TUSK Exceeds Third Quarter Targets-Increases Gas
Production
biz.yahoo.com
"CALGARY, ALBERTA--Third quarter results for TUSK Energy Inc. (TSE:TKE - news) exceeded expectations. Production averaged 668 boepd,
exceeding the target of 650 boepd, representing a 23% increase over the levels of the second quarter. Cash flow of $935,080 ($3.74 million
annualized), which exceeded the target of $3.6 million, was 40% higher than the previous quarter. The commodity mix of TUSK continued to
diversify. Oil production averaged 480 bopd while gas production, at 1877 Mcfd, was up 28% from second quarter levels to represent 22% of
total volumes.
This momentum has continued into the fourth quarter with average October production of 750 boepd yielding run-rate annualized cash flow of
approximately $4.7 million ($0.32 per share).
The first nine months of the fiscal year were highlighted by three significant events: (i) the acquisition of Auburn Energy Ltd. which included
joint venture arrangments with a number of First Nations; (ii) key personnel additions which expanded the Company's internal exploration,
evaluation and prospect generating capabilities; and, (iii) an acceleration of drilling activities.
Through joint venture arrangements with the Saddle Lake, Whitefish Lake and Alexis First Nations, TUSK has the opportunity to explore on
more than 105 square miles. Over 80 of these overlay multi-zone potential for shallow gas (less than 750 metres) with excellent pipeline
infrastructure. Twenty five sections have potential for gas and/or oil in moderate depth horizons (1,500 metres).
The management team at TUSK was strengthened in the second quarter with the addition of Ian Brown, P. Geol., as Vice President, Exploration
and Wayne Jessee, P. Eng., as Vice President, Corporate Development. Ian has expanded the exploration group, allowing for more technical
focus on the Company's key areas of Meekwap, Strachan, First Nations Lands and Silverdale and an aggressive prospect generation and
drilling effort.
The focus during the near term will be on adding production and cash flow through drilling. Since June 30th, TUSK has been involved in 8
wells, resulting in two gas wells (0.73 net), two oilwells (1.00 net), a confidential well (0.33 net), and three dry holes (0.01 net). During the fourth
quarter 11 wells, 7 gas targets and 4 oil targets, are expected to be drilled on TUSK properties.
During the first nine months of 2000, cash flow was $2,347,488, a 40% increase over the prior year. Cash flow per share for the first three
quarters was $0.17, up 12% from the $0.15 per share recorded during the first nine months of the prior year. Cash flow growth was sufficient to
negate the impact of issuing additional shares during the second half of 1999 and during the current fiscal year as a part of the consideration for
the acquisition of Auburn in the second quarter.
In keeping with industry trends, TUSK will report boe production using both a 10:1 and a 6:1 ratio for the conversion of natural gas volumes to
barrels of oil equivalent (boe) as of the end of this fiscal year. Assuming these trends continue, TUSK would report boe production using only
the 6:1 ratio during the 2001 fiscal year. At 6:1, production averaged 792 boepd during the third quarter.
10:1
Net Income Per Share Cash Flow Per Share boepd
---------- --------- --------- --------- -----
Third Quarter
2000 $244,680 $0.01 $ 935,080 $0.07 668
Second Quarter
2000 $155,456 $0.01 $ 667,256 $0.04 540
First Nine Months
2000 $621,388 $0.04 $2,347,488 $0.17 593
1999 $493,869 $0.05 $1,644,169 $0.15 675
Net debt as of September 30 was $7,805,725, approximately 1.7 times October's annualized cash flow. Further improvement in the debt to cash
flow ratio should occur over time as the pace of drilling accelerates."
Contact:
TUSK Energy Inc.
Norman W. Holton
President
(403) 264-8875
(403) 263-4247
E-mail: tusk@tusk-energy.com
Website: www.tusk-energy.com |
