Third quarter report:
Harbour Updates Action Against TransCanada Energy
for Breach of Contract and Announces Financial Results
CALGARY, ALBERTA--On October 21, 1998, Harbour Petroleum Company
Limited announced that it had commenced an action against
TransCanada Energy Ltd. ("TransCanada") for breach of contract,
breach of confidentiality and breach of the duty of good faith and
fair dealing. Harbour has claimed from TransCanada $380,000 in
damages, $1,000,000 in general damages, special damages to be
proved at trial and $1,000,000 in punitive damages.
This action is the result of TransCanada bringing an ex-parte
application before a Registrar in Bankruptcy in Calgary and
obtaining an Order appointing an Interim Receiver to oversee
Harbour's transactions and operations and also filing a Petition
for receiving order on October 13, 1998. TransCanada claims that
Harbour owes it $7,747,500 for failing to deliver gas until
October 31, 2000. Harbour denies owing this amount and believes
that it has good and meritorious defences to the claim.
On October 16, 1998, Harbour filed a motion to set aside the
appointment of the Interim Receiver and filed an Objection to the
Petition for receiving order, for hearing on October 20, 1998.
The Registrar set the matter down for hearing on December 17, 1998
before a Justice of the Court of Queen's Bench of Alberta. At
that time, it is expected that the court can either: lift the
receiving order, or make the receiving order a permanent receiving
order, or adjourn the matter pending a trial of the issue, with or
without varying the receiving order.
FINANCIAL
Cash flows and revenues for the first nine months of 1998 have
decreased from the previous year. This is attributable to:
- a reduction in net oil prices
- an increase in operating costs, primarily at Lloydminster due
to start-up costs on new wells
- an increase in net G&A due to a change in Harbour's
capitalization policy
- property sales
The Superba disposition closed in September 1998 resulting in
proceeds of $4.1 million. The proceeds were used to eliminate
bank debt and provide working capital.
The gas contract with TransCanada was terminated by TransCanada
Energy on October 6, 1998 and therefore remains on Harbour's
September 30, 1998 Balance Sheet. After giving effect to the
termination of the gas contract with TransCanada, and excluding
the amount of TransCanada's claim, Harbour's pro-forma Balance
Sheet on October 6, 1998 would be as follows:
/T/
$
----------
Current Assets 2,946,799
Capital Assets 9,131,443
----------
12,078,242
----------
----------
Current Liabilities 2,472,226
Future Site Restoration 178,332
Shareholders' Equity 9,427,684
----------
12,078,242
----------
----------
/T/
On the September 30, 1998 Balance Sheet the gas contract loss is
the value of the open position on the production shortfall for the
remainder of the gas contract. The increase from June 30, 1998 is
due to stronger prices and a larger shortfall after the Superba
disposition.
CONCLUSION
Harbour intends to carry on in the ordinary course of business by
maintaining ongoing production and continuing to make industry
standard farmout arrangements with joint venture partners for
drilling Harbour's existing exploratory properties. Harbour is
continuing to work with its legal counsel to prepare for the
December 17, 1998 hearing.
Harbour Petroleum Company Limited has 27,882,847 outstanding
common shares and is listed on The Toronto Stock Exchange - symbol
HRP.
-30-
FOR FURTHER INFORMATION PLEASE CONTACT:
Harbour Petroleum Company Limited
Robert G. Atkinson
(604) 688-3410
or
Harbour Petroleum Company Limited
Ronald A. Howard
(403) 265-5522
The Toronto Stock Exchange has neither approved nor disapproved of
the information contained herein. |
