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Saxon announces third quarter 1996 results.

CALGARY, ALBERTA--(BUSINESS WIRE)--Nov. 22, 1996--Saxon Petroleum Inc. (Alberta Stock Exchange, TSE SXN.) -0-


HIGHLIGHTS

Nine Months Ended September 30 Percent
 1996 1995 Change
------------------------------------------------------------

Financial ($000's except per share)
Production revenue $ 10,144 $ 11,776 (14)
Cash flow $ 3,945 $ 5,006 (21)
 Per share $ .04 $ .12 (67)
Net income (loss) $ (141) $ 47 -
 Per share - - -
------------------------------------------------------------
Operating
 Daily sales
 Oil (Bbls) 1,094 1,245 (12)
 Gas (Mcf) 5,392 8,690 (38)
 Liquids (Bbls) 140 228 (39)
 Average prices
 Oil ($/Bbl) $ 24.88 $ 21.53 16
 Gas ($/Mcf) $ 1.40 $ 1.51 (7)
 Liquids ($/Bbl) $ 16.20 $ 14.49 12
 Operating expenses
 ($/BOE) $ 6.79 $ 6.59 3
-------------------------------------------------------------



Operating

Saxon's average oil and liquids production for the nine months ended September 30, 1996 declined 151 barrels of oil per day (12 percent) and 88 barrels of liquids per day (39 percent), respectively, compared to 1995. For the same period, gas production decreased 3,167 Mcf per day (37 percent). These changes in production are largely attributable to the dispositions of the Stettler property in the spring of this year and the Swalwell property in late 1995.

There have been production delays caused by facility and pipeline construction. The very wet summer this year further delayed field development by three months as it restricted site access. As a result the 1996 cash flow forecast of 10 cents per share will not be achieved. However, winter weather conditions now prevail and drilling is proceeding as planned. It is anticipated that the fourth quarter cash flow will be 3 cents per share for a 1996 total of 7 cents per share.

As announced recently, Saxon has drilled two (2) additional oil wells in west central Alberta. The first well is an horizontal well which is currently being production tested and the second, a vertical well, is currently being completed. Preliminary results have encouraged the Company to immediately drill two (2) additional horizontal wells to evaluate the full potential of the play.

These drilling successes have prompted Saxon to increase its 1996 capital budget from $11.5 million to $25.4 million, a 120 percent increase. Dependant upon continuing success, Saxon could drill 16 development (11 horizontal) wells in 1997 in the Company's core areas.

Financial

In the third quarter the preferred shares of Archean Energy Ltd. held by Saxon were redeemed for $15.0 million. Saxon recorded a $0.6 million loss as a result of the early redemption and it offsets the $0.6 million of income accrued on the shares in the first seven (7) months. Proceeds from the redemption were used to repay all of the outstanding bank debt of approximately $13.0 million. The balance of the cash is working capital.

Production revenue declined 14 percent to $10.1 million as a result of the sales of the Swalwell and Stettler properties as well as plant constraints.

Production declines were partially offset by a 16 percent increase in average oil prices to $24.88, but gas prices declined 7 percent to $1.40.

Operating expenses declined 22 percent to $3.3 million. Per unit operating expenses are up slightly to $6.79 per BOE from $6.59 per BOE in 1995. It is expected that per unit operating expenses will begin to decline as production increases from the tie-in of successful wells.

Cash flow from operations declined 21 percent to $ 3.9 million. Cash flow per share declined 67 percent partially due to actual cash flow declines, but mainly to a significant increase in shares outstanding in the fourth quarter of 1995.

Outlook

The early redemption of the Archean preferred shares provided Saxon with substantial liquidity that will be effectively deployed in the development and acquisition of oil and gas assets while reducing the debt to cash flow ratio to nil from four at the end of 1995.

The Company is in a strong financial position with no debt and substantial tax pools. The Company is reviewing a number of acquisition and exploration/development opportunities to accelerate growth and utilize the Company's strong financial position. -0-


CONSOLIDATED BALANCE SHEETS
(unaudited)


 September 30, December 31,
 1996 1995
------------------------------------------------------------
ASSETS

Current
 Cash and deposits $ 994,665 $ 66,813
 Marketable securities - 15,220,779
 Accounts receivable 1,806,929 1,723,010
 Prepaid expenses 345,137 237,477
------------------------------------------------------------
 3,146,731 17,248,079

Investment - 15,000,000
Deferred charges 483,122 833,115
Property, plant and equipment 44,582,526 36,092,324
------------------------------------------------------------
 $48,212,379 $69,173,518
------------------------------------------------------------
------------------------------------------------------------

LIABILITIES

Current
 Accounts payable and accrued
 liabilities $ 4,073,409 $ 2,571,410
 Current portion of long
 term debt 96,320 462,568
------------------------------------------------------------
 4,169,729 3,033,978

Long term debt 43,891 22,081,333
Provision for future site
 restoration 671,040 449,900
Deferred income taxes 604,890 482,184
------------------------------------------------------------
 5,489,550 26,047,395

SHAREHOLDERS' EQUITY
 Share capital 42,058,983 41,723,217
 Retained earnings 663,846 1,402,906
------------------------------------------------------------
 42,722,829 43,126,123
------------------------------------------------------------
 $48,212,379 $69,173,518
------------------------------------------------------------
------------------------------------------------------------

CONSOLIDATED STATEMENTS OF
INCOME AND RETAINED EARNINGS
(unaudited)


Nine Months
 Ended September 30
------------------------------------------------------------
 1996 1995
------------------------------------------------------------

REVENUE
 Petroleum and natural
 gas sales $10,245,272 $11,776,331
 Royalties (1,690,756) (1,889,328)
 Alberta royalty tax credit 286,237 320,091
------------------------------------------------------------
 8,840,753 10,207,094
------------------------------------------------------------

EXPENSES
 Operating 3,300,265 4,210,391
 General and administrative 994,001 831,632
 Depletion and depreciation 3,557,573 4,163,690
 Interest and financing 939,358 501,135
------------------------------------------------------------
 8,791,197 9,706,848
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Income (loss) before income taxes 49,556 500,246

Income taxes 190,916 453,387

-----------------------------------------------------------

NET INCOME (LOSS) (141,360) 46,859

RETAINED EARNINGS,
 beginning of period 1,402,906 1,445,096
 Dividends (597,700) -
------------------------------------------------------------
RETAINED EARNINGS, end of period $ 663,846 $ 1,491,955
------------------------------------------------------------
------------------------------------------------------------

EARNINGS PER SHARE
 Basic $ - $ -
 Fully diluted $ - $ -
------------------------------------------------------------
------------------------------------------------------------

CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)


 Nine Months Ended
 September 30
------------------------------------------------------------
 1996 1995
------------------------------------------------------------

Cash provided by (used in)

OPERATING
 Net (loss) income $ (141,360) $ 46,859
 Items not involving a
 current cash flow 4,086,402 4,959,515
------------------------------------------------------------
 Cash flow 3,945,042 5,006,374
 Changes in non-cash
 working capital (191,579) (292,119)
------------------------------------------------------------
 Cash flow after changes in
 non-cash working capital 3,753,463 4,714,255
------------------------------------------------------------

FINANCING
 Repayment of prepaid contracts - (21,323,821)
 Dividends (597,700) -
 Issue of shares 335,767 9,083
 Proceeds (repayment) of
 long-term debt (22,403,690) 23,717,911
 Deferred charges (56,130) (559,556)
------------------------------------------------------------
 (22,721,753) 1,843,617
------------------------------------------------------------

INVESTING
 Capital expenditures
 Exploration, development
 and corporate (8,354,002) (4,444,742)
 Acquisitions (5,320,241) -
 Proceeds on disposition
 of assets 1,847,607 -
 Proceeds on disposition
 of investment 15,000,000 -
 Changes in non-cash
 working capital 16,722,778 (3,413,473)
------------------------------------------------------------
 19,896,142 (7,858,215)
------------------------------------------------------------

NET (DECREASE) INCREASE
 IN CASH 927,852 (1,300,343)

 Cash and deposits,
 beginning of period 66,813 1,602,466
------------------------------------------------------------

CASH AND DEPOSITS,
 END OF PERIOD $ 994,669 $ 302,123
------------------------------------------------------------

CASH FLOW PER SHARE

 Basic $ .04 $ .12
 Fully diluted $ .03 $ .10

------------------------------------------------------------





The Alberta Stock Exchange has neither approved nor disapproved the information contained herein.

CONTACT: Saxon Petroleum Inc.

Glen Tarrant, 403/266-7111

Chris Bradley, 403/266-7111
COPYRIGHT 1996 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1996, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Date:Nov 22, 1996
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