EARNINGS / Pan East Announces 1997 Operating and Financial Results
and Outlook for 1998
TSE SYMBOL: PEC
MARCH 25, 1998
CALGARY, ALBERTA--
1997 CAPITAL PROGRAM AND FINDING COSTS
Pan East participated in the drilling of 14 (6.9 net) wells in
1997 resulting in 9 (4.1 net) gas wells and 5 (2.8 net) abandoned
wells for a success rate of 64 percent. The wells averaged 3,000
meters (9,900 feet), with the deepest being 3,600 meters (11,900
feet) and Pan East operated 12 of these wells. Net capital
expenditures in 1997 totaled $23.0 million of which 86 percent or
$19.7 million was incurred for land acquisitions, seismic and
drilling and completion costs with the remainder on production
equipment. Proceeds from minor property dispositions were $2.0
million. Finding and on-stream costs based on the total capital
program divided by the total reserves added, were $0.55 per McfE
for established reserves (proven plus 50 percent probable) and
$0.56 per McfE for proven reserves only. Reserve additions
replaced 1997 production by 400 percent.
PRODUCTION
Pan East's current production is concentrated in the Kaybob/Edson
and Strachan Deep Basin areas in northwest Alberta and Midwinter
in northeast British Columbia. Pan East operates the majority of
its production consisting entirely of natural gas, associated
liquids and sulphur. Total production in 1997, on an equivalent
basis, was 28.0 MmcfE/day essentially unchanged from the 27.8
MmcfE/day recorded in 1996.
FINANCIAL RESULTS
Revenue from oil and gas operations was unchanged in 1997 from
1996. Cash flow from operations was lower in the same period.
This was attributable primarily to hedging activities entered into
in the fall of 1996. As a result of these hedging activities, Pan
East received a natural gas price of $1.47 which was lower than
the industry average for the same period. This was compounded by
the higher royalty rate charged by the crown associated with
industry average gas prices. In 1996, Pan East reported a
one-time income transaction of $1.1 million. Finally, higher
general and administrative expenses were realized as the company
added to its technical staff in anticipation of the expanded
capital budget in 1998. This lower level of cash flow and higher
depletion and depreciation charges resulted in the company
reporting a net loss in 1997.
/T/
1997 1996
---------------------------------
PRODUCTION AND PRICES
Average Daily Production
Natural Gas (Mmcf/d) 24.7 23.4
Liquids (Bbl/d) 186 280
Sulphur (LT/d) 153 160
Natural Gas Equivalent (MmcfE/d) 28.0 27.8
Average Product Prices
Natural Gas ($/Mcf) 1.47 1.46
Liquids ($/Bbl) 24.27 24.04
Sulphur ($/LT) 6.91 10.73
Financial
($000 except per share amounts)
Gas, Liquids and Sulphur Revenue 15,282 15,577
Cash Flow From Operations 6,540 9,901
Per Share 0.14 0.26
Net Earnings (Loss) (3,594) 1,144
Per Share (0.08) 0.03
/T/
1998 OUTLOOK
At December 31, 1997, Pan East had cash and working capital of
$14.8 million. These funds combined with cash flow and available
credit lines will finance a 1998 capital program budgeted at $50
million. Pan East anticipates drilling 30 to 35 wells in 1998
with an average working interest of 40 percent. To date in 1998,
Pan East has participated in the drilling of 13 (5.1 net) wells
resulting in 7 (2.6 net) gas wells, one (.6 net) oil well and 2
(0.7 net) dry holes for an 80 percent success rate to date with 3
(1.2 net) wells currently drilling. The Company anticipates
production increases of 15 MmcfE per day during the second quarter
bringing Pan East's daily production to approximately 40 MmcfE.
Pan East's Exploration Manager, Andrew Boland, commented "this
years drilling inventory is our strongest yet. We will be
drilling some exciting prospects with promising upside." |
