EARNINGS / Real Resources Inc. Announces Third Quarter Results for 1998
CALGARY, Nov. 30 /CNW/ - Real Resources Inc. (''RER - TSE'') announced
third quarter 1998 results reflecting the continuing growth of the Company.
During the third quarter a total of 7 wells were drilled resulting in 5
oil wells, 1 gas well and one well which was dry and abandoned.
Total Corporate proved plus probable reserves at the end of the third
quarter of 1998 are 7.5 million barrels of oil equivalent which is an increase
of 65% over the 4.6 million barrels of oil equivalent reported at December
31, 1997. The reserves were added for $4.29 per boe on a proven plus probable
basis which is below industry average. Production for the quarter averaged
1,734 boepd, a 25% increase over the 1,383 boepd produced in the first
quarter of the year.
Real's exploration effort has now developed 20 active prospects of which
land has been acquired on 15 of the prospects. This has resulted in a 75%
increase in our net undeveloped land holding to 104,300 acres at the end of
the third quarter of 1998 from 59,600 acres at 1997 year end. A total of 22
exploration well locations have been identified on these lands for drilling
within the next year.
During September, Real closed a flow through share private placement with
NCE Resources Group Inc. Gross proceeds of $2,000,000 were received on
closing and a further $1,000,000 will be received subsequent to the end of the
third quarter. During October, Real completed a private placement with ARC
Canadian Energy Venture Fund of 2,500,000 Units for gross proceeds of
$2,125,000. Each unit is comprised of one common share and one half of a
warrant in the capital of Real.
The following is a summary of the financial results of Real for the first
nine months of 1998 with corresponding results for the same period of 1997:
Revenue Funds from Operations Profit (Loss)
----------- ------------------------- -------------------
($ MM) ($ MM) (per share) ($ MM) (per share)
----------- ------------------------- -------------------
1998 6.3 2.0 $0.06 (1.3) ($0.04)
1997 2.6 1.3 $0.10 0.3 $0.02
Cash flow for the first nine months of 1998 was $2,035,090, an increase
of 59% from $1,279,641 for the corresponding period in 1997. Production for
the first three quarters of 1998 averaged 1,597 boepd as compared to 431 boepd
in the first nine months of 1997. This 271% increase in production overcame
the huge drop in oil prices as oil revenue grew during the period. However,
since the Company's production is essentially all light-medium crude, the weak
oil price which was 37% below that of last year negatively impacted cash flow
and earnings.
Even though Real has an inventory of at least 30 development oil
locations, these wells will not be drilled until an improvement in oil prices
is seen. The capital allocated to these wells will be re-deployed to acquire
additional oil reserves and lands on gas prone exploration prospects. Since
the current reserve and production base of the Company is medium to light oil,
Real is in an excellent leveraged position to oil price increases which will
establish future growth of the Company.
The Toronto Stock Exchange has neither approved nor disapproved the
information contained herein. |
