HGY-tse Hornet Energy
the news release was just issued today on www.cdn-news.com
OUTLOOK
Management anticipates flat oil and robust gas prices in the short
term, but believes prices for both commodities will decline from
current levels once the slowing world-wide economy has an impact
on oil demand and the slowing North American economy has an impact
on gas demand. The timing of price degradation is questionable
and, as such, the Company has protected approximately 50% of
anticipated 2001 cash flow by buying put options on 60% of our oil
and 50% of our gas production for 2001 at floor prices consistent
with our budgeted commodity prices. This minimizes the downside
to the Company, but does not impact the upside of higher than
planned commodity prices.
Recognizing the risks of carrying too much debt in a high
commodity price scenario and the high cost of equity in the
current public market environment, the Company has balanced the
2001 budget of $10,000,000 with projected cash flows which also
ensures the debt remains close to one times estimated cash flow.
The budget is based on a gas price of $5.00 Cdn. per mcf and an
oil price of $35.00 Cdn. per bbl and will be largely spent in our
three operational areas of Wilson Creek/Gilby, Crossfield and
Brant. Activity at Wilson Creek/Gilby will focus on drilling to
follow-up on a discovery made in late 2000 as well as other
identified opportunities. At Brant, we plan to spend the majority
of our budget funds on drilling existing lands to help fill our
newly constructed pipeline and, at Crossfield, we will be drilling
to increase production and optimize the facility operation.
With the planned budget, we will grow reserves, net asset value,
production, cash flow and earnings per fully diluted share by 7%,
7%, 45%, 48% and 42% respectively.
The Company will continue to rationalize low working interest,
non-operated and high operating cost properties, preferring to
develop opportunities where we can operate and maintain a high
working interest. The Company is also pursuing corporate
opportunities that will enhance and potentially recognize
shareholder value.
Hornet Energy Ltd. is a Canadian owned oil and gas exploration and
production company based in Calgary. The Company's common shares
are listed on The Toronto Stock Exchange under the symbol "HGY". |
