EnerMark Announces Strong Third Quarter Results.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)--Nov. 21, 2000 Enermark (TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :EIF EIF Eukaryotic Initiation Factor EIF Eukaryotic Translation Initiation Factor EIF European Investment Fund EIF Edinburgh International Festival EIF Entry Into Force EIF Entertainment Industry Foundation EIF European Interoperability Framework .un.) WE ARE PLEASED TO REPORT THE RESULTS for the three months ended September September: see month. 30, 2000. The total cash distribution paid to Unitholders for the period was 24 cents per Unit, an increase of 40% over the third quarter of 1999. This was comprised of regular monthly cash distribution payments of 6.0 cents per Unit paid on the 20th days of September, October October: see month. and November November: see month. respectively plus a supplemental adjustment of 6 cents per Unit paid on November 20th. In addition, EnerMark allocated approximately 3 cents per Unit to reduce bank debt which increased as a result of successful acquisitions concluded during the quarter. Daily production averaged 24,834 barrels of oil equivalent ("BOE BOE Based on Experience BOE Board of Education BOE Boletín Oficial del Estado (Spanish) BOE Bank of England BOE Board of Equalization BOE Board of Elections BOE Barrel of Oil Equivalent BOE Bind on Equip ") per day during the third quarter of 2000, up significantly over second quarter volumes as a result of successful acquisitions concluded earlier in the year. Crude oil and NGLs production averaged 14,430 bbls/day while natural gas production increased to 104 MMcf/day for the period. EnerMark's production mix now stands at 42% natural gas and 58% crude oil.
Three months ended Sept. 30
2000 1999
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Daily Sales Volumes:
Crude oil (bbls) 12,574 11,399
NGLs (bbls) 1,856 1,857
Natural gas (Mcf) 104,045 68,765
BOE* per day 24,832 20,133
Average Selling Price:
Crude oil (per bbl) $38.95 $27.43
NGLs (per bbl) $38.60 $18.14
Natural gas (per Mcf) $4.43 $2.61
WTI - average price US$/bbl $31.57 $21.72
Currency - average rate $1 Cdn in US$ $ 0.6749 $ 0.6731
*BOE = barrel of oil equivalent (10 Mcf = 1 bbl oil)
Acquisition Activity: On November 6, EnerMark Income Fund announced that it has entered into an agreement whereby EnerMark will make an offer to acquire all of the issued and outstanding shares of Cabre Exploration Ltd. ("CBE CBE Commander of the Order of the British Empire (a Brit. title) CBE n abbr (= Companion of (the Order of) the British Empire) → título de nobleza CBE n abbr (= " - TSE) by way of a take-over bid. Under the proposed take-over, shareholders of Cabre will be offered 3.25 EnerMark Trust Units and a warrant to purchase an additional EnerMark Trust Unit for each Cabre share held. The warrants allow the holder to purchase a Trust Unit at a price of $4.59 at any time until the close of business on December December: see month. 15, 2001. There are approximately 20 million shares of Cabre Exploration Ltd. issued and outstanding, on a fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis, resulting in a total purchase price of approximately $350 million including the assumption of approximately $40 million of bank debt. Cabre's assets are currently producing approximately 12,000 barrels of oil equivalent per day, net of the pending asset disposition announced by Cabre on October 25, 2000. This is comprised of 33 million cubic feet per day of natural gas and 8,700 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. of crude oil and natural gas liquids, increasing EnerMark's existing production base by approximately 45% and resulting in a production per unit increase of 6%. The acquisition cost per producing daily barrel of production is approximately $29,000 excluding any valuations for Cabre's undeveloped land base. A formal take-over bid circular is expected to be mailed to Cabre Exploration shareholders as soon as reasonably possible, and if all necessary approvals are obtained and all other conditions satisfied or waived, the take-over is expected to be completed in December, 2000. Operations Summary Hanna Han·na , Marcus Alonzo Known as "Mark." 1837-1904. American financier and politician who managed the 1896 and 1900 presidential campaigns of William McKinley and served as a U.S. senator from Ohio (1897-1904). Garden, 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. - operated property - W.I. 85 - 100% As a result of EnerMark's acquisition of this core property area in the first quarter of 2000 and continued strong natural gas prices, the initial planning and pre-spud work for a 57 well drilling Well drilling is the process of drilling a hole in the ground for the extraction of a natural resource such as ground water, natural gas, or petroleum. Drilling for the exploration of the nature of the material underground (for instance in search of metallic ore) is best described program to be carried out in the fourth quarter was accelerated to the third quarter. The fourth quarter will see up to 57 Second White Specks zone wells drilled, compression added and a gathering system installed. It is anticipated that this program will result in an increase in natural gas production from this area of 5 MMcf/day in the first quarter of 2001. Alexis Alexis, czar of Russia Alexis (əlĕk`sĭs) (Aleksey Mikhailovich) (əlyĭksyā` mēkhī`ləvĭch), 1629–76, czar of Russia (1645–76), son and successor of Michael. , Alberta - operated property - W.I. 41.9% A well that was successfully completed in the second quarter was tied in and placed on stream in the third quarter. The well began producing natural gas from the Viking zone at 2.0 MMcf/day and is currently producing at 2.5 MMcf/day gross, 1.0 MMcf/day net. Divestments EnerMark Income Fund continually con·tin·u·al adj. 1. Recurring regularly or frequently: the continual need to pay the mortgage. 2. reviews its asset base with a view to monetizing non-core assets during periods of high commodity prices. To date in 2000, EnerMark has divested combined oil and natural gas reserves located in Alberta, Saskatchewan and British Columbia British Columbia, province (2001 pop. 3,907,738), 366,255 sq mi (948,600 sq km), including 6,976 sq mi (18,068 sq km) of water surface, W Canada. Geography for proceeds of approximately $13.0 million. The Fund will continue to review its assets in order to improve overall operating efficiencies and increase the value of the Fund to the unitholders. Financial Summary In the third quarter of 2000, the Fund realized record Funds Flow from Operations for the second consecutive quarter of $46.2 million (surpassing the $35.6 million mark set in the previous quarter) - this represents an increase of 85% over the comparable amount of $25.0 million reported in the third quarter of 1999. Net income for the quarter rose to $23.9 million from $7.8 million in 1999. These results are attributable to improvements in crude oil prices, further major increases in the price of natural gas, and attaining record production levels from the Fund's development program and the results of acquisitions completed during the year. For the nine months ended September 30, 2000, Funds Flow from Operations rose to $110.1 million, an increase of 98% from $55.5 million in same period in 1999 and exceeding the $82.1 million reported for the year ended December 31, 1999. Net income for the nine months ended September 30, 2000 increased by 254% to $44.9 million, or $0.31 per Unit, from $12.7 million, or $0.11 per Unit, in 1999. Cash available for distribution for the third quarter of 2000 increased by 65% to $41.2 million (24.0 cents per Unit) after deducting $5.0 million (2.8 cents per Unit) for debt repayment compared to $25.0 million (20.0 cents per Unit) in the same period of the prior year. During the third quarter the Fund realized an average price of $38.90 per barrel of oil and NGLs; and $4.43 per Mcf of natural gas, increases of 49% and 70% respectively over the third quarter of 1999. The cost of hedging in the same period was $2.8 million or $2.10 per barrel of crude oil and NGLs and $0.1 million or $0.01 per Mcf of natural gas. In the same period of 1999, $0.2 million or $0.18 per barrel of crude oil and NGLs was recorded as a cost of hedging. During the period the Fund also entered into a natural gas hedge with El Paso El Paso (ĕl pă`sō), city (1990 pop. 515,342), seat of El Paso co., extreme W Tex., on the Rio Grande opposite Juárez, Mex.; inc. 1873. Merchant Energy Canada Inc., as more fully described under the heading of Marketing included in this Interim Report. The Fund completed the acquisition of all outstanding common shares of EBOC EBOC Evidence-Based On-Call (website of medical conditions) Energy Ltd. ("EBOC") during the third quarter. Final consideration consisted of $143.6 million in cash, assumption of $9.3 million of bank debt net of working capital and related costs of $4.2 million. Immediately thereafter, the Fund completed a Trust Unit Offering of 26,450,000 Units (inclusive of inclusive of prep. Taking into consideration or account; including. 6,900,000 Units purchased by an indirect subsidiary of El Paso) for net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of $109.9 million which was applied to reduce the indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. incurred in the purchase of EBOC. In conjunction with the acquisition, EnerMark increased its maximum available credit facility from $250 million to $310 million. Income Taxes Effective January 1, 2000, the Fund adopted the new recommendations issued by the Accounting Standards Board The role of the Accounting Standards Board (ASB) is to issue accounting standards in the United Kingdom. It is recognised for that purpose under the Companies Act 1985. It took over the task of setting accounting standards from the Accounting Standards Committee (ASC) in 1990. of the Canadian Institute of Chartered Accountants The Canadian Institute of Chartered Accountants (CICA) is the umbrella body for the Chartered Accountant profession in Canada and Bermuda. Membership of the CICA totals 70,000 Chartered Accountants and 8,500 students. , dealing with accounting for income taxes. This standard requires the use of the asset and liability method for computing computing - computer future income taxes. The Fund adopted the new recommendations on a retroactive Having reference to things that happened in the past, prior to the occurrence of the act in question. A retroactive or retrospective law is one that takes away or impairs vested rights acquired under existing laws, creates new obligations, imposes new duties, or attaches a basis without restating prior periods. The cumulative effect as at January 1, 2000 is to increase future income taxes and decrease accumulated ac·cu·mu·late v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates v.tr. To gather or pile up; amass. See Synonyms at gather. v.intr. To mount up; increase. income by $16.2 million. The new recommendations have increased the acquisition cost of Pursuit Resources and EBOC by $29.8 million and $84.9 million respectively with an offsetting increase to future income tax liability. The new recommendations do not affect the consolidated cash flows or liquidity, nor do they have any material impact on consolidated net earnings for the nine months ended September 30, 2000.
Consolidated Statement of Income
Three months ended Nine months ended
Sept 30 Sept 30
($ thousands, except per Unit amounts),
(Unaudited) 2000 1999 2000 1999
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Net income
Revenues
Oil and gas sales $91,131 $48,669 $ 218,987 $ 116,352
Crown royalties (17,998) (7,090) (41,170) (16,380)
Alberta Royalty Tax
Credit 126 369 416 1,098
Freehold and other
royalties (4,648) (2,840) (10,693) (5,513)
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68,611 39,108 167,540 95,557
Interest and other income 94 766 280 881
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68,705 39,874 167,820 96,438
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Expenses
Operating 15,194 9,493 38,073 26,514
General and administrative 1,045 1,262 3,580 3,813
Management fee 1,175 652 2,848 1,519
Interest 4,186 2,347 10,907 7,194
Depletion, depreciation and
amortization 21,063 15,353 53,560 46,716
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42,663 29,107 108,968 85,756
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Net income before taxes 26,042 10,767 58,852 10,682
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Capital taxes 898 521 2,342 1,284
Future income tax
(recovery) 1,289 1,912 11,638 (3,280)
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2,187 2,433 13,980 (1,996)
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Net income $23,855 $8,334 44,872 12,678
===============================================================
Net income per Trust Unit $0.16 $0.07 0.31 0.11
===============================================================
Reconciliation of Cash Available for Distribution
Three months ended Nine Months ended
Sept.30 Sept. 30
($ thousands, except per
Unit amounts),
(Unaudited) 2000 1999 2000 1999
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Funds flow from
operations $46,207 $25,034 $110,070 $55,549
Pursuit Resources Corp.
cash flow for 3 months
ended Mar. 31 - - 6,104 -
Cash withheld for reduction of
Pursuit Resources Corp. debt - - (4,014) -
Cash withheld for debt
reduction (4,961) $- (8,995) -
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Cash available for
distribution $41,246 $25,034 $103,165 $55,549
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Cash available for
distribution per Unit $0.240 $0.200 $0.660 $0.460
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Certain information regarding EnerMark contained herein may 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. under applicable securities laws. Such statements are subject to known or unknown risks and uncertainties that may cause actual results to differ materially from those anticipated or implied in the forward-looking statements. For further information or a complete copy of the 3rd Quarter Interim Report, please contact Investor Relations Investor relations The process by which the corporation communicates with its investors. at 800-319-6462, e-mail investorrelations@enerplus.com, or visit our website at www.enerplus.com |
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