EARNINGS / Barrington Petroleum reports 1997 Results
CALGARY, March 5 /CNW/ - Barrington Petroleum Ltd. today announced
financial and operational results for 1997.
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Year Ended December 31 Change
1997 1996
FINANCIAL ($m unless otherwise indicated)
Revenue before royalties 128,901 93,462 38%
Cash flow from operations 57,134 43,923 30%
Per share basic ($) 1.05 0.97 8%
Per share fully diluted ($) 0.95 0.89 7%
Net earnings 4,948 9,481 -48%
Per share basic ($) 0.09 0.21 -57%
Per share fully diluted ($) 0.09 0.20 -55%
Weighted average number of common shares
outstanding (m)
Basic 54,666 45,384 20%
Fully diluted 62,312 50,794 23%
Year end number of common shares
outstanding (m)
Basic 59,145 52,730 12%
Fully diluted 67,986 61,345 11%
Capital expenditures, net 157,210 138,726 13%
Long term debt 134,430 80,188 68%
Working capital deficiency 13,578 741 1732%
PRODUCTION
Natural gas
Millions of cubic feet (mmcf) 40,344 29,467 37%
Millions of cubic feet per
day (mmcf/d) 111 81 37%
Price before hedging ($/mcf) 1.95 1.69 15%
Price after hedging ($/mcf) 1.87 1.69 11%
Oil and liquids
Barrels 2,605,256 1,661,690 57%
Barrels per day (bbls/d) 7,138 4,540 57%
Price before hedging ($/bbl) 20.95 26.13 -20%
Price after hedging ($/bbl) 20.61 24.55 -16%
Barrels equivalent production
(boe/d - 10:1) 18,191 12,591 44%
OPERATIONS
Net wells drilled 155 73 112%
Net metres drilled (m) 146.6 74.6 97%
Net success rate 74% 75%
Undeveloped net acres of land 960,243 785,090 22%
Average working interest 75% 68%
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1997 highlights
Barrington recorded a 37% increase in natural gas production and a 57%
increase in crude oil production, for an overall gain of 44% on a barrel of
oil equivalent (boe) basis. Cash flow was 30% higher, at $57.1 million, while
basic cash flow per share was 8% higher at $1.05. On a proven plus one-half
probable basis, reserves at year-end were up 26%, while finding and
development costs for 1997 amounted to $6.30 per barrel of oil equivalent.
Production growth
''I am pleased to report that we achieved both our average and our exit
production targets for 1997,'' said Barrington's president, Brian Gore. He
continued, ''Our exit production rate exceeded 20,100 boe/d, of which 63% was
natural gas and natural gas liquids. Our 1998 capital program is directed
towards increasing this leverage, in order to position Barrington for an
expected rise in gas prices later this year.''
After selling 13 mmcf/d of non-strategic gas producing assets,
Barrington's 1997 natural gas production rose to 111 mmcf/d from 81 mmcf/d in
1996. This increase was derived from new production at Rainbow and Zama in
northwestern Alberta, development drilling and facilities expansion at
Greencourt in central Alberta, and continued development drilling in
northeastern Alberta. Average daily oil and liquids production was 7,138
bbls/d in 1997 (net of 900 bbls/d sold during the year), an increase of 2,598
bbls/d over 1996. Oil production growth resulted from exploratory and
development drilling in southeastern Saskatchewan, exploratory success at
Sakwatamau in west central Alberta and the addition of 1,200 bbls/d of heavy
oil in the company's Meridian region. Mr. Gore added, ''During 1997,
Barrington's actual production growth was 10,258 boe/d, of which 63% was
achieved by drilling and 37% from acquisitions. The sale of non-core
properties reduced the net impact of this growth by about 2,200 boe/d.''
Barrington's 1997 natural gas price climbed to $1.87 per mcf, up from
$1.69 per mcf last year. Oil and liquids prices were lower, at $20.61/bbl
compared to $24.55/bbl in 1996, reflecting lower world prices and the
inclusion of a greater proportion of heavy oil in the company's crude oil
stream.
Financial results
Barrington's cash flow from operations reached a record $57 million in
1997, up from $44 million the previous year. Cash flow per share also
increased to $1.05, up from $0.97 in 1996. Earnings per share, at $0.09, were
down from $0.21 in 1996, due to a higher effective deferred tax rate resulting
from acquisition activity, slightly increased depletion rates and lower oil
prices.
Fixed and floating rate long-term debt of $134 million at year-end was
essentially on budget. Approximately $10 million of capital expenditures,
originally budgeted for 1998, were accelerated into the fourth quarter of
1997. In addition, a $7 million property sale scheduled for closing late in
December, 1997 was delayed. This gave rise to a year-end working capital
deficit of $13.6 million, which will be reduced in the first quarter of 1998.
Capital expenditures and reserves
In 1997, Barrington's capital expenditures amounted to $157.2 million net
of dispositions. This program added established reserves of 25.0 million boe,
replacing 1997's production of 6.6 million boe by a factor of 3.8 times.
Commenting on 1997's successful reserves replacement, Mr. Gore said ''In
the face of sharply higher costs for services and a very competitive
environment for land and property acquisitions, we are pleased that our 1997
finding and development costs, at $6.30 per boe for established reserves, were
in line with industry averages. We also increased our undeveloped acreage
position by 22% from 785,000 net acres to 960,000 net acres.''
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Reserves
1997 1996 Change
Natural Gas (mmcf)
Proved 243,841 263,409 -7%
Probable 48,437 59,374 -18%
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Total 292,278 322,783 -9%
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Oil and NGL's (mbbls)
Proved 28,316 16,771 69%
Probable 20,488 11,618 76%
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Total 48,804 28,389 72%
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BOE (10:1)
Proved 52,700 43,112 22%
Probable 25,332 17,555 44%
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Total 78,032 60,667 29%
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Net present value before income taxes, risked as to 50%
for probable reserves ($mm)
Undiscounted 856,497 916,794 -7%
Discounted at 10% 467,305 502,928 -7%
Discounted at 15% 383,005 413,404 -7%
Finding and development costs
Reserve Additions and Finding and on-stream
Dispositions cost per BOE
--------------------- ---------------------
Proved +
Capital Total Risked Proved +
Expenditures Proved Probable Proved Probable Probable
----------- ------ -------- ------ -------- --------
($mm) (Mboe) (Mboe) ($/boe) ($/boe) ($/boe)
1997
Exploration
and development 124,672 20,668 8,662 6.03 4.99 4.25
Corporate &
property
acquisitions 81,681 8,476 3,844 9.64 7.86 6.63
Property
dispositions (50,871) (8,808) (3,287) 5.78 4.87 4.21
Head office
expenditures 1,728 -- -- -- -- --
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Current year net
reserve additions 157,210 20,336 9,219 7.73 6.30 5.32
Revisions to prior
years -- (4,105) (1,442) -- -- --
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Total 157,210 16,231 7,777 9.69 7.81 6.55
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3 year average,
including
revisions 353,520 48,815 21,320 7.24 5.94 5.04
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5 year average,
including
revisions 458,219 64,888 23,683 7.06 5.97 5.17
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Asset disposition program
During 1997, Barrington sold producing properties for cash proceeds of
$51 million in fourteen separate transactions. ''We are pleased with the
outcome of this process'', said Mr. Gore, ''since Barrington is now more
streamlined and more focussed. We will continue selling assets which are
mature or are no longer strategic to our business plan, and will recycle the
capital into liquids-rich natural gas reserves in western Alberta.''
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1993-1997 average finding and development cost
Drilling results
1997 1996
Gross Net Gross Net
Oil 124 92.9 49 38.2
Gas 48 22.0 27 16.5
Water injection 1 0.4
Dry & abandoned 47 40.1 23 18.1
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Total 219 155.0 100 73.2
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Success rates 79% 74% 77% 75%
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Outlook
Barrington's board of directors has approved a revised 1998 capital
expenditure budget of $100 million. This will be funded by expected cash flow
of $60 million, additional equity through the projected exercise of warrants
and stock options of $21 million, and additional debt of $19 million. This
program will result in 1998 year-end debt, net of working capital, of $167
million, or less than two times 1999 projected cash flow. If commodity price
fluctuations alter cash flow expectations significantly, then the company will
expand or reduce its capital program accordingly.
Mr. Gore concluded, ''Barrington has never looked better. Two years ago,
we began building a presence in western Alberta where multi-zone geological
horizons yield long life, liquids-rich natural gas reserves as well as light
oil. Today, 47% of our production base and 44% of our unexplored acreage are
located in this region. This transformation is about to reward our
shareholders' patience. In effect, the lack of pipeline transportation
capacity to export markets has trapped gas inside Alberta. Early in November,
new pipeline capacity comes on line. Barrington will capture the maximum
benefit because of the manner in which our natural gas contract portfolio is
structured.''
''Rigorous focus on Barrington's strategic plan has successfully grown
our company from a junior to a strong intermediate producer. Executing our
long term plan will extend our success story well beyond 1998.'' |
