Pursuit Resources 1997 Second Interim Report and News Release.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)--Aug. 14, 1997--Pursuit (TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :PUT.) In the second quarter of 1997 Pursuit continued its three year performance of consistent quarterly production growth and completed the majority of its 1997 exploration and development drilling program with an 86 percent drilling success rate on 34 gross (22 net) wells. Current production rates of 3,800 barrels of oil equivalent per day reflect second quarter drilling and completion operations -0-
HIGHLIGHTS
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Three Months Ended Six Months Ended
June 30, Percent June 30, Percent
1997 1996 Change 1997 1996 Change
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Financial (millions, except per share amounts)
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Oil and Gas
Revenue $5.6 $3.0 85 $12.7 $5.1 149
Funds Flow
from Operations 2.4 1.3 80 6.1 2.2 175
Per Share .10 .11 (9) .26 .19 37
Net Earnings 0.1 0.3 (69) 1.0 0.5 125
Per Share .00 .03 (100) .04 .04 ---
Capital
Expenditures 9.1 6.4 43 10.8 7.0 54
Weighted Average
Shares 23.5 11.9 97 23.5 11.9 97
Outstanding (millions)
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2.7:1 consolidation of Pursuit common shares has been reflected
retroactively in all share and per share figures
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OPERATING
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PRODUCTION
Oil - bbls/d 1,492 827 80 1,609 725 122
Natural Gas
- mmcf/d 19.7 9.8 102 18.3 8.2 123
Combined (boe/d) 3,466 1,803 92 3,436 1,544 123
Prices
Oil - $/bbl $20.23 $22.11 (9) $22.22 $21.35 4
Natural Gas
- $/mcf $1.56 $1.51 3 $1.89 $1.58 20
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NET DRILLED (net)
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Oil 12(8.5) 3(1.3) 17(10.7) 5(2.7)
Gas 9(7.3) 1(1.0) 12(8.2) 1(1.0)
Dry 1(1.0) --- 5(3.0) 1(0.7)
-------- ------- -------- ------
Total 22(16.8) 4(2.3) 34(21.9) 7(4.4)
-------- ------- -------- ------
Net Success
Rate (percent) 94 100 86 84
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OPERATIONS Pursuit drilled more wells during the first six months of 1997 than in any year in our history, and achieved an overall success rate of 86 percent. A number of development projects initiated during the second quarter will contribute to strong production and financial results for the remainder of the year. Development activity in the Inga, 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 Halfway gas project was delayed by the inability of the regional transmission system to accept added sour gas Sour gas is natural gas or any other gas mixture which contains significant amounts of hydrogen sulfide (H2S). According to this reference [1], natural gas is usually considered sour if there are more than 5. volumes. In order to resolve this problem, Pursuit installed additional pipeline capacity and production from the area has commenced at forecast rates. Projects in the Prairiedale, Saskatchewan Saskatchewan, province, Canada Saskatchewan (səskăch`əwən, –wän', săs'–), province (2001 pop. 978,933), 251,700 sq mi (651,903 sq km), W Canada. and Chigwell Chigwell, city (1991 pop. 51,575), Essex, SE England. It is a residential suburb of London. Portions of Epping and Hainault forests are in the outlying district. The Chigwell public school was founded in 1629. , 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. areas are being completed, while wells in the Lloydminster Lloydminster (loid`mĭnstər), city (1991 pop. in Alberta, 10,042; in Saskatchewan, 7,241), on the Alta.-Sask. boundary, Canada. The city is chartered by both provinces. , Medicine River, and Sylvan Lake Sylvan Lake can refer to: Communities:
While the limited availability When customers of the PSTN make telephone calls, they commonly make use of a telecommunications network called a switched-circuit network. In a switched-circuit network, devices known as switches are used to connect the caller to the callee. of rigs did not result in significant changes in the planned drilling program, shortages of service equipment and supplies caused delays in bringing new wells on production during the second quarter. Rising drilling, completion and equipment costs will cause Pursuit to limit drilling to key exploration projects and high productivity development wells in the second half of the year. EXPLORATION AND DEVELOPMENT A total of 34 gross (21.9 net) wells were drilled during the first half of 1997, achieving an overall net success rate of 86 percent. Results included 17 (10.7 net) oil wells and 12 (8.2 net) gas wells. During a very active second quarter 22 (16.8 net) wells were drilled with exploration success achieved in the Gilby Gilby was a Formula One constructor from the United Kingdom. They participated in 6 grands prix, entering a total of 6 cars. The Gilby cars were constructed by Syd Greene originally for his son Keith to drive. , Lloydminster and Prairiedale areas. At Lloydminster, an 11-well program was completed on four separate prospects with all wells being completed for production. While the completion and tie-in tie-in n. One thing that is related to or connected with another. Noun 1. tie-in - a fastener that serves to join or connect; "the walls are held together with metal links placed in the wet mortar during construction" of these wells took longer than expected due to the shortage of services, the wells are now producing and have added approximately 150 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. to the Company's production base. At Prairiedale, Saskatchewan, 8 (7.5 net) wells were drilled resulting in six Viking Viking Either of two unmanned U.S. spacecraft launched by NASA in 1975. After nearly yearlong journeys, Vikings 1 and 2 entered orbits around Mars and released landers that touched down on the planet and relayed measurements of properties of its atmosphere and soil, as well gas wells and one Bakken oil well. The Viking wells will be tied-in tied-in a conformation defect in an animal in which a limb is perceptibly thinner at one point, e.g. tied-in below the knee, or below the hock. to the field compression installed earlier this year. During the third quarter, this program is expected to add daily production of 1.5 million cubic feet per day. Results from the two Bakken wells drilled at Prairiedale have been reviewed and, based on the 3D seismic data, two additional Bakken exploration wells are planned for later this year. The tie-in of two of the four Halfway gas wells at Inga, British Columbia was completed by the end of July July: see month. . Production has commenced in early August at a net rate of approximately two million cubic feet per day. An additional well will be tied-in during the third quarter. Pursuit will assess the long term deliverability characteristics of the wells once the project is completed and develop a program for further activity in the area. Pursuit and its partner also recently acquired an additional five sections of land in the Inga Halfway project area. Activities in the 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. property base added through the Aztec Aztec (ăz`tĕk'), Indian people dominating central Mexico at the time of the Spanish conquest. Their language belonged to the Nahuatlan subfamily of Uto-Aztecan languages. acquisition were highlighted by a significant Belly belly /bel·ly/ (bel´e) 1. abdomen. 2. venter (1). bel·ly n. 1. See abdomen. 2. The stomach. 3. The womb; the uterus. River Formation gas discovery which began producing late in the second quarter. As well, several recompletions on existing wells are expected to take place in the near future. Pursuit is evaluating opportunities in the area and will undertake further land acquisitions and drilling activity prior to year end. The Company expects to drill five to ten wells during the remainder of 1997 including at least two relatively high potential exploration prospects. FINANCIAL During the first half of 1997 revenues increased 149 percent to $12.7 million, compared to $5.1 million in the first half of 1996. Production rose 123 percent to 3,436 barrels of oil equivalent per day for the first half of 1997, compared to 1,544 barrels of oil equivalent per day for the comparable 1996 period. These results reflect the Aztec Resources Ltd. acquisition effective January January: see month. 1, 1997, as well as a successful drilling and development program. Pursuit's production base remains relatively evenly split between crude oil and natural gas on a 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. basis. Revenues increased 85 percent during the second quarter to $5.6 million, up from $3.0 million during the second quarter of 1996. Production for the quarter averaged 3,466 barrels of oil equivalent per day, a 92 percent increase over the same period last year. During the first half of 1997, WTI WTI West Texas Intermediate WTI Western Transportation Institute (Montana State University) WTI World Tribunal on Iraq WTI With The Idea (used in chess to point to the idea behind a specific move) crude oil on the NYMEX See New York Mercantile Exchange. NYMEX See New York Mercantile Exchange (NYM). exchange averaged $U.S. 21.19 per barrel, a three percent increase over 1996. Consistent with this benchmark, Pursuit's realized price for the first half of 1997 averaged $22.22 per barrel, a four percent increase over 1996. For the six months ended June June: see month. 30, 1997, the Company's average natural gas price was $1.89 per million cubic feet, a 20 percent increase compared to the first half of 1996. Pursuit's average oil price during the second quarter was $20.23 per barrel, down nine percent from $22.11 in the 1996 quarter. WTI averaged $U.S. 19.94 for the second quarter of 1997, down eight percent from the same quarter of 1996. Pursuit's natural gas price rose three percent for the quarter to $1.56, compared to $1.51 in the second quarter of 1996. Funds flow from operations for the first half of 1997 increased 175 percent to $6.1 million ($0.26 per share), compared to $2.2 million ($0.19 per share) in the first half of 1996. Funds flow for the second quarter was $2.4 million ($0.10 per share) compared to $1.3 million ($0.11 per share) for the same period a year ago. These results reflect higher production levels and overall commodity price increases, offset by increased production, administrative and interest charges related to the Company's increased scale of operations. The reduced level of increase in year-over-year cash flow for the second quarter is principally related to the lower oil prices realized during the 1997 second quarter. For the first six months of 1997, net earnings were $1.0 million ($0.04 per share) a 125 percent increase over 1996 first half earnings of $451,000 ($0.04 per share). Net earnings for the second quarter were $91,000 (nil per share) compared to $291,000 ($0.03 per share) in the same quarter of 1996. Net earnings in 1997 reflect an increased depletion depletion n. when a natural resource (particularly oil) is being used up. The annual amount of depletion may, ironically, provide a tax deduction for the company exploiting the resource because if the resource they are exploiting runs out, they will no longer be able rate compared to last year's results. Operating costs operating costs npl → gastos mpl operacionales of $4.86 per equivalent barrel are comparable to the costs of $4.78 per equivalent barrel reported for the first half of 1996. This represents a significant reduction from the costs reported for the first quarter of 1997 and are consistent with Pursuit's 1997 cost projections. Our accelerated capital program during the first six months of this year increased long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. , excluding convertible debt, to $25 million at June 30, 1997. Based on production additions to date and reduced 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. throughout the remainder of 1997, this debt is projected to be under $27 million by year end. This falls within the Company's guideline guideline Medtalk A series of recommendations by a body of experts in a particular discipline. See Cancer screening guidelines, Cardiac profile guidelines, Gatekeeper guidelines, Harvard guidelines, Transfusion guidelines. of limiting bank debt to 1.5 times forward cash flow. OUTLOOK Futures prices Futures price The price at which parties to a futures contract agree to transact upon the settlement date. and market fundamentals lead Pursuit to believe gas prices will strengthen throughout the remainder of 1997. Oil prices continue to show resistance to dropping below the $19 to $20 per barrel WTI range and provide attractive netbacks from all the Company's properties at those levels. Crude oil prices are expected to remain in this range for the remainder of the year. Pursuit's successful exploration and development program has increased current production to approximately 3,800 barrels of oil equivalent per day. A number of relatively high impact projects are planned for the second half of 1997, leading us to expect to exit the year at production rates exceeding 4,100 barrels of oil equivalent per day. Respectfully re·spect·ful adj. Showing or marked by proper respect. re·spect  ful·ly adv. submitted on behalf of the Board of Directors,D. Nolan Blades Douglas R. Martin President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Chairman and CFO See Chief Financial Officer. August 14, 1997 -0-
CONSOLIDATED STATEMENTS OF EARNINGS
(thousands except per share amounts)(unaudited)
Three Months Ended Six Months Ended
June 30 June 30
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1997 1996 1997 1996
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REVENUE
Oil and gas $5,554 $3,005 $12,728 $5,110
Royalties, net (988) (474) (1,948) (816)
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4,566 2,531 10,780 4,294
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EXPENSES
Operating 1,216 786 3,023 1,342
Administrative 546 184 952 382
Interest 327 203 606 327
Depletion,
depreciation and
amortization 2,221 838 4,244 1,438
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4,310 2,011 8,825 3,489
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EARNINGS BEFORE
INCOME TAXES 256 520 1,955 805
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INCOME AND OTHER TAXES
Capital taxes 75 13 111 26
Deferred taxes 90 216 830 328
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165 229 941 354
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NET EARNINGS $91 $ 291 $1,014 $ 451
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NET EARNINGS PER SHARE $ 0.00 $ 0.03 $ 0.04 $0.04
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
(thousands except per share amounts)(unaudited)
Three Months Ended Six Months Ended
June 30 June 30
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1997 1996 1997 1996
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CASH PROVIDED BY (used in)
OPERATIONS
Net earnings $ 91 $ 291 $ 1,014 $ 451
Items not affecting cash
Depletion,
depreciation and
amortization 2,221 838 4,244 1,438
Deferred income taxes 90 205 830 328
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Funds from operations 2,402 1,334 6,088 2,217
Change in non-cash
working capital 3,460 (116) 4,421 (440)
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5,862 1,218 10,509 1,777
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FINANCING
Share capital (43) (7) 30,139 41
Long-term debt 3,351 5,150 14,455 5,150
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3,308 5,143 44,594 5,191
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Cash available for
investing activities 9,170 6,361 55,103 6,968
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INVESTMENTS
Additions to property,
plant and equipment (9,102) (6,369) (10,753) (6,976)
Acquisition of Aztec
Resources Ltd. (68) --- (44,350) ---
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(9,170) (6,369) (55,103) (6,976)
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Change in cash position --- (8) --- (8)
Cash position,
beginning of period --- --- --- ---
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Cash position,
end of period $ --- $ (8) --- $ (8)
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FUNDS FROM
OPERATIONS SHARE $ 0.10 $ 0.11 0.26 $0.19
CONSOLIDATED BALANCE SHEETS
(thousands)
June 30 December 31
1997 1996
----------------------------
(unaudited)
ASSETS
Accounts receivable $ 5,195 $ 2,730
Property, plant and
equipment, net 81,289 30,100
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$ 86,484 $ 32,830
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LIABILITIES AND SHAREHOLDER'S EQUITY
Accounts payable $ 9,390 $ 2,504
Long-term debt 27,550 13,095
Provision for future
site restoration 689 359
Deferred income taxes 2,084 1,285
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39,713 17,243
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Shareholders' Equity
Share capital 43,951 13,781
Retained earnings 2,820 1,806
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46,771 15,587
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$ 86,484 $ 32,830
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CORPORATE INFORMATION BOARD OF DIRECTORS D. Nolan Blades Gerald J. DeSorcy Olivier de Vregille John L. Fenniak Gregory S. Fletcher Fletcher may refer to one of the following: Ideas and companies
AUDITORS AUDITORS, practice. Persons lawfully appointed to examine and digest accounts referred to them, take down the evidence in writing, which may be lawfully offered in relation to such accounts, and prepare materials on which a decree or judgment may be made; and to report the whole, together KPMG KPMG Klynveld Peat Marwick Goerdeler (accounting firm) KPMG Kaiser Permanente Medical Group KPMG Keiner Prüft Mehr Genau (German) KPMG Kommen Prüfen Meckern Gehen , Calgary, Alberta LEGAL COUNSEL Burstall Ward, Calgary, Alberta BANKERS Royal Bank of Canada Bank of Canada Canada's central bank, established under the Bank of Canada Act (1934). It was founded during the Great Depression to regulate credit and currency. The Bank acts as the Canadian government's fiscal agent and has the sole right to issue paper money. , Calgary, Alberta RESERVE EVALUATION ENGINEERS Fekete Associates Inc., Calgary, Alberta OFFICERS AND KEY PERSONNEL D. Nolan Blades President and Chief Executive Officer Douglas R. Martin Chairman and Chief Financial Officer John L. Fenniak Vice President, Business Development Bill Ibbitson Vice President, Operations Chris Zinkan Vice President, Exploration Judy Dingwall Controller Kurt Miles Manager, Land and Contracts Cam Sebastian Treasurer Harley L. Winger wing·er n. Sports A player who plays wing, as in hockey or soccer. winger Noun Sport a player positioned on a wing Noun 1. Secretary CONTACT: Pursuit Resources Corp. D. Nolan Blades, 403/264-6256 403/263-3116 (FAX) or Pursuit Resources Corp. Douglas R. Martin, 403/264-6256 403/263-3116 (FAX) |
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