Chaparral Resources, Inc. Announces First Quarter Results and Operational Update.WHITE PLAINS, N.Y. -- Chaparral chaparral (chăpərăl`), type of plant community in which shrubs are dominant. It occurs usually in regions having from 10 to 20 in. (25–50 cm) of rainfall annually and with a Mediterranean-type climate. Resources, Inc. (OTCBB OTCBB See OTC Bulletin Board (OTCBB). :CHAR) (the "Company") today announced its financial results for the first quarter 2005. The Company reported net income of $3.83 million, or 10 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , for the quarter ended March 31, 2005, compared to $0.63 million, or 2 cents per share, for the quarter ended March 31, 2004. The $3.20 million increase in Chaparral's net income primarily relates to higher revenues as a result of higher prices achieved during the first quarter of 2005. Revenues were $24.33 million for the first quarter of 2005 compared with $15.61 million for the first quarter of 2004. The $8.72 million increase is the result of higher crude prices achieved during the first quarter of 2005 as compared to the same period of 2004, partially offset by lower sales volumes. During the first quarter of 2005, we sold approximately 679,000 barrels of crude oil, recognizing $24.33 million in revenue, or $35.82 per barrel after quality differential losses. Comparably, we sold approximately 721,000 barrels of crude oil, recognizing $15.61 million in revenue, or $21.65 per barrel, for the first quarter of 2004. The result is a positive price variance The materials price variance (Vmp) is computed as follows: Vmp = (Actual Unit Cost - Standard Unit Cost) * Actual Quantity Purchased or Vmp = (Actual Quantity Purchased * Actual Unit Cost) - (Actual Quantity Purchased * Standard Unit Cost). of $10.22 million offset by an unfavorable volume variance of $1.50 million. The Company's development of the Karakuduk Field requires substantial cash expenditures for drilling, well completions, workovers, oil storage and processing facilities, pipelines, gathering systems, water injection facilities, plant and equipment (pumps, transformer transformer, electrical device used to transfer an alternating current or voltage from one electric circuit to another by means of electromagnetic induction. sub-stations etc.) and gas utilization. We have invested approximately $160 million in the development of the Karakuduk Field as at March 31, 2005. Total capital expenditures for the first quarter of 2005 were approximately $6 million. Capital expenditures are estimated to be at least $100 million from 2005 through 2009, including the drilling of approximately 70 more wells over this period. We anticipate 2005 capital expenditures of approximately $46 million. During 2005, the Company expects to increase production by drilling new wells, converting at least 15 more wells to artificial lift, converting three more wells to water injection wells, adding four new water injection wells to the injection fund and by continuing with hydraulic fracturing Hydraulic fracturing is a method used to create fractures that extend from a borehole into rock formations, which are typically maintained by a proppant. The method is informally called fracing. work in selected wells. A sedimentological study undertaken in 2004 will also help in identifying reservoir fairways that should result in more productive wells. During the first quarter of 2005 the Company continued with the development of the Karakuduk Field. As of March 31, 2005 the total field well count had risen to 69 compared to 66 on December 31, 2004. The producing well count at the field as of March 31, 2005 was 50 wells compared to 45 at the end of 2004. Production for the first quarter of 2005 was 779,500 barrels, equivalent to 8,661 barrels of oil per day ('bopd"), compared to 762,100 barrels, or 8,284 bopd, in the final quarter of 2004 and 7,760 bopd for the first quarter of 2004. Competition for pipeline export quota meant that the Company received lower than anticipated quota. The Company sold 84,000 tonnes to export markets (94% of total sales) and 5,000 tonnes locally during the quarter, compared with 92,600 tonnes exported (97% of total sales) and 3,000 tonnes to the local market in the fourth quarter of 2004. Current daily oil production is in excess of 10,000 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. . Drilling activity continued in the first quarter. During winter the weather at the field was far warmer and much wetter than is usual and this adversely impacted all operations and field production. Drilling was also affected with rig move times taking longer than normal. The Company also implemented a 'closed circulation system' as required by the Kazakh environmental authorities. This means that waste drill cuttings Drill cuttings typically refer to any solids removed from a wellbore while drilling. The term specifically refers to shale cuttings generated when drilling petroleum wells, and is usually removed by circulating the drilling fluid over shale shakers. and waste drilling fluids Noun 1. drilling fluid - a mixture of clays and chemicals and water; pumped down the drill pipe to lubricate and cool the drilling bit and to flush out the cuttings and to strengthen the sides of the hole drilling mud are no longer discharged into lined pits at the drilling locations that are buried following completion of the well. The waste material is now collected and taken to a specially prepared pit near the field camp. Essential maintenance and a failure of the drawworks bearings of the rig also impacted on drilling. The result was that for the first quarter of 2005, the Company drilled only 8,624m for 2.8 wells. This compares to 12,701m for 4.1 wells in the last quarter of 2004 and 11,618m for 3.5 wells in the first quarter of 2004. During April, production from the field rose to an average of 9,718 bopd as a result of the successful completion of well 149 and the effects of the programme to convert more wells to artificial lift. The Company also commissioned the first phase of its gas utilization programme for the Karakuduk Field. The pipeline linking the central processing facility to the pipeline booster Booster - A data-parallel language. "The Booster Language", E. Paalvast, TR PL 89-ITI-B-18, Inst voor Toegepaste Informatica TNO, Delft, 1989. pump station at km 15 was commissioned on April 7, 2005. Oil heaters at this station are now gas-fired, and this will result in significant cost savings for the Company. The Company will continue with the development of the Karakuduk Field throughout the remainder of 2005. One drilling rig and two workover rigs will operate at the field. The Company forecasts that up to 16 wells will be drilled, including two horizontal wells, the first such wells to be drilled at Karakuduk. Phase 2 of the gas utilization project will commence which includes the extension of the gas pipeline from km 15 to the Transfer Pumping Station where the gas can be sold into the Central Asian Transit System gas pipeline. The company will continue to investigate the use of field gas to generate electricity. The Company will also continue with its water injection programme, and further hydraulic fracturing of wells is also planned. Simon Gill, Chief Executive Officer of Chaparral, commented, "The steady increase in production through the first quarter is a result of fundamental improvements in the operation of the Karakuduk Field. We expect to continue to improve field operations through the remainder of the year." Chaparral Resources, Inc. is an oil and gas development and production company. The Company's only operating asset is its participation in the development of the Karakuduk Field, in the Republic of Kazakhstan, through KKM KKM Kyou Kara Maou (fanfiction) KKM Kreiskolbenmotor (German: Planetary Rotation Motor) KKM Katholische Korporationen München KKM Koordinierungskreis Mosambik eV , which is the operating company operating company A business that engages in transactions with outsiders. . The Company has directly and indirectly a 60% ownership interest in KKM with the other 40% ownership interest being held by Nelson. Nelson, an independent oil company listed on the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. and the Alternative Investment Market of the London Stock Exchange London Stock Exchange London marketplace for securities. It was formed in 1773 by a group of stockbrokers who had been doing business informally in local coffeehouses. , holds a majority interest in Chaparral and operates several other producing oil fields This list of oil fields includes major fields of the past and present. The list is incomplete; there are more than 40,000 oil and gas fields of all sizes in the world[1]. in Kazakhstan. More information is available on the Company's web site, www.chaparralresources.com. Information Regarding 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. : Except for historical information contained herein, the statements in this News Release are forward-looking statements that are made pursuant to 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 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. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Company's actual results in future periods to differ materially from forecasted results. These risks and uncertainties include, among other things, volatility of oil prices, product demand, market competition, risks inherent in the Company's international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. , imprecision im·pre·cise adj. Not precise. im  pre·cise ly adv. of reserve estimates and
Chaparral's ability to replace and expand oil and gas reserves.
These and other risks are described in the Company's Annual Report
on Form 10-K Form 10-KA report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and other filings with the Securities and Exchange Commission.
FINANCIAL HIGHLIGHTS
($000, except share data)
Quarter Ended
March 31
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2005 2004
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Revenue 24,327 15,609
Cost and expenses (14,103) (11,498)
Other income/(expense) (3,954) (2,335)
Income tax expense (2,436) (1,142)
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Net income available to common stockholders 3,834 634
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Basic earnings per share:
Net income per share $0.10 $0.02
Weighted average number of shares outstanding
(basic) 38,209,502 38,209,502
Diluted earnings per share:
Net income per share $0.10 $0.02
Weighted average number of shares outstanding
(diluted) 39,117,455 38,209,502
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