Scimitar Hydrocarbons Corporation - Interim Report - Third Quarter 2001.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. 19, 2001 Scimitar Hydrocarbons hydrocarbons (hīˈ·drō·kärˑ·b  nz),n. Corporation (CDNX CDNX See Canadian Venture Exchange (CDNX). :SIY SIY Spooksoliy (Spocania) ): Activity Update The activities of Scimitar Hydrocarbons Corporation to date, and especially during the third quarter 2001, are now starting to realize rewards which should lead to enhanced shareholder value. EGYPT Egypt (ē`jĭpt), Arab. Misr, biblical Mizraim, officially Arab Republic of Egypt, republic (2005 est. pop. 77,506,000), 386,659 sq mi (1,001,449 sq km), NE Africa and SW Asia. : Implementing the Steam Pilot Project at our 100% operated Issaran field in Egypt was the key focus over the last few months. Along with completing one of the last requirements during the 3 year "Piloting Period," the steam injection has demonstrated very favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. results. The work undertaken this quarter led to Scimitar announcing its' Commerciality Declaration thereby marking the end of the Pilot Period and the beginning of the 20 year Commercial Development Period. Achieving this 20 year production horizon (with options for two additional 5 year terms) enhances the justification of additional capital expenditures and will accelerate the growth of the Issaran Project. PAKISTAN: Scimitar was awarded an Exploration License in Pakistan on November November: see month. 10, 2001 covering 272,000 acres on the Safed Koh Safed Koh (säfād` kō), mountain range on the Pakistan-Afghanistan border, SE of Kabul; rises to 15,620 ft (4,761 m) at Mt. Sikaram. It parallels the Kabul River. A spur of the range is crossed by the Khyber Pass. block. This will give Scimitar exposure to three prospects, one with an existing gas and condensate condensate, matter in the form of a gas of atoms, molecules, or elementary particles that have been so chilled that their motion is virtually halted and as a consequence they lose their separate identities and merge into a single entity. discovery, in a proven gas/condensate fairway. The Corporation expects to finalize fi·nal·ize tr.v. fi·nal·ized, fi·nal·iz·ing, fi·nal·iz·es To put into final form; complete or conclude: "They have jointly agreed ... the Concession Agreement Concession Agreement A right granted by a government to a corporation. It specifies rules under which the company can operate locally. Notes: Some concession agreements might include tax breaks for the corporation, in order to keep them from moving to another jurisdiction. by the end of 2001 or early 2002 and is excited about the favorable long term opportunities in this area. Pakistan has established itself as an important credible world participant with its' support of the US and Allied countries, and the country should benefit from the related economic growth. Scimitar was successful in negotiating a capital commitment of US$553,000 during the initial two year evaluation period Evaluation period The time interval over which funds assess a money manager's performance. (primarily on geological ge·ol·o·gy n. pl. ge·ol·o·gies 1. The scientific study of the origin, history, and structure of the earth. 2. The structure of a specific region of the earth's crust. 3. A book on geology. and geophysical ge·o·phys·ics n. (used with a sing. verb) The physics of the earth and its environment, including the physics of fields such as meteorology, oceanography, and seismology. studies), with an option in the third year to drill a new well or re-entry RE-ENTRY, estates. The resuming or retaking possession of land which the party lately had. 2. Ground rent deeds and leases frequently contain a clause authorizing the landlord to reenter on the non-payment of rent, or the breach of some covenant, when the into the existing discovery well. Future Plans Now that we are in the Commercial Development Period on the Egypt Project, Scimitar's short term goal is to increase production over the next 15 months using a three prong approach: drilling new wells, steam stimulation, and existing production enhancements via workovers and equipment upgrades. The 3D seismic program, commencing in November, will identify potential drilling locations. Additionally, several other producing wells in the field are expected to benefit from steam stimulation as well as planned wells to be drilled in 2002. With the Pakistan Project, the Corporation will commence a review of the geological, geophysical and well data upon finalizing the Concession Agreement.
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Nine
Corporate Highlights Quarter Ended Months Ended
-------------------- September 30 September 30
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2001 2000 2001 2000
FINANCIAL: ($ thousands, except per share amounts)
Revenue $ 2,506 $ 4,188 $ 7,828 $ 9,290
Cash Flow $ 979 $ 2,589 $ 2,366 $ 4,313
Per Share $ 0.03 $ 0.07 $ 0.06 $ 0.11
Earnings $ 645 $ 606 $ 1,588 $ 1,845
Per Share $ 0.02 $ 0.02 $ 0.04 $ 0.05
Capital Expenditures $ 1,450 $ 955 $ 4,284 $ 4,181
Working Capital $ 352 $ 884 $ 352 $ 884
Total Assets $ 13,403 $ 9,908 $ 13,403 $ 9,908
Shareholders' Equity $ 11,488 $ 8,757 $ 11,488 $ 8,757
OPERATIONS:
Oil Production (bopd) 1,053 1,406 1,077 1,116
Average Selling
Price ($/bbl) $ 25.87 $ 32.37 $ 26.62 $ 30.37
Netback ($/bbl) $ 14.89 $ 22.67 $ 13.89 $ 18.73
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Oil Production Average oil production for the nine months ended September September: see month. 30, 2001 was 1,077 barrels of oil per day (bopd), a 3% reduction from the 1,116 bopd produced for the comparable nine month period in 2000. For the third quarter 2001, production was 1,053 bopd, an increase of 3% from the second quarter 2001 average of 1,019 bopd. For the third quarter ended September 2000, daily production averaged 1,406 bopd when a number of new wells came onstream, resulting in an average of 1,092 bopd for the 2000 year. Revenue and Netback net·back n. Linkage of the price of crude oil to the market price of products refined from it. Gross oil revenue for the nine months ended September 30, 2001 was $7.8 million ($26.62/bbl), a reduction of 16%, from $9.3 million ($30.37/bbl) for the comparable 2000 period, due to lower production coupled with a 12% ($3.75/bbl) price reduction. On a quarterly basis, Scimitar received $25.87/bbl for the third quarter 2001 as compared to $32.37 for the third quarter 2000 and $27.27 for the second quarter 2001. The share of revenues produced for the General Petroleum Company, was 19% ($5.19/bbl) for the nine months ended September 30, 2001 relatively consistent with 18% ($5.57/bbl) for the comparable 2000 period. Operating costs operating costs npl → gastos mpl operacionales increased to $2.2 million ($7.54/bbl) for the September 30, 2001 nine month period from $1.9 million ($6.07/bbl) for the same period in 2000. The increase primarily reflects the impact of higher costs for equipment rentals and additional field labor. For the 2001 third quarter, operating costs have been reduced to $6.10/bbl, down from $8.24/bbl during the first half 2001. Scimitar's Production Netback, after deducting operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. and production fees, was $4.1 million ($13.89/bbl) for the 2001 nine month period, down from $5.7 million ($18.73/bbl) for the comparable 2000 period. Other Costs Administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. increased to $1.8 million ($5.95/bbl) for the nine months ended September 2001 from $1.4 million ($4.73/bbl) for the nine months ended September 2000, primarily as a result of unusual items related to the unsuccessful sale of a subsidiary, current litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. fees and additional personnel. The 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 and depreciation charges increased to $1.1 million ($3.70/bbl) for the current nine month period as compared to $1.0 million ($3.36/bbl) for the nine months ended September 2000, reflecting the higher capital base of the Issaran Project. Cash Flow and Earnings Cash flow generated was $2.4 million ($0.06/share) for the 2001 nine month period versus $4.3 million ($0.11/share) in the comparable 2000 period. For the current quarter, cash flow was $1.0 million ($0.03/share) as compared to $2.6 million ($0.07/share) for the third quarter 2000 and $254,000 ($nil/share) for the second quarter of 2001. Net earnings were $1.6 million ($0.04/share) for the nine months ended September 2001 versus the comparable 2000 nine month earnings of $1.8 million ($0.05/share). Capital Expenditures Capital expenditures for the nine months ended September 2001 increased to $4.3 million from $4.2 million for the comparable 2000 period. The majority of these costs, especially the $1.5 million during the third quarter, relate to our steam injection project along with drilling/completion activities during the first half 2001. Liquidity and Capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. At September 30, 2001, Scimitar had working capital of $352,000, including a cash position of $524,000. The Corporation remains debt free at September 30, 2001. In August, Scimitar issued 3.5 million shares raising $1.2 million (at $0.35/share) in a private placement, of which Directors and Management subscribed for 31% of the issue.
CONSOLIDATED STATEMENTS OF NET EARNINGS
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Quarter Ended
September 30
-----------------
2001 2000
Revenues:
Sales of crude oil $ 2,505,614 $ 4,188,251
Production fees (472,516) (710,350)
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$ 2,033,098 $ 3,477,901
Expenses:
Operating 591,310 544,653
General and administrative 466,428 371,051
Depletion and depreciation 333,886 543,668
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1,391,624 1,459,372
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Net earnings from operations 641,474 2,018,529
Interest income 4,029 1,920
Gain on property disposition - -
Write-down of petroleum and
natural gas properties - (1,439,913)
Foreign exchange (loss) gain (815) 24,999
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NET EARNINGS 644,688 605,535
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Earnings per share $ 0.02 $ 0.02
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(table continued)
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Nine Months Ended
September 30
--------------------
2001 2000
Revenues:
Sales of crude oil $ 7,827,691 $ 9,289,889
Production fees (1,525,632) (1,702,918)
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$ 6,302,059 $ 7,586,971
Expenses:
Operating 2,216,662 1,856,251
General and administrative 1,750,565 1,446,644
Depletion and depreciation 1,087,348 1,027,983
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5,054,575 4,330,878
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Net earnings from operations 1,247,484 3,256,093
Interest income 10,660 9,964
Gain on property disposition 308,805 -
Write-down of petroleum and
natural gas properties - (1,439,913)
Foreign exchange (loss) gain 20,992 18,818
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NET EARNINGS 1,587,941 1,844,962
=========== ===========
Earnings per share $ 0.04 $ 0.05
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For further information please contact: Angus Angus (ăng`gəs), council area (1993 est. pop. 111,020), 842 sq mi (2,181 sq km), and former county, NE Scotland. Under the Local Government Act of 1973, the county of Angus became part of the Tayside region in 1975. A. Mackenzie, Chairman and Chief Executive Officer or Ms. M. Dalgado, Investor Relations Investor relations The process by which the corporation communicates with its investors. : Tel: 1-800-933-8855, Tel: (403) 543-0333. Fax: (403) 543-0344. http://www.scimitar.ab.ca The Canadian Venture Exchange The Canadian Venture Exchange (CDNX) is now a defunct stock exchange having been acquired by the TSX Group in 2001 and renamed the TSX Venture Exchange. History of the Canadian Venture Exchange (CDNX) has neither approved nor disapproved the information contained herein. |
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