Morgan Hydrocarbons announces strong product growth and lower finding and development costs.CALGARY, Alberta--(BUSINESS WIRE)--March 4, 1996--Morgan Hydrocarbons hydrocarbons (hīˈ·drō·kärˑ·b  nz),n. Inc. announced its financial and operating results for the year ended Dec. 31, 1995. Results are highlighted by another year of strong production growth and a continuation of the trend to lower finding and development costs. Highlights -- Revenue for the year jumped 33 percent to reach $99.3 million, up from $74.9 million in 1994. -- Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses for 1995 increased by 16 percent to $52.5 million compared with $45.4 million for 1994, primarily due to production growth. -- Fully diluted cash flow per share was down 4 percent to $1, primarily as a result of the higher number of shares outstanding at Dec. 31, 1995, and a 29 per cent decline in natural gas prices. -- Net income for the 12 months ended Dec. 31, 1995, was $616,000, compared with a loss of $19.4 million in the same period of the previous year. -- Natural gas production jumped 45 percent to 63.9 mmcf per day from 44.2 mmcf per day for the 12 months ended Dec. 31, 1994. -- Crude oil production averaged 11,794 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. , an increase of 36 percent from 8,676 barrels per day for the 12 months of 1994. -- 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. increased to 41.2 million barrels of oil equivalent up 39 percent from 29.7 million barrels at Dec. 31, 1994. Total additions were 20.4 million equivalent barrels. 12.4 million barrels were added through acquisitions and 8.0 million barrels were added through exploration and development. -- Finding and development costs, based on proved reserve additions and including acquisitions, improved significantly to $6.25 per barrel of oil equivalent The barrel of oil equivalent (bboe, sometimes BOE) is a unit of energy based on the approximate energy released by burning one barrel of crude oil. The US Internal Revenue Service defines it as equal to 5.8 × 106 BTU [1]. 5. and $3.66 per barrel using proved and probable reserve additions. 1996 Update and Outlook Property Dispositions In its ongoing efforts to continually improve operating costs operating costs npl → gastos mpl operacionales and depletion expense, Morgan has recently completed two property dispositions: Effective Jan. 1, 1996, Morgan sold its Kerrobert light oil property for $12.25 million. Average production at Kerrobert for the fourth quarter in 1995 was 669 barrels per day from 318 wells. Operating costs for this property in 1995 averaged $11.77 per barrel. Proceeds from this sale will be directed to more efficient light oil exploitation opportunities in S.E. Saskatchewan. Since December 1995, five wells have been drilled in this area resulting in 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. light oil production in excess of 600 barrels per day. Effective Feb. 1, 1995, Morgan divested its Marten marten, name for carnivorous, largely arboreal mammals (genus Martes) of the weasel family, widely distributed in North America, Europe, and central Asia. Martens are larger, heavier-bodied animals than weasels, with thick fur and bushy tails. Creek gas property for $14.25 million. Average production from Marten Creek in the fourth quarter of 1995 was 6.9 mmcf per day. A portion of the proceeds from this sale will be directed to consolidating the company's working interests in Morgan operated gas properties and the remainder will be earmarked toward natural gas property acquisitions. Exploration In February this year, Morgan drilled the first step-out well to an oil discovery made in the Court area of Saskatchewan. This new well encountered 14 meters of net oil pay in the Rex and Bakken formations, twice that of the discovery well drilled in 1995. 3-D seismic indicates 10 to 20 additional development locations that will be drilled in the second quarter. Morgan has a 50 percent working interest in the Court prospect, which is part of the previously announced joint venture with Canadian Occidental Petroleum Occidental Petroleum Corporation ("Oxy") NYSE: OXY is an international oil and gas exploration and production company with operations in the United States, Middle East/North Africa and Latin America regions. Ltd. Morgan expects to drill an additional 35 to 40 exploration wells in 1996, on lands relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc this joint venture program. EOR EOR - exclusive or Morgan's horizontal steam drive EOR (Enhanced Oil Recovery Enhanced Oil Recovery (EOR) is a generic term for techniques for increasing the amount of oil that can be extracted from an oil field. Using EOR, 30-60 %, or more, of the reservoir's original oil can be extracted [1] compared with 20-40% [2] ) pilot program at the Senlac heavy oil field is proceeding where steam injection commenced in January 1996. The company expects to see positive effects from the steam flood in Verb 1. flood in - arrive in great numbers arrive, come, get - reach a destination; arrive by movement or progress; "She arrived home at 7 o'clock"; "She didn't get to Chicago until after midnight" offsetting producing wellbores by the end of the first quarter. Morgan's independent engineers have evaluated the Sonlac EOR potential and at Dec. 31, 1995, they have assigned 10 million barrels of additional probable reserves to the pool. For its heavy oil properties at Plover plover (plŭv`ər), common name for some members of the large family Charadriidae, shore birds, small to medium in size, found in ice-free lands all over the world. Lake, Cactus Lake, Northminster and Hillmond, Morgan is currently evaluating other thermal recovery opportunities such as SACD (Super Audio CD) A high-resolution CD audio format from Sony and Philips. SACD and DVD-Audio (DVD-A) were the two next-generation digital audio formats for enhanced sound quality, but neither one caught on (see high-resolution audio). (Steam Assisted Gravity Drainage Steam Assisted Gravity Drainage (SAGD) is an enhanced oil recovery technology for heavy crude oil and bitumen. Description Two parallel horizontal oil wells are drilled in the formation. ) and Cyclic cyclic /cyc·lic/ (sik´lik) pertaining to or occurring in a cycle or cycles; applied to chemical compounds containing a ring of atoms in the nucleus. cy·clic or cy·cli·cal adj. 1. Steam Stimulation. The company anticipates commencing a second pilot project in late 1996. With EOR success in 1996, Morgan expects its finding and development costs over the next two to three years to improve significantly thereby increasing profitability and maximizing shareholder growth. -0- STATISTICS
THREE MONTHS ENDED YEAR ENDED
FINANCIAL DECEMBER 31 DECEMBER 31
($000's 1995 1994 Change 1995 1994 Change
except per
share amounts)
-----------------------------------------------------------------
Revenue $24,046 $19,965 22% $99,304 $74,894 33%
Cash flow 12,279 12,067 2% 52,490 45,350 16%
from
operations
Per share 0.22 0.27 -19% 1.00 1.04 -4%
fully diluted
Net income (441) 683 - 616 (19,391) -
(loses)
Per share - (0.01) 0.03 - 0.01 (0.47) -
fully diluted
Total Debt
net of 109,041 78,993 38%
working capital
Weighted average
shares (000's)
Basic 49,474 40,938 21%
Fully diluted 55,038 45,583 21%
Operating (000's except per data amounts) ----------------------------------------------------------------- Production Natural gas 64.2 53.8 19% 63.9 44.2 45% (mmcf/d) Light oil 4,698 3,273 44% 4,393 3,311 33% & NGLs (bbls/d) Heavy oil 7,394 6,183 20% 7,401 5,365 38% ----------------------------------------------------------------- Total 18,512 14,836 25% 18,184 13,096 39% (boe/d) ----------------------------------------------------------------- Prices, including hedging Natural gas $1.31 $1.49 -12% $1.31 $1.81 -28% Light oil 21.95 20.51 7% 22.76 20.77 10% & NGL's ($/bbl) Heavy oil 13.66 15.89 -14% 16.56 14.35 15% ($/bbl) ----------------------------------------------------------------- Capital expenditures, net of 115,949 82,297 41% dispositions ----------------------------------------------------------------- Reserves (mboe) Proved 41,203 29,740 39% Proved and probable 58,228 32,581 79% ----------------------------------------------------------------- Finding and development costs ($/boe) Proved $6.25 $7.93 -21% Proved and probable 3.66 7.30 -50% ----------------------------------------------------------------- CONTACT: Morgan Hydrocarbons W.A. Trickett, 403/298-8300 Sadiq Lalani, 403/298-8300 |
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