Well, I guess I can add another small cap for discussion:
EEE
Canadian 88 Energy Corp. Provides Operational Update in Response to Recent Decline in Share Price
CALGARY, Alberta--(BUSINESS WIRE)--Sept. 1, 1999--Canadian 88 Energy Corp.(AMEX:EEE)(TSE:EEE)(ASE:EEE) of Calgary, Alberta said today that it is concerned about the recent decline in its share price at a time of bolsterous energy markets. Company President Greg Noval said in Calgary today that the share price has now got to a level of less than 50 percent of Net Asset Value (NAV) as recently estimated by the Company and such large independent analytical firms as J.S. Herold, Inc. and other bona fide analysts covering the Company.
The Company said that the recent decline in stock price may be attributable to two factors. One being recent Canadian national press commenting "Canadian 88 Cuts Costs to Stop Bleeding." Noval said, "There is no bleeding at Canadian 88, simple cost reductions including 10 percent voluntary pay cuts by senior management and operating staff and improvement in field operating efficiency are designed to increase cash flow and corresponding earnings by upwards of 10 cents/share. They should not be construed as a reflection of the Company's financial ability which is very strong."
The Company said that the second factor which may be affecting the Company's share price is a report that is apparently being circulated by two former stockbrokers claiming to have independently evaluated the Company. Proper analysis of the Company could not however be conducted without detailed information that would have to be provided by Canadian 88. "The management and staff of Canadian 88 have worked very hard over the last 10 years providing shareholders with tremendous value and we take extreme exception to the rogue commentators attack on Canadian 88," Noval said.
A recent search on the Bloomberg News Service reveals that of the eight bona fide analysts who actually follow EEE, two rank EEE as a strong buy, four rank EEE as a buy and the remaining two rank EEE as a hold. This speaks very well for the Company.
On the operational front the Company said that it intends to reward its faithful shareholders with a dividend of shares in Prize Energy Inc. which will be more formally announced tomorrow. As reported in Canadian 88's first six month 1999 Report to Shareholders:
(1) Average Daily Production has increased 32 percent in the first half to 140.1 mmcfe/d compared to 106.4 mmcfe/d in 1998.
(2) Revenue increased to a record level of $53.2 million in 1999 as compared to $36.3 million in the same period during 1998.
(3) Cash flow increased by 39 percent during the period to $19.3 million from $13.9 million during the same period.
(4) In June, Canadian 88 expanded its production loan facility from $205 million to $280.5 million with a borrowing base attributed to its reserves of $300 million under the loan agreement. Debt at the end of the second quarter of 1999 was approximately $225 million and has remained relatively unchanged to date. On a going forward basis, with estimated year end 1999 debt of $250 million, debt to cash flow ratio is approximately 2.5 times. Accordingly, Canadian 88 has the flexibility to accomplish its capital spending objectives and undertake many attractive opportunities available to the Company.
(5) Furthermore, EEE doubled its proven producing reserves in 1998 and during the last year has increased its undeveloped land position by approximately 35 percent.
(6) In addition, the Company's exploration success was recognized by the recent Peter's & Co. F&F study dated July 1999 which placed Canadian 88 2nd and 5th overall in Canada in terms of 5 and 3 year Proven F&D rankings based on our 10 to 1 mcfe F&D cost of $0.51 and $0.50 (versus the industry average of $0.77 and $0.75 respectively).
On a further positive note, the Company said yesterday it completed the successful drilling and logging of its L.S.D. 12, Sec. 24, Twp. 28, Rge. 8 W5M West Benjamin well at Wildcat Hills and that 140 meters of high fractured Mississippian pay having been encountered in the well. The well is currently being cased and completion operations on the well will commence immediately upon rig release. Pipeline construction connecting this well and Canadian 88's initial L.S.D. 16, Sec. 23, Twp. 28, Rge. 8 W5M West Benjamin discovery well is nearly completed with production of up to 20 mmcf/d expected to commence by early October.
On other drilling fronts the Company said that drilling is proceeding ahead without difficulty on its L.S.D. 11, Sec. 32, Twp. 6, Rge. 2 W5M Waterton exploration well targeting a new reserve accumulation in the Mississippian formation estimated at up to 200 Bcf of natural gas. The L.S.D. 11 of Sec. 32 well is being operated by Canadian 88 Energy Corp. and it is currently drilling at 4,421 meters (14,505 feet) toward a projected total depth of 4,873 meters (15,988 feet). Canadian 88 Energy Corp. has a 90 percent working interest and Prize Energy Inc. has a 10 percent working interest in the subject well.
At Ferrier a Leduc reef test is currently being drilled at L.S.D. 7, Sec. 33, Twp. 37, Rge. 7 W5M 100 percent by Canadian 88. The well is currently drilling ahead at 2,528 meters (8,294 feet) depth toward a total depth of 3,780 meters (12,402 feet).
In addition to these wells a new fall 1999 multi-well drilling program focused on shallow drilling is being kicked-off next week at a cost of approximately $15 million targeting 1,500 BOE/d of new production and several production optimization projects and recompletion projects are currently underway to develop another 2,500 BOE/d of risked production by year end at a cost of $10 million.
In addition, interpretations of large scale 3-D seismic programs are underway at Wildcat Hills, Ram River and Blackstone directed at drilling of high impact wells into year end. Furthermore, a large $24 million seismic program is currently underway at no cost to Canadian 88 evaluating Canadian 88's deep water Scotia Shelf acreage and lands posted for sale in October in the area offsetting Canadian 88's attractive holdings. In terms of this latter area, the Company is working toward having a $40 million well drilled on its land next year at no cost to the Company targeting at least one very large structure identified on its lands. The prospect is analogous to structures containing major discoveries offshore Angola where the success rate on exploration wells yielding 250,000,000 barrel plus discoveries has averaged 60 percent. The deep water East Coast prospect was the highlight of corporate presentations of Shell Canada, Murphy Oil and Imperial Oil at the recent CAPP Symposium in Calgary during June of this year and Canadian 88 is the only public Canadian independent in this extremely exciting high impact play.
Canadian 88 Energy Corp. (EEE) is an independent public oil and gas company with its head office in Calgary, Alberta, Canada. The shares of Canadian 88 Energy Corp. are traded on the Toronto, Alberta and American Stock Exchanges.
The information contained herein has neither been approved nor disapproved by the respective Exchanges.
CONTACT:
Canadian 88 Energy Corp.
Greg Noval, 403/974-8800
403/974-8811 (FAX) |
