Tappit Resources Ltd -
Tappit six-month results
Tappit Resources Ltd TPT
Shares issued 46,315,532 1999-07-27 close $0.34
Wednesday Jul 28 1999
Mr. Lawrence Bintner reports
Financial results for the six months ended June 30, 1999, were as follows:
HIGHLIGHTS
Three months ended June 30
1999 1998
Financial
Petroleum sales 2,538,306 782,678
Cash flow from
operations 1,565,741 189,130
Cash flow
per share 3.4 cents .7 cent
Net earning
(loss) 379,103 (171,576)
Net earning (loss)
per share 1 cent (1 cent)
Production
Average daily
production (barrels
of oil equivalent
a day) 1,204 582
Average sales price
per barrel 23.17 15.88
Average royalties
per barrel 1.57 2.42
Average operating
costs per barrel 4.51 3.92
Netback per barrel 17.08 9.54
General and admin
cost per barrel 0.95 1.88
Interest cost
per barrel 1.84 3.08
Cash flow netback
per barrel 14.29 4.57
HIGHLIGHTS
Six months ended June 30
1999 1998
Financial
Petroleum sales 4,867,735 1,656,680
Cash flow from
operations 2,730,800 506,904
Cash flow
per share 6 cents 2 cents
Net earning (loss) 537,240 (257,576)
Net earning (loss)
per share 1 cent (1 cent)
Production
Average daily
production (barrels
of oil equivalent
a day) 1,228 590
Average sales price
per barrel 21.90 15.51
Average royalties
per barrel 2.25 2.37
Average operating
costs per barrel 4.43 3.94
Netback per barrel 15.22 9.20
General and admin
cost per barrel 0.91 1.62
Interest cost
per barrel 2.02 2.83
Cash flow netback
per barrel 12.29 4.74
A program of fiscal restraint, cost control and selected asset sales carried out over the first half of 1999 allowed Tappit to apply 89 per cent of cash flow to debt reduction. Total debt was reduced from $14.37-million to $11.94-million, a reduction of $2.43-million. The object of this program was to reduce Tappit's debt to quarterly annualized cash flow multiple to below two times. This was achieved by the end of June, 1999, with debt to cash flow coming in at 1.9 times. From a position of balance sheet health Tappit is now able to resume production growth. Further debt reduction is expected by year-end, however the bulk of the second half cash flow (expected to be close to $3.5-million at $18 (U.S.) to $20 (U.S.) oil price) will be allocated to drilling as well as production acquisitions.
The average world price for oil during the second quarter was $17.66 (U.S.), compared with $13 (U.S.) for the first quarter. The average price over the first half of the year was $15.33 (U.S.). The improvement in oil prices in the second quarter together with high gas prices for the period resulted in excellent netbacks per barrel of oil equivalent giving Tappit a record quarterly cash flow of $1,565,741. Cash flow per share came in at 3.4 cents (13.6 cents per share annualized). Historically Tappit has traded at four to six times trailing cash flow per share. As the current bull market progresses and smaller producers gain the spotlight, the company expects the share price to trade at these multiples. Production gains from the second half 1999 capital program together with higher oil prices should translate to increased cash flows giving added momentum to share value.
To update recent activity in Alberta, Tappit has flow lined one gas well and added a booster compressor at two other wells, which are scheduled to be tied in shortly. A fourth gas well will be connected to facilities in the next two weeks. Total net production increase is expected to be 750,000 cubic feet a day (75 barrels of oil equivalent a day).
In addition, Tappit has finished drilling a 100-per-cent-owned well in Alberta. The well has been cased as a gas well and is being evaluated for production capability.
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