Canadian 88 Energy Corp. announces record first quarter of 1997 results.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 16, 1997--Canadian 88 Energy Corp. (TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). , Alberta Stock Exchange Alberta Stock Exchange See Canadian Venture Exchange (CDNX). EEE EEE eastern equine encephalomyelitis. EEE eastern equine encephalomyelitis. .) HIGHLIGHTS OF THE FIRST QUARTER OF 1997 - Production (increase of 30 percent), revenue (increase of 70 percent), cash flow, (increase of 84 percent), and earnings (increase of 1198 percent) all skyrocket sky·rock·et n. A firework that ascends high into the air where it explodes in a brilliant cascade of flares and starlike sparks. intr. & tr.v. during the first quarter of 1997 compared to the first quarter of 1996. - 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 evolved as the leader in the utilization and development of deep foothills conventional and horizontal drilling a drilling machine having a horizontal drill spindle. See also: Horizontal techniques, having drilled more wells and meterage Me´ter`age n. 1. The act of measuring, or the cost of measuring. meterage a fee charged for measurement. See also: Dues and Payment over the past 18 months in the Foothills corridor (wells 2500 m and deeper - Twp 47 W5M south to Twp 1 W5M) than any other oil and gas company. - Canadian 88 led the industry in the application of high resolution 3-D seismic with the completion of three large 3-D seismic surveys totaling over 595 square miles A square mil is a unit of area, equal to the area of a square with sides of length one mil. A mil is one thousandth of an international inch. This unit of area is usually used in specifying the area of the cross section of a wire or cable. encompassing Canadian 88's undeveloped land base in the 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. foothills at Waterton Waterton may refer to:
Western Canada, commonly referred to as the West . - Four new discoveries have occurred at Crossfield (100 percent W.I.), Porcupine porcupine, in zoology porcupine, member of either of two rodent families, characterized by having some of its hairs modified as bristles, spines, or quills. Hills (100 percent W.I.), Bison (100 percent W.I.) and Chedderville (94.4 percent W.I.), all operated by Canadian 88. FINANCIAL - Cash flow increased 84 percent to a record $10.5 million from $5.7 million in 1996. Earnings of $11.1 million increased sharply from $0.9 million in 1996. Revenues in the first quarter of 1997 increased 70 percent to $20.5 million from $12.1 million in 1996. - Average natural gas production increased 33 percent to a record level of 66.5 mmcf per day from 50.1 mmcf per day in 1996. Production was constrained con·strain tr.v. con·strained, con·strain·ing, con·strains 1. To compel by physical, moral, or circumstantial force; oblige: felt constrained to object. See Synonyms at force. 2. due to debottlenecking and expansion of processing capacity currently underway at our Olds/Crossfield facilities. Production of oil and ngls increased to a record level of 2394 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. from 1945 barrels per day in 1996. Canadian 88's average gas price for the three month period increased 47 percent to $2.37 per mcf compared to $1.61 per mcf during the first quarter of 1996. Natural gas liquids prices rose 33 percent for the three months to $26.65 from $20.07 in the first quarter of 1996. The Company's average crude oil price for the three month period increased 25 percent to $28.81 from $23.11 in 1996's first quarter. - Capital expenditures during the first quarter of 1997 were a record $32.3 million, representing a 114 percent increase from $15.1 in the first quarter of 1996. Capital expenditures were incurred as follows: $21.7 million to exploration and development activities (1996 - $9.6 million); $5.6 million to facilities and pipelines (1996 - $3.5 million); and $5.0 million towards aggressive land acquisitions (1996 - $2.0 million). - In January January: see month. , 1997 the Company made an offer to acquire all the issued and outstanding shares of Morrison Petroleums Ltd. in exchange for cash and shares of the Company. In February, 1997 after further analysis, the Company withdrew its offer and disposed dis·pose v. dis·posed, dis·pos·ing, dis·pos·es v.tr. 1. To place or set in a particular order; arrange. 2. of shares acquired on its behalf for a cash gain of approximately $14.3 million before expenses associated with the offer of $4.1 million which included a commitment to donate $1.0 million to charity. Subsequent to our withdrawal, the successful acquiror has announced significantly less production from the Morrison assets than both Analysts and we had been previously led to believe and furthermore, a strong possibility exists that there may be a significant writedown writedown A reduction in the value of an asset carried on a firm's financial statements. For example, the firm's accountants, believing the inventory is overvalued, may decide to take a writedown by reducing inventory valuation. of these acquired assets pending. OPERATIONS AND EXPLORATION As highlighted in our recent annual report Canadian 88 has been working hard to develop what we call the "Canadian 88 Advantage". Canadian 88 has become the leader in the application of deep conventional and horizontal drilling techniques in the west central Alberta Central Alberta (also named Alberta's Heartland) is a region located in the Canadian province of Alberta. Central Alberta is the most densely populated rural area in the province. Agriculture and energy make up an important part of the economy. Foothills corridor. We have also become the leader in the application of large scale 3-D seismic technology in 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 we have a distinct advantage over our competition through having aggressively shot three large high resolution 3-D seismic surveys at Waterton (70 square miles), Chedderville (125 square miles) and Olds/Crossfield (400 square miles). The true value of this major investment is now unfolding as initial interpretations and drilling successes are rolling in. Canadian 88 will be able to reap the rewards of this high-quality program for many years to come. For example at Chedderville, a 94.4 percent working interest well has resulted in a Leduc natural gas discovery with reserve potential of up to 150 bcf of natural gas and significant natural gas liquids. This $2.5 million well has encountered over 50 meters of pay, AOF AOF Academy Of Finance (New York State Department of Education) AOF Afrique Occidentale Française (French) AOF Avon Old Farms (Avon, CT school) - tested at 67 mmcf/d and is expected to produce over 10 mmcf/d of natural gas with associated natural gas liquid recovery. Through the use of 3-D seismic over our lands, Canadian 88 has been able to pinpoint several additional drilling locations in this highly prospective area and at least three more wells will be drilled in the area throughout the remainder of 1997. Further production potential this year of up to 20 mmcf/d is expected from this area. At Waterton, 3-D seismic was completed in early January and we established a new record at the January 8, 1997 Alberta Land Sale paying $3.25 million for a 256 hectare hectare (hĕk`târ, –tär), abbr. ha, unit of area in the metric system, equal to 10,000 sq m, or about 2.47 acres. parcel on our Waterton gas play. Full field development of our Waterton play has commenced. This program entails drilling five additional deep wells and the construction of a pipeline to tie-in production to Shell's Waterton plant. This multi-well development drilling program should add upwards of 70 mmcf/d of natural gas production net to Canadian 88 (90 percent W.I.) with 50 mmcf/d anticipated to be onstream by the end of 1997. We spudded in April the 4-5-7-2 W5M well, located south of our initial discovery, and currently are licensing a location to the north of the discovery well. With two rigs under contract for the remainder of 1997 a total of four new wells should be drilled on this property by year end. Additionally at Olds/Crossfield, three drilling rigs are currently active and will add the required production to fully utilize Canadian 88's gas plant expansion. Canadian 88's 100 percent owned facilities in the area are currently being expanded from 70mmcf/d to 140 mmcf/d, as 20 mmcf/d of 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. capability came onstream in December 1996 and an additional 50 mmcf/d of capacity is targeted by year-end 1997. We have budgeted a minimum of $50 million to be spent on this property in 1997 and expect to have our 100 percent owned gas plant full (including the 50 mmcf/d additional capacity) by the end of 1997 through the successful drilling of a minimum of 24 deep horizontal gas wells, all targeting the Devonian Formation. Additional multi-zone potential has been identified on 3-D seismic and prolific formations in the Mississippian, Viking, Mannville, Elkton and Pekisko will also be tested. OUTLOOK Although we failed on our takeover attempt Noun 1. takeover attempt - an attempt to take control of a corporation bear hug - a takeover bid so attractive that the directors of the target company must approve it or risk shareholder protest for Morrison, the end result was a blessing in disguise Disguise Dishonesty (See DECEIT.) Abigail enters nunnery as convert to retrieve money. [Br. Lit.: The Jew of Malta] Achilles disguised as a woman to avoid conscription. [Gk. in that not only were we right in withdrawing our bid, the process caused us to recognize our full strengths and potential. It forced us to stringently evaluate our own lands and the future direction of the Company. The process made it clear to us that the true strengths of Canadian 88 are the prospects and the people that Canadian 88 already has. With this realization we are now entirely focused on drilling prospects from our large, high quality inventory of internally generated plays. Presently, the potential exists to drill over 320 locations with an average working interest of 90 percent which exists on our drilling opportunity list. Based on our record four year average finding and development cost of $3.22 Cdn/$2.50 U.S. for proven reserves only, this program could result in 138,229 mBOE of additional reserves being found under Canadian 88 lands. At January 1, 1997 total reserves are 84,952 mBOE (proven plus 50 percent probable). Total 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. of $450 million could result in additional estimated production on a risked basis of 330 mmcf/d and 12,700 bbls/d of liquids. A continual highgrading of our prospect list currently focuses on drilling over 50 prime locations from this list during 1997 with risked production rate potential of 145 mmcf/d and 4,000 bbls/d. The Company is currently debt-free with one of the strongest balance sheets in the industry. Successful development drilling at Waterton, Olds/Crossfield and Chedderville along with the potential for high impact exploration success at Cremona, Porcupine Hills and Norman Wells Norman Wells, village (1991 pop. 627), Northwest Territories, Canada, on the Mackenzie River, W of Great Bear Lake. It is the center of an oil region. In 1985 a pipeline to the south was completed. should ensure that 1997 will be another record year. Detailed financial and operating statistics are as follows: -0-
CANADIAN 88 ENERGY CORP.
FIRST QUARTER 1997 FINANCIAL AND OPERATING STATISTICS
Three Months Ended Percent
March 31 Change
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1997 1996
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FINANCIAL:
(000's except per share amount)
Production Revenues $20,512 $12,101 70
Cash Flow from Operations $10,505 $5,712 84
Net Earnings $11,089 $854 1198
PER COMMON SHARE:
Cash Flow from Operations $0.12 $0.10 20
Net Earnings $0.12 $0.01 1100
Average Common Shares 89,269 59,241 51
OPERATIONS
PRODUCTION VOLUMES:
Oil (bbls/d) 256 458 -44
NGL (bbls/d) 2,138 1,487 44
Gas (mmcf/d) 66.5 50.1 33
Sulphur (lt/d) 297 203 46
SALES PRICES:
Oil ($/bbl) $28.81 $23.11 25
NGL ($/bbl) $26.65 $20.07 33
Gas ($/mcf) $2.37 $1.61 47
Sulphur ($/lt) $0.00 $12.85 -100
CAPITAL EXPENDITURES
Exploration & Development $21,723 $9,553 127
Plants & Facilities &
Prod. equip. $5,559 $3,515 58
Land & Lease $5,059 $2,031 149
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$32,341 $15,099 114
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Undeveloped Land Acreage position at March 31, 1997
Gross Net Average
Acres Acres WI
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Western Canada 391,000 345,000 88
Northwest Territories 215,000 215,000 100
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606,000 560,000 92
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Canadian 88 Energy Corp. is an independent exploration and production company with shares listed for trading on the Toronto and Alberta Stock Exchanges under the symbol EEE. NOTE: The information contained herein has neither been approved nor disapproved by the Toronto and Alberta Stock Exchanges. CONTACT: Canadian 88 Energy Corp., Calgary Greg Noval, 403/974-8800 403/974-8811 (FAX) Bill Dyment, 403/974-8800 403/974-8811 (FAX) |
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