Richard/Richland Petroleum Part III
First Quarter Highlights
The acquisition of Signal Energy, effective 4/1/96, was the first step in efforts to diversify company's asset base in terms of product mix and geography. Signal's assets are concentrated in three properties in Alberta and 75% of 600 boe/d production is natural gas. The kicker is the 52,000 acres of undeveloped acreage that came with the deal. I was a Signal shareholder at the time of acquisition and am in firm belief that Richland made a steal with this deal. Richland believes they can increase production minimum of 25% over 9 to 12 month period through infill drilling, tie-ins and workovers. The acreage is complimentary to that of Richland acreage and more than doubled their presence in Alberta.
Eighteen non-operated developement wells (20% Interest) were drilled in the Wapella field in the first quarter and all were successful. Of this total, thirteen wells have been tied in with 230 bbl's/d net to Richland. The balance of five wells will be tied in after facilities are upgraded. The operator may be drilling another eight wells later in 1996.
Three wells were also drilled on 100% company acreage in the Wapella field. Two of these wells have been put into production, adding 130 bbl's/d of production. Two more wells may be drilled later in the year.
Three wells were also drilled at Edenvale. Two of the wells have been put into prduction, contributing 300 bbl's/d. Third well is awaiting completion.
These 1st quarter developement wells mentioned above totals 24. There were 3 other developement wells drilled successfully, but the company didn't mention these in text.
An exploritory well was drilled at Dalesboro and was subsequently abandoned.
Successful developement drilling in the first quarter allowed Richland to exit the quarter with production at 3450 bbl's/d. The average production amounted to 3235 bbl's/d vs 3240 bbl's/d for the 1st Qtr in 1994. Make note that the next quarter will include the 600 boe/d as a result of the Signal acquisition.
Richland has invested significant capital over the past 24 months on facilities. Benefits are now being realized in terms of lower operating costs. The Signal acquisition, success of the first qtr developement drilling program and planned drilling over the next two quarters, will help the company re-establish the momentum lost in the later half of 1995 and add shareholder value in 1996.
The company realized lower revenue brought about from lower wellhead prices due to higher differentials, stronger Canadian dollar and a loss brought about by the 1996 hedging program.
These factors, along with more shares outstanding, had a negative impact on cash flow and earnings per share. For detailed data, go to isdnwire.com and search for 1st qtr report. |
