Annual Report / Olympia Energy
Olympia Energy Inc. Announces Cash Flow and Earnings for the Year Ended
December 31, 2001
CALGARY, Alberta--(BUSINESS WIRE)--April 18, 2002--Olympia Energy Inc. is
pleased to announce the Company's results and supplementary data for the
year and quarter ended December 31, 2001.
2001 Highlights Include:
· The increase of proven reserves from 8.4 million barrels of oil
equivalent per day (BOE) at 6:1 to 11.6 million BOE after producing 1.4
million BOE during the year
· The increase of established reserves from 10.45 million BOE to 14.17
million BOE
· The increase of average production from an average of 3,856 BOE/d in
2000 to 3,885 BOE/d in 2001 (6:1)
· The increase in net undeveloped acreage from 51,000 acres to 82,000
acres
· The purchase of 2,951,001 shares pursuant to Olympia's Normal Course
Issuer Bids and option buybacks at a cost of $2.36 per share
· The acquisition of Bridgetown Energy Corporation which added low risk
development opportunities and production to Olympia's portfolio
· The raising of $5,500,170 by way of a flow through share offering at
prices ranging from $2.80 to $2.90 per share to finance the 2002
exploratory program
Three Months Ended Year Ended Year Ended
December 31, December 31,
($ thousands,
except per share amounts) 2001 2000 2001 2000
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Summary
Revenue 4,221 16,046 30,495 38,209
Cash flow per share .06 .40 .68 .93
Net earnings per share (.01) .18 .26 .46
Capital expenditures 5,855 7,216 20,929 35,107
Corporate acquisitions 16,462 1,359
Shares outstanding - Basic 37,406,311 37,423,460
Shares outstanding - Weighted average 36,691,867 37,427,839
Shares outstanding - Fully Diluted 38,139,715 38,739,799
Production
Natural gas mcf/day 18,000 19,800 17,106 17,610
Natural gas liquids b/d 529 601 537 550
Oil barrels/day 647 483 496 371
Total barrels equivalent 6:1 4,180 4,384 3,885 3,856
Total barrels equiv. 10:1 2,979 3,064 2,744 2,682
Prices
Sales price natural gas 3.41 9.13 5.59 5.85
Sales price natural gas liq. 19.19 42.98 30.02 35.92
Sales price oil 21.69 44.97 32.92 43.56
Net Back
Total sales 7,874 21,002 46,768 50,878
Operating costs 2,160 1,600 7,330 4,757
Royalties 1,567 3,357 9,018 7,912
-------------------------------------
Field Net back 4,147 16,045 30,420 38,209
General & Administrative 754 487 2,957 1,968
Interest 410 414 1,424 1,230
-------------------------------------
Net back 2,983 15,144 26,039 35,011
-------------------------------------
Balance Sheets
Current assets 11,020 13,598
Other 214 318
Property & Equipment 104,719 59,837
--------------------
Total Assets 115,953 73,753
--------------------
Current liabilities 11,576 10,896
Bank debt 35,952 18,410
Other deferred 30,858 15,276
Shareholders' equity 37,567 29,171
--------------------
Total liabilities & Equity 115,953 73,753
--------------------
Cash Flows
Net earnings (288) 6,837 9,629 17,103
Depletion 3,852 2,573 11,725 7,772
Future Tax (1,168) 5,634 3,760 10,034
Other (75) 21 (75) 21
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Total Cash Flow 2,321 15,065 25,039 34,930
--------------------------------------
Capital expenditures (5,855) (8,645) (37,198) (36,465)
Issue of shares 5,142 229 5,737 605
Shares repurchased (917) (449) (6,970) (2,114)
Debenture repaid - - - (3,000)
Increase (repayment)
- bank loans (1,187) (5,890) 11,019 12,570
Change non-cash working cap. 323 (310) 2,456 (7,526)
--------------------------------------
Change in cash balance (173) - 83 (1,000)
Sales
The high commodity prices enjoyed during the last quarter of 2000 and the
first quarter of 2001 proved not to be sustainable. The recession that gripped
North America and warmer than anticipated temperatures took its toll on the
demand for oil and gas. Increasing product inventories further exacerbated the
situation which then lead to further price erosion.
Throughout 2001 Olympia managed to replace its production declines through the
bit and through the successful acquisition of Bridgetown Energy Corporation in
the third quarter of 2001.
Unfortunately, falling market prices resulted in lower dollar sales volumes.
The following table reconciles revenue between 2000 and 2001:
2001
$000's
--------
2000 Production Revenue 50,878
Decrease in natural gas volumes (1,176)
Decrease in natural gas price (1,625)
Increase in oil volumes 1,551
Decrease in oil price (2,860)
--------
46,768
--------
Royalties
Royalty rates, before Alberta Royalty Tax Credits (ARTC) increased from 17% of
sales in 2000 to 20% of sales in 2001. Royalties were $6.71 per BOE at 6:1 in
2001. Royalties were $5.97 per BOE at 6:1 in 2000.
Olympia was eligible for the maximum Crown royalty shelter amount of
$2,000,000, which limited its entitlement to $500,000 in 2001 and $ 517,000 in
2000.
The royalty rate increase primarily related to higher references prices
charged by the provincial government in 2001 than in 2000. In addition,
proportionately larger volumes of Wildcat Hills gas were produced in the first
quarter of 2001 when reference prices were highest.
Production Expenses
Production costs, particularly electrical power needed to power the Company's
compression facilities, increased significantly through the first half of the
year. Other operation costs increased in concert with industry trends.
The prices of such inputs have now fallen but the price increases left their
mark on the annual figures in spite of the Company's best efforts to control
them.
Field Netbacks
Field netbacks for the 12 months ended December 31, 2001 averaged $21.46/BOE
at 6:1 ($30.37 at 10:1) versus $27.07/BOE ($38.91 at 10:1) for the previous
year. This decrease was due primarily to lower commodity prices and higher per
unit operating costs.
In $ per BOE
2001 2000
6:1 10:1 6:1 10:1
Sales 32.99 46.69 36.04 51.82
Royalties 6.36 9.00 5.60 8.06
Production Expenses 5.17 7.32 3.37 4.85
-----------------------------------
Field Net Back 21.46 30.37 27.07 38.91
-----------------------------------
General and Administrative Expenses
General and administrative expenses increased 50% in 2001 to $2,956,765 from
$1,967,905 in 2000. On a per unit basis, general and administrative expenses
increased 50%, from $1.39 per BOE at 6:1 ($2.00 at 10:1) in 2000 to $2.09 per
BOE at 6:1 ($2.95 at 10:1) in 2001.
This increase reflects an increase in staff level as well as increases in
other general and administrative expenses due to market conditions in 2001.
Interest on Long Term Debt
Interest expense increased from $1,229,995 in 2000 to $1,423,509 in 2001. The
acquisition of Bridgetown Energy Corporation was made with the Company's line
of credit and this caused the average debt level in 2001 to be higher than in
2000. Lower interest rates in 2001 helped mitigate the effect of this.
Depletion and Depreciation
2001 2000
($000's) Per Per ($000's) Per Per
Boe Boe Boe Boe
6:1 10:1 6:1 10:1
----------------------------------------
Depletion 11,375 8.03 11.36 7,450 5.27 7.58
Depreciation 88 .06 .09 81 .06 .08
Provision for abandonment 262 .18 .26 241 .17 .25
----------------------------------------
11,725 8.27 11.71 7,772 5.50 7.91
----------------------------------------
Olympia's depletion rate increased from $5.27/boe from the year ended December
31, 2000 to $8.03/boe for the year ended December 31, 2001.
The increase in depletion rate was largely due to the acquisition of
Bridgetown Energy Corporation.
Timing differences between capital spending, reserve recognition and
production will cause fluctuations in depletion from year to year.
Income Taxes
Income taxes decreased from 37% of net income before tax to 34% of net income
before tax. This decrease was mainly attributable to the Alberta Rate
Reduction in 2001.
The Company was unable to shelter all of its income with its tax pools in 2001
with the result that $879,000 will be payable currently. A further $121,000
was accrued for Large Corporations Tax. Large Corporations Tax is dependent on
company size and consequently increased as the Company expanded.
The Company has the following tax pools available to it at December 31, 2001:
$000's
------
Cumulative Canadian Oil and Gas Property Expenses 11,850
Cumulative Canadian Development Expenses 6,221
Undepreciated Capital Cost 14,805
Other 86
------
32,962
------
CAPITAL EXPENDITURES
Capital expenditures, aside from the purchase of Bridgetown Energy Corporation
comprised the following:
2001 2000
$ $
000's 000's
----------------
Oil and gas property acquisitions 2,650 5,944
Drilling and completions 10,927 20,651
Geological and geophysical 2,608 1,701
Facilities and pipelines 4,649 6,740
Other 95 71
----------------
20,929 35,107
----------------
Capital expenditures were financed by:
Cash flow from operations 17,453 32,354
Issuance of share capital, net 1,737 605
Net change in working capital 1,739 2,148
----------------
20,929 35,107
----------------
Reserves
Gilbert Lausten Jung Associates Ltd. independently evaluated Olympia's
reserves of oil, natural gas liquids and natural gas effective January 1,
2002. The following tables summarize the results of this report:
Reconciliation of Changes in Reserves
------------------------------------------------------------------
Natural Gas (bcf) Oil and NGL's (mstb)
------------------------------------------------------------------
Proven Probable Total Proven Probable Total
Balance,
December 31, 2000 39.7 17.35 57.05 1780.1 1220.3 3000.4
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Acquisitions 5 2.6 7.6 1352 588.5 1940.5
Additions & Revisions 9.9 -1.2 7.6 708.1 553.4 1261.5
Production (6.23) - (6.23) (376.5) - (376.5)
Changes 8.67 1.4 8.97 1683.6 1141.9 2825.5
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Balance 12/31/2001 48.37 18.75 66.02 3463.7 2362.2 5825.9
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Net to Appraised Interest
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Gas Oil & Undisc. PV10 PV15
(bcf) NGL's k$ k$ k$
(mstb)
------------------------------------------------------------------
Proven Producing 34.4 1900 132,300 78,200 66,400
Proven Non-Producing 13.97 1563.7 40,300 17,400 12,000
Total Proven 48.37 3463.7 172,600 95,600 78,400
Probable 17.65 2362.3 91,400 30,400 21,200
Total Proven + Prob. 66.02 5826 264,000 126,000 99,600
Less 50% Probable (8.8)(1181.15) (45,700) (15,200) (10,600)
Total Proven +50% Prob 57.2 4644.85 218,300 110,800 89,000
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Drilling
The following table summarizes Olympia's drilling activity in 2001:
2001 2000
Wells Drilled Gross Net Gross Net
-------------------------------------------------------
Natural Gas 46 24.60 10 5.02
Oil 1 0.25 1 0.67
Dry 6 2.30 8 5.67
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Total 53 27.15 19 11.36
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Exploration 9 4.80 12 7.73
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Development 44 22.35 7 3.63
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Land
The following summarizes Olympia's net undeveloped land position at year-end:
Area 2001 2000
------------------------------------
Atlee-Buffalo 23,068 -
Bottrel 1,486 1,463
Caroline West 9,664 9,043
Fallen Timber 2,880 2,880
Jumping Pound 3,448 3,485
Little Horse 9,755 9,964
Pocketknife 4,104 3,374
Wildcat Hills 10,730 5,608
Winchell Coulee 3,584 3,584
Other 13,581 11,142
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82,300 50,543
------------------------------------
In addition, Olympia had in excess of 140,000 acres of industry-held lands
tied-up under farm-in option terms as of December 31, 2001 and have since
earned an interest in approximately 30,000 acres by drilling earning wells
pursuant to several of these deals during the first quarter of 2002.
Efficiency
3 Year
Average 2001 2000
------------------------
Net Reserve Additions (6:1) -
Exploration
Proven 2,749 2,358 1,901
Established 3,036 2,535 2,001
Proven plus Probable 3,323 2,711 2,102
Net Reserve Additions (6:1) -
Acquisitions
Proven 919 2,185 571
Established 1,096 2,696 592
Proven plus Probable 1,273 3,207 613
Finding & On Stream Costs /
BOE - Exploration
Proven 8.93 8.87 19.21
Established 8.09 8.25 18.25
Proven plus Probable 7.39 7.72 17.38
Finding & On Stream Costs /
BOE - Acquisitions
Proven 13.48 16.23 18.47
Established 11.30 13.15 17.54
Proven plus Probable 9.73 11.05 16.70
Corporate Net Back / BOE 18.51 21.46 27.07
Recycle Ratio - Overall
Proven 1.83 1.73 1.83
Established 2.09 1.99 1.92
Proven plus Probable 2.30 2.25 2.01
Olympia's finding and on-stream costs have fluctuated significantly over the
past three years. These fluctuations relate mainly to the development cycle in
the Company's project areas.
Normal Course Issuer Bids
The Company purchased a total of 2,951,001 of its common shares through option
buybacks and on the open market in 2001. The total cost of such purchases was
$6,969,880 or $2.36 per share.
Reader's Advisory:
All numbers stated in barrels of oil equivalent have been converted on the
basis of 6 mcf equals 1 boe unless otherwise stated. |
