Chaparral Resources Inc. Announces Second Quarter Results and a 67% Increase in Production.Energy Editors/Business Editors HOUSTON--(BUSINESS WIRE)--Aug. 18, 2003 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) today announced its financial results for the second quarter 2002. The Company reported a net loss of $1.11 million, or 3 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 June 30, 2003, compared to a net income of $5.05 million, or 18 cents per share, for the quarter ended June 30, 2002. The $6.16 million decrease in Chaparral's net income primarily relates to (i) lower quantities of oil sold, (ii) a $5.34 million extraordinary gain recognized in May 2002 as a result of the restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). of the Company's loan with Shell Capital Inc., in part offset by, (iii) lower costs associated with the refinancing Refinancing An extension and/or increase in amount of existing debt. of Chaparral's debt obligations with Shell Capital Inc., (iv) lower operating costs operating costs npl → gastos mpl operacionales , (v) expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created of the hedge agreement during 2002, and (vi) improved operational results from the Karakuduk Field. Revenues were $8.47 million for the second quarter of 2003 compared with $10.65 million for the second quarter of 2002. The $2.17 million decrease is the result of lower volumes sold during the second quarter 2003 net of higher oil prices received during the second quarter 2003. The reduction of volumes sold was the result of delay of delivery of approximately 200,000 barrels of oil, contracted during June 2003, until July 2003. The net value of this sale amounted to approximately $4.3 million and will be recognized as revenue in the third quarter. During the second quarter 2003, the Company sold approximately 455,000 barrels of crude oil, recognizing $8.47 million, or $18.62 per barrel, in revenue. Comparably, the Company sold approximately 579,000 barrels of crude oil, recognizing $10.65 million in revenue, or $18.39 per barrel, for the second quarter 2002. Chaparral's operations for the six months ended June 30, 2003 resulted in a net loss of $1.06 million compared to a net profit of $1.93 million as of June 30, 2002. The $2.99 million decrease in net income primarily relates to (i) lower sales revenue as a result of lower volumes sold, (ii) a $5.34 million extraordinary gain recognized as a result of the May 2002 restructuring of the Company's loan with Shell Capital Inc., in part offset by (iii) recognition of a $1.02 gain as a result of the adoption of SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 143, (iv) lower costs associated with the refinancing of our debt obligations with Shell Capital, Inc., (v) expiration of the hedge agreement during 2002 (vi) improved operational results from the Karakuduk Field, and (vii) lower operational costs associated with reduced sales. During the six months ended 2003, we sold approximately 819,000 barrels of crude oil, recognizing $16.29 million, or $19.89 per barrel, in revenue. Comparably, we sold approximately 1,150,000 barrels of crude oil, recognizing $19.03 million in revenue, or $16.54 per barrel, for the six months ended 2002. 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 $2.74 million net of a negative volume variance The discrepancy between what a party to a lawsuit alleges will be proved in pleadings and what the party actually proves at trial. In Zoning law, an official permit to use property in a manner that departs from the way in which other property in the same locality of $5.48 million. As of June 30, 2003, transportation costs were $3.3 million, or $4.03 per barrel, and operating costs associated with sales were $2.53 million, or $3.09 per barrel. Transportation costs were $4.63 million, or $4.03 per barrel, and operating costs associated with sales were $3.74 million, or $3.25 per barrel, for the six months ended 2002. As of Aug. 8, 2003, we have successfully increased our daily production to approximately 10,000 barrels from 6,000 barrels at Dec. 31, 2002, an increase of approximately 67%. We also surpassed the significant milestone of 8 million barrels (1 million tons) of cumulative production from the Karakuduk Field. In 2003, KKM KKM Kyou Kara Maou (fanfiction) KKM Kreiskolbenmotor (German: Planetary Rotation Motor) KKM Katholische Korporationen München KKM Koordinierungskreis Mosambik eV has maintained an active drilling program, installed artificial lift support, and initiated a successful 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 program. The activities in these areas to date are in line with expectations and will continue. Production from the Karakuduk Field is expected to increase further due to: (i) the introduction of additional new wells, (ii) the ongoing 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. program, (iii) the ongoing installation of down hole pumps and (iv) the implementation of a water injection program. Nikolai D. Klinchev, chief executive officer of Chaparral, said, "As increased drilling activity continues and other improvements are made to the Karakuduk Field over the next several months, we expect that our daily production will increase to 12,000 barrels of oil per day by year-end, a 100% increase from Dec. 31, 2002. We would also like to congratulate KKM's employees, consultants and field personnel for their outstanding achievement in achieving 10,000 barrels of oil per day of production and for exceeding the impressive 8 million barrels (1 million tons) cumulative production milestone. On behalf of the board of directors, we would like to thank them for their continued dedication and efforts over the past several years." Chaparral Resources Inc. is an international oil and gas exploration and production company. The Company's only operating asset is its participation in the development of the Karakuduk Field through KKM, of which Chaparral is the operator. The Company owns a 60% ownership interest in KKM with the other 40% ownership interest being held by Joint Stock Company KazMunayGaz, the national petroleum company of Kazakhstan. Central Asia Industrial Holdings, a private investment holding company, holds a majority interest in Chaparral and is a significant investor in the Kazakh oil sector. 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 Press 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
(in thousands, except per share data)
Quarter Ended Six Months Ended
June 30, June 30,
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2003 2002 2002 2002
----------- ----------- ----------- -----------
Revenue $8,472 $10,646 $16,285 $19,025
Cost and expenses (8,209) (8,945) (14,933) (18,416)
Other expense (1,042) (1,698) (2,748) (3,499)
Income tax expense (330) (287) (681) (519)
Extraordinary gain on
debt restructuring - 5,338 - 5,338
Cumulative effect of
change in
accounting
principle - - 1,018 -
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Net income/(loss) (1,109) 5,054 (1,059) 1,929
Net income/(loss)
available to common
stockholders $ (1,109) $ 5,054 $ (1,059) $ 1,929
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Basic and diluted
earnings per share:
Net income/(loss) per
share $(0.03) $0.18 $(0.03) $0.09
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Weighted average
number of shares
outstanding (basic) 38,209,502 27,955,630 38,209,502 21,157,483
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Weighted average
number of shares
outstanding (diluted) 38,209,635 28,488,711 38,209,635 21,430,647
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