EARNINGS / Blackrock Ventures Inc. 1997 Results
BLACKROCK ANNOUNCES RESULTS FOR THE YEAR ENDED DECEMBER 31,
1997
1998-04-01
TORONTO, ONTARIO
BlackRock Ventures Inc. (TSE: BVI) today reported earnings of $729,000 for
1997, primarily reflecting its share of earnings generated by an equity
accounted investment. BlackRock owned 18.9% of the outstanding shares of
Rayrock Yellowknife Resources Inc. (TSE: RAY), which had earnings of
U.S.$8.4 million in 1997. Major factors in Rayrock's earnings were the sales
of its 100% owned Western Ag-Minerals and a 38.9% interest in oil and gas
producer Discovery West Corp. Rayrock owns approximately 46% of BlackRock
Ventures' outstanding common shares.
BlackRock had revenue of $361,000 in 1997 which was derived from conventional
oil and gas properties it received upon the reorganization which created
BlackRock in October 1996. These properties were sold in the third quarter of
1997. BlackRock is now focussing exclusively on its heavy oil Steam Assisted
Gravity Drainage (SAGD) pilot project near Cold Lake, Alberta.
Pilot plant successfully producing
BlackRock began construction of the surface facilities for its Cold Lake
pilot plant in May 1997, following the drilling of its first SAGD well pair.
Upon completion of the surface facilities in early September 1997, and tie-in
with the wells, BlackRock introduced steam into the Clearwater deposit
approximately 400 metres below surface.
BlackRock began producing bitumen by the end of October, approximately 60
days ahead of the schedule determined by initial computer modeling. By
December 31, 1997, average daily production was approximately 350 barrels of
bitumen per day. The well, which experienced operating disruptions in
February, is currently producing at the rate of 425 barrels of bitumen per
day. At full production, the pilot plant is expected to produce approximately
600 barrels of bitumen per day. Data collected from operation of the first
well pair, as well as future information collected from expansions of the
pilot project, will be used to assess the viability of a 25,000 bpd
commercial-scale SAGD plant on the property.
BlackRock owns a 65% interest in the Cold Lake project, which is being
increased to 75% by operation of the pilot.
Additional section of crown lease purchased
BlackRock purchased an additional section of Crown lease adjoining the
northeast corner of its existing property, in the third quarter of 1997. This
section is forecast to add approximately 100 million barrels of in place
bitumen to the property's resource to raise the total to approximately 800
million barrels.
Pilot expansion
Based upon the achievement of SAGD production in the existing well pair, the
company expects to expand its pilot project with two additional well pairs.
The expansion has a number of objectives, including:
.. testing the horizontal and vertical uniformity of the Clearwater deposit
.. gaining operating experience in the recycling of water within the
production process
.. gaining operating experience in the reuse of heat with the production
process
The timing of the expansion will be based on the price of bitumen and other
economic conditions. BlackRock will continue to operate the existing well
pair in order to expand the steam chamber which is crucial to obtaining
ongoing production data. When the price of bitumen recovers sufficiently to
raise projected cash flows to appropriate levels, the expansion is expected
to take place.
Balance Sheet . As at December 31
(Cdn$ in thousands) 1997 1996
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Assets
Current assets
Cash $ 1,679 $ 1,682
Accounts receivable 111 365
Prepaid expenses 33 125
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1,823 2,172
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Long-term investment 30,308 29,856
Cold Lake oil sands property 11,455 2,912
Conventional oil and gas properties-at cost,
less accumulated depreciation of $65 2,566
Other assets 26
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41,789 35,334
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$ 43,612 $ 37,506
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Liabilities
Current liabilities
Accounts payable and accruals $ 273 $ 2,323
Due to affiliated company 24 5,764
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297 8,087
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Shareholders' Equity
Capital stock 49,804 34,748
Deficit (3,251) (3,625)
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46,553 31,123
Deduct reciprocal shareholdings (3,238) (1,704)
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43,315 29,419
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$ 43,612 $ 37,506
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Statements of Earnings
For the year ended December 31, 1997, and for the period from the date of
incorporation, May 16, 1996, to December 31, 1997
(Cdn$ in thousands, except per share amounts) 1997 1996
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Operating revenues
Oil and gas $ 361 $ 322
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Operating expenses
Production, including royalties 209 133
Depletion and depreciation 85 65
General and administrative 688 234
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982 432
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Operating loss (621) (110)
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Other (expense) income
Interest expense (16) (126)
Interest income 160 9
Loss on sale of conventional oil and gas properties (813)
Other 33 (29)
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(636) (146)
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Loss before undernoted item (1,257) (256)
Share of earnings (loss) of equity accounted
associate 1,986 (3,363)
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Earnings (loss) for the period $ 729 $ (3,619)
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Earnings (loss) per share $ 0.01 $ (0.12)
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Statements of Deficit
For the year ended December 31, 1997, and for the period from the date of
incorporation, May 16, 1996, to December 31, 1997
(Cdn$ in thousands) 1997 1996
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Deficit - beginning of period $ (3,625) $
Earnings (loss) for the period 729 (3,619)
Share issue costs (325)
Dividends on preferred shares (30) (6)
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Deficit - end of period $ (3,251) $ (3,625)
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Statements of Changes in Financial Position
For the year ended December 31, 1997, and for the period from the date of
incorporation, May 16, 1996, to December 31, 1997
(Cdn$ in thousands) 1997 1996
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Operating activities
Earnings (loss) for the period $ 729 $ (3,619)
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Non-cash charges to earnings
Depletion and depreciation 85 65
Loss on sale of conventional oil and gas properties 813
Share of (earnings) loss of equity accounted
associate (1,986) 3,363
Other 6
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(1,088) 3,434
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Funds used in operations (359) (185)
(Increase) decrease in working capital,
excluding cash (4,434) 1,827
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Cash (used in) provided by operating activities (4,793) 1,642
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Investment activities
Sale of conventional oil and gas properties 1,707
Cold Lake pilot costs (8,576) (2,958)
Other assets, net of disposals (38)
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Cash used in investment activities (6,907) (2,958)
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Financing activities
Net proceeds on issue of capital stock 14,731
Loan from affiliated company (3,004) 3,004
Dividends on preferred shares (30) (6)
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Cash provided by financing activities 11,697 2,998
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(Decrease) increase in cash (3) 1,682
Cash-beginning of period 1,682
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Cash-end of period $ 1,679 $ 1,682
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