EARNINGS / Dundee Petroleum Reports 1998 Third Quarter Results
CALGARY, Nov. 24 /CNW/ - Dundee Petroleum Corp. is pleased to report
financial and operating results for the nine months ended September 30, 1998.
For the first nine months of 1998, production averaged 175 BOE per
day, unchanged from the same period of 1997. Production consisted of 55% oil
and 45% natural gas. With the majority of the Company's recently drilled
Cessford wells coming onstream in mid-September, Dundee exited the third
quarter with production of 250 BOE per day, consisting of 65% natural gas and
35% oil. This exit production level represents a 43% increase over the nine
month average to-date.
Revenues (net of royalties) for the first nine months of 1998 were
$743,557 compared with $925,886 for the same period of 1997. Cash flow from
operations was $231,888 or $.O18 per share, a decrease of $313,285 from the
comparative 1997 period. Average sales price for the period was $18.10 per
barrel of oil equivalent, with oil averaging $17.76 per barrel and natural gas
averaging $1.85 per mcf. The Company's average netback was $10.64 per BOE.
During the first nine months of 1998, Dundee expended $1,796,500 for the
acquisition of capital assets. The majority of the expenditures were for
exploration and development drilling ($1,300,000). The balance of expenditures
($496,500) were incurred on land, seismic, tangible equipment and other
assets. In order to finance these expenditures, the Company sourced funds
from: the disposition of properties ($525,000), cash flow from operations
($232,000), increase in long term debt ($800,000) and the issuance of share
capital ($270,000).
With the downturn in crude oil prices now lasting longer than historical
cycles, the Company has been successful in strategically re-directing a
substantial portion of the 1998 budget into natural gas drilling
opportunities. Of most significance, Dundee's 36 well shallow gas farmin in
the Cessford area of southeastern Alberta yielded a 100% drilling success
rate, resulting in a new core area characterized by long-life gas reserves
with significant upside drilling potential.
As reported, 33 of the initial 36 wells were placed on production in
September of this year. Production from these wells, at a restricted flow
rate, is currently averaging approximately 1 Mmcf per day net to Dundee. The
Company estimates that first year average production from the 36 wells will be
1.1 Mmcf per day net to Dundee. Total proved reserves added from the Cessford
farmin transaction are estimated to be 4.5 Bcf net to Dundee, of which
approximately one-half is attributable to an additional 39 drilling locations
on the lands which the Company has earned.
The Cessford project has dramatically altered the weighting of Dundee's
reserve and production mix, which are now comprised of approximately 2/3
natural gas and 1/3 oil. In order to secure a strong and reliable cash flow
stream in the near term, the Company has contracted 55% of its Cessford gas
(600 GJ/day) for the winter contract at an average price of $2.84/GJ ($3/Mcf).
This activity at Cessford, coupled with Dundee's remaining inventory of solid
drilling prospects, poises the Company to recognize substantial growth in
shareholder value.
At September 30, 1998, the Company had 12,942,334 common shares
outstanding.
SUMMARY OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1998
Production Oil & Gas Cash Flow Net Earnings
Year (BOE/day) Revenue Cash Flow Per Share (Loss)
---- ---------- --------- --------- --------- ------------
Fiscal Y.T.D.
1998 175 $ 868,272 $ 231,888 $.018 $ (5,814)
1997 175 $1,098,178 $ 545,173 $.060 $ 388,446
The Alberta Stock Exchange has neither approved nor disapproved of this
release.
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