Maxx just posted some decent nbrs, looks cheap. Scott
Maxx first quarter 2000 results
Maxx Petroleum Ltd MXP
Shares issued 15,858,382 2000-05-09 close $4.3
Tuesday May 9 2000
Mr. Bob Rosine reports
Maxx Petroleum Ltd. has released its operating results and
financial statements for the first quarter of 2000.
FINANCIAL HIGHLIGHTS
(for the three months ended March 31)
(in thousands of dollars)
2000 1999
Gross production
revenue $ 18,692 $ 10,477
Funds generated
from operations
(Cash flow) 8,172 4,536
Per share 0.52 0.30
Net income 1,636 478
Per share 0.10 0.03
Capital
expenditures
(net of propery
dispositions) 12,270 6,295
Working
capital
(deficiency) (10,088) (3,026)
Long term
debt 51,850 51,055
OPERATIONAL HIGHLIGHTS
(for the three months ended March 31)
2000 1999
Production
Crude oil
and natural
gas liquids
(bbls/d) 6,299 5,165
Natural gas
(mmcf/d) 12.1 14.6
Boe/d 7,505 6,623
Average sales
price
Crude oil
($/bbl) 26.46 15.52
Natural gas
($/mcf) 3.03 2.54
Drilling
activity
Gross wells 26.0 5.0
Net wells 19.0 2.7
First quarter highlights and synopsis
Financial
No. 1 first quarter revenue at $18.7-million, 78 per cent
higher than the same period in 1999.
No. 2 cash flow from operations increased 80 per cent to
$8.2-million (52 cents per share) from $4.5-million in 1999
(30 cents per share).
No. 3 net earnings for the quarter were $1.6-million (10
cents per share) compared with $4.8-million (three cents
per share) in 1999.
No. 4 net capital expenditures totaled $12.3-million during
the quarter.
No. 5 operating netbacks increased by 39 per cent to $14.70
per boe in the quarter compared with $10.54 per boe in
1999.
No. 6 cash netbacks after corporate charges increased by 57
per cent to $11.96 per boe, compared with $7.62 per boe in
1999.
No. 7 a corporate recycle ratio of 2.1 was achieved based
on an estimated established working interest reserve
additions finding and development cost of $5.59 per boe.
No. 8 Credit facilities have increased from $56-million to
a maximum of $70-million with current availability set at
$62-million until the next interim review date.
Production and drilling
No. 1 production averaged 7,505 boe/d during the first
quarter, compared with 6,623 boe/d in 1999. This
represents a 3 per cent increase over fourth quarter 1999
, and a 25 per cent increase over third quarter 1999 of
6,003 boe/d. Current production stands at 8,500 boe/d, and
the company istracking towards meeting its targeted 2000
average production of 8,800 boe/d.
No. 2 during the quarter Maxx drilled a total of 26 wells
(19 net), the majority of which were development heavy oil
wells.
Reserves and net asset value (NAV)
No. 1 first quarter 2000 activity resulted in an estimated
gross proved reserve additions of 2,196 million barrels of
crude oil. Based on capital expenditures of $12.3-million
this returns an F&D cost of $5.59 per boe.
No. 2 reserve additions replaced production by 322 per cent
on a proved basis.
No. 3 the net present value (before income tax) of proved
plus 1/2 probable reserves at year-end 1999, is $127.9-
million and $118.4-million when discounted at 12 and 15 per
cent respectively. The above net present values are based
on pricing from Sproule effective October 1, 1999. Updating
for Sproule's March 1, 2000, price forecast, the resultant
net present value increases to $141.6-million and $132.1-
million on a before tax basis discounted at 12 and 15 per
cent respectively. This represents an 11.6 per cent
increase from the October 1, price deck based on a 15 per
cent discount factor. Further adjusting the reserve net
present value to reflect first quarter drilling results,
and adjusting for production, the resultant net present
value stands at $146.6-million and $136.7-million on a
before tax basis discounted at 12 and 15 per cent respectively, when employing Sproule's March 1, 2000, price
forecast. Based on the above, Maxx's net asset value as of
April 1, 2000, is $6.44 per share and $5.81 per share when
discounted at 12 and 15 per cent respectively.
Operations
At Burnt Timber, the company spudded 10-29-30-7W5M on March
29; the well is licensed to a total depth of 3,200 metres.
Total depth should be reached in the second week of May.
The target is sweet gas in the Cardium and Viking
formations. Assuming success at 10-29, an additional five
wells are planned to delineate the Viking structure. Maxx
has a 100-per-cent interest in the drilling operations at
10-29 with land interests varying from 55 to 100 per cent
in 44,800 gross undeveloped acres.
At Cow Lake, the company acquired an additional 25-per-cent
working interest along with 280 boe/d in the company's core
production area. The company is licensing the location 14-
10-37-8W5M for a Mississippian test that is scheduled to
spud in June. Maxx holds a 75 per cent working interest in
existing production and undeveloped lands. Current
production is at 8 mmcf/d (6 mmcf/d net) and 365 bbls/d of
natural gas liquids (275 bbls/d net).
At Berland River, 4-15-59-24W5M was completed in the
Wabamun formation. Initial test rates immediately after
acid stimulation were 3 mmcf/d declining rapidly to 1.5
mmcf/d. The Wabamun zone in the existing wellbore has been
suspended, as flow rates are uneconomic. Currently the
company is preparing a re-entry program to side-track the
wellbore with the intention of encountering superior
reservoir quality and significantly enhanced flow rates.
This operation is planned to commence in the second half of
2000.
Additional wells are scheduled to be drilled at Carrot
Creek, Willesden Green and Fahler in the second half of the
year.
In heavy oil, the company drilled 18 wells and cased 17
wells in phase one of its planned 62 well program for 2000.
Subsequent drilling phases are scheduled to commence in
May, in order to capture existing commodity prices. First
quarter drilling added reserves at $3.80 per boe on a
proved basis as determined by internal engineering
estimates. Current heavy oil production stands at 4,600
bbls/d. Maxx has a 100-per-cent working interest in its
heavy oil operations.
Heavy oil operating costs averaged $6.62 per barrel, which
represents a 38 per cent increase over the same period in
1999. This increase in heavy oil production costs is due
to the higher initial start-up costs of new wells drilled
in the fourth quarter of 1999 and the first quarter of
2000, as well as increased well workovers performed in the
current high commodity price environment. The first
quarter heavy oil operating costs includes a non-recurring
cost of 54 cents per barrel, consisting of prior costs
from 1999 and ecology pit clean up charges. In addition,
the large increase in heavy oil production to 3,676 bpd as
compared with 1,380 bpd in the same period in 1999, forced
the company to process a portion the heavy oil production
through third party facilities. This increased production
costs by 27 cents per barrel versus processing through the
companys owned facility at Wildmere.
In order to reduce heavy oil field operating costs, the
company is currently evaluating several facility options
which will eliminate the need for third party processing.
However, workover costs, which are fully captured in its
operating cost values, will continue to maintain the
operating costs at higher levels than the lower 1998 and
1999 values, as the current price environment make
workovers of low producers and shut-in wells very
economic. For the balance of the year, the company will
see all-in heavy oil operating costs averaging less than
$6.00 per boe.
Outlook for the year 2000
Looking forward, the company expects to set record
annualized production and cash flow on a per share basis
during 2000. In short, it will be Maxx's best year ever.
The industry is currently enjoying commodity prices that
are compelling at every economic level; this bodes well for
the company delivering record performance in 2000.
The company shall continue to employ a focused synergistic
strategy, combining purchases and acquisitions with
exploration and development. Capital spending will be
focused on natural gas and natural gas liquids in west
central Alberta along with heavy oil development and
exploitation in the Lloydminster area. Currently the
company has a significant inventory of heavy oil
exploitation and development projects coupled with
development gas opportunities at Cow Lake and Willesden
Green. High impact natural gas exploration at Burnt Timber and Berland River will position the company for future
development given success. It is these projects that
provide a relatively low risk development platform in 2000
and given exploration success provide superior exploration
upside through 2000 and into 2001.
Given current production of 8,500 boe/d and the company's
successful first quarter drilling program, it is on track
to meet its previously stated 2000 targets of 8,800 boe/d
average production and $2.10 cashflow per share. These
targets represent a 36 per cent production increase and a
54 per cent cashflow per share increase over 1999.
The company remains positive on industry fundamentals and
are well positioned to grow shareholder value through a
focused program of exploration, development, acquisitions
and exploitation.
CONSOLIDATED STATEMENT OF OPERATIONS
(for the three months ended March 31)
(in thousands of dollars)
Revenue
Production $ 18,692 $ 10,477
Less:
Crown
royalties 3,868 1,151
Other
royalties 668 477
-------- --------
14,151 8,849
-------- --------
Alberta
royalty tax
credit 144 376
-------- --------
14,300 9,225
-------- --------
Expenses
Production 4,264 2,946
General and
administrative 694 789
Interest, net 956 764
Depletion
and
depreciation 4,876 3,961
-------- --------
10,790 8,460
-------- --------
Income before
provision for
income taxes 3,510 765
-------- --------
Income taxes
Current
corporation
taxes 214 190
Deferred 1,660 97
-------- --------
1,874 287
-------- --------
Net income
(loss) $ 1,636 $ 478
======== ========
Earnings
(loss)
per share $0.10 $0.03
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