EARNIBGS / Interaction Resources Announces First Quarter Financial
Results
Shares issued and outstanding - 46,960,071
TSE SYMBOL: INR
MAY 26, 1998
CALGARY, ALBERTA--Interaction Resources Ltd. ("Interaction") is
pleased to announce solid financial results for the first quarter
ended March 31, 1998 which saw average daily production increase
by 71 percent and cash flow increase by 53 percent compared to the
first quarter of 1997. In addition, production milestones have
been reached with the tie-in of previously shut-in gas wells.
Financial
In the first quarter of 1998, average daily production was 1,313
barrels of oil equivalent ("boes")/day versus 770 boes/day in
1997. Oil and NGL production increased to 557 bbls/day for the
quarter compared to 300 bbls/day in 1997. Gas production
increased to 7,557 mcf/day versus 4,700 mcf/day in the first
quarter of 1997.
Interaction's average price for oil and NGLs decreased by 33
percent to $17.33 per barrel in the first quarter of 1998 from
$25.91 per barrel in the same quarter in 1997. However, gas price
for the first quarter increased by 15 percent to $2.14 per mcf in
1998 from $1.86 per mcf in 1997.
Lower royalties and operating costs in the first quarter of 1998
resulted in netbacks of $11.42 per boe which is comparable to the
1997 first quarter netbacks of $11.40 per boe. Royalties
decreased to $3.57 per boe in 1998 versus $5.37 in 1997 and
operating costs declined to $4.66 per boe in the first quarter of
1998 compared to $5.23 in the same quarter in 1997.
Both interest costs and general and administrative costs increased
in the first quarter of 1998. Interaction's debt levels increased
in 1998 as the Company closed an acquisition made at the end of
1997. General and administrative costs have increased with the
increased level of employees. These costs are expected to remain
relatively constant throughout the remainder of the year and will
be spread over higher anticipated production volumes resulting in
lower per boe costs.
Cash flow increased to $825,000 in the quarter compared to
$540,000 realized in the first quarter of 1997. Cash flow per
share remained constant at $0.02 per share.
Depletion and depreciation expense was $843,000 or $7.13 per boe
compared to $6.32 per boe in 1997. This resulted in a net loss of
$18,000 for the quarter compared to net income of $101,000 for the
first quarter of 1997.
/T/
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Three months Revenue Cash flow Cash flow
ended March 31 ($000) ($000) per share
($000s except per ($)
share amounts)
--------------------------------------------------------------
1998 2,325 825 0.02
1997 1,524 540 0.02
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Three months Net income Net income Average
ended March 31 (loss) (loss) per daily
except per ($000) share ($) production
share amounts) (boe)
--------------------------------------------------------------
1998 (18) 0.00 1,313
1997 101 0.00 770
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/T/
Operational
During the quarter, Interaction completed a 75 percent working
interest well in the Cecil area of northwest Alberta. The well
tested gas at rates exceeding 5 mmcf/day with condensate rates of
25 bbls/mmcf from the Elkton formation. The well was put on
production in early May. Modifications have been made at the well
site to eliminate the formation of hydrates which will allow
production of 5 mmcf/day and 125 bbls/day of liquids (net to
Interaction 470 boes/day) within the next week. Plant capacity is
currently available for additional volumes above 5 mmcf/day.
There are three other prospective zones (Bluesky, Gething and Rock
Creek) which have log indicated and tested gas pay which are not
currently producing. Interaction plans to drill at least one more
75 percent working interest offset well to produce one or more of
the additional zones.
Interaction's current production is approximately 1,500 boes/day
and is comprised of 10 mmcf/day of gas and 500 bbls/day of oil and
NGLs.
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