EARNINGS / Backer Petroleum Nine Month Financial & Operating Report
BACKER PETROLEUM CORP. - ANNOUNCEMENTS
CALGARY, ALBERTA--
Third Quarter Results ... Operating cash flow was $2,333,339 and
net loss was $66,041 for the nine months ended September 30,
1998. The results for the first nine months of 1997 were $712,364
operating cash flow and $278,980 net income. 1998 depletion
includes a $337,000 ceiling test writedown of Backer's only U.S.
property which was sold effective October 1, 1998.
Sturgeon Lake, Alberta... Backer has secured a farmin and option
from 15.5% owned Virginia Energy Corporation encompassing
approximately 6,400 acres in the Sturgeon Lake area, 200 miles
northwest of Edmonton. The farmin well, which awaits a final land
title opinion, will test a Leduc reef anomaly identified by
three-dimensional seismic as an extension to existing Leduc oil
production. The Nisku, which produces adjacent to the farmin
lands, provides a secondary oil target, and Cretaceous sands
offer the possibility of gas exploitation. Anticipated gross
production from the Leduc is several hundred barrels of oil per
well per day. The Company has committed to a 33.33% working
interest in the farmin test well which has an after payout
conversion, and is anticipated to spud in the first quarter of
1999. The test well will trigger a series of options whereby the
Company will have the opportunity to earn in the entire 6,400
acres.
Darwin, Alberta... The four Bluesky gaswells at Darwin, 60 miles
north of Peace River, continue to produce at daily rates of
approximately 2.75 Mmcfd, net to Backer's 30% before payout
working interest, and averaged a price of $1.87 per Mcf over the
first ten months of 1998. Additional drilling during the first
quarter of 1999 will focus on increasing cash flow with as many
as four new wells that can be brought on stream being drilled
prior to spring break-up. The Company will also look to establish
new reserves by participating in two exploratory locations on the
southern end of its 20,000 acre land position at Darwin.
Knobhill, Alberta... The Company has completed a
three-dimensional seismic survey on its Knobhill Belly River oil
property, located in west central Alberta. Backer owns a 42.5%
working interest in one producing oilwell and approximately 1,500
contiguous acres. Oil prices will influence the timing of the
development drilling expected to commence in the second quarter
of 1999.
Queenstown, Alberta... Backer holds a 45% to 90% working interest
in 3,400 acres at Queenstown, a recently acquired property in
southern Alberta. Seven producing wells currently average 65 BOE
per day, net to the Company. The first objective will be to
increase production via conservation of associated solution gas.
Optimization of existing wells and additional development
drilling is forecast for mid-year 1999, but will also be
dependent on oil prices.
Disposition... The Company has agreed to sell its entire interest
in the Bird Canyon Area, Sublette County, Wyoming, effective
October 1, 1998 to Sovereign Investments inc., owned by D.M.
Mercier, President and majority shareholder of Backer. The
independent Directors of the Company reviewed the independent
evaluation of the property and approved the total sale
consideration of CAN $300,000. The disposition of this non-core
property which provided less than 2% of Backer's revenue relieves
the Company of U.S. reporting, regulatory and tax obligations,
and the sale proceeds will be directed at developing Backer's
Alberta properties.
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