 35,460 31,776
Changes in non-cash
working capital (5,780) (3,860) (12,757) (706)
--------- -------- -------- --------
16,761 2,233 22,703 31,070
--------- -------- -------- --------
Financing
Issue of common shares 157 226 51,293 7,882
Repurchase of common shares - - (9) (227)
Loan placement fees paid (6,841) - (6,841) -
Increase (decrease) in
long-term debt 4,255 15,000 (55,845) 65,000
--------- -------- -------- --------
(2,429) 15,226 (11,402) 72,655
--------- -------- -------- --------
Investments
Exploration and development
expenditures (19,629) (22,817) (64,728)(104,482)
Sale of capital assets 1,467 - 43,731 -
Increase in other assets (1,160) (1,860) (817) (1,860)
--------- -------- -------- --------
(19,322) (24,677) (21,814)(106,342)
Changes in non-cash
working capital (425) 6,948 10,513 886
--------- -------- -------- --------
(19,747) (17,729) (11,301)(105,456)
--------- -------- -------- --------
Change in cash and
short-term deposits (5,415) (270) - (1,731)
Cash and short-term deposits,
beginning of period 5,415 1,876 - 3,337
Cash excluded on dividend of
Prize Energy Inc. - (1,606) - (1,606)
--------- -------- -------- --------
Cash and short-term deposits,
end of period - - - -
--------- -------- -------- --------
--------- -------- -------- --------
Funds from operations per
common share $0.18 $0.06 $0.28 $0.30
--------- -------- -------- --------
The information contained herein has neither been approved nor disapproved by the respective exchanges. |
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