EARNINGS / Carmanah Reports 9-Month Results, Updates Activities
TSE SYMBOL: CKM
NOVEMBER 25, 1997
CALGARY, ALBERTA--
HIGHLIGHTS
- Underwritten equity issue raises $49.5 million
- Onado purchase completed
- Natuna farmout arranged
- Camar-6 tests 3,700 BOPD
- Rigs arranged for 1998 drilling
- 1998 Capital Budget $84 million
- McDaniel Report confirms significant reserve growth at low cost
- Debt financing to provide development capital being arranged
Carmanah was involved in a number of high-impact developments
during the third quarter of 1997.
In July, Carmanah completed the successful placement of 9.9
million common shares from treasury, underwritten by a syndicate
of Canadian investment dealers. The issue raised gross proceeds
of $49.5 million and broadened investor participation in the
Company. There are now 35 million common shares outstanding.
Subsequently, a significant portion of the proceeds were used to
complete the purchase of a 26 percent working interest in the
Onado Area, Venezuela. The Onado Area contains the Onado Field
and three additional under-developed, seismically-defined
structures with substantial potential for additional reserve
development. Carmanah anticipates commencing field operations at
Onado in early-1998, upon approval of the Plan of Development
around year-end.
At Natuna, Indonesia a major international oil company exercised
its option to farm in on the Northeast Natuna PSC, a 736,000-acre
block offshore and north of Esso's D-Alpha gas field. Under the
terms of the farmout, Carmanah recovers past costs and is carried
through US$25 million of expenditures, while retaining the largest
interest in the PSC. Drilling is scheduled for the late spring,
1998.
During the quarter, Carmanah (84 percent) drilled Camar-6 within
the Camar Field in the Java Sea, offshore Indonesia. The well
encountered thick pay and tested 3,700 BOPD without water from the
Kujung II LL-III carbonates and LL-IV underlying sandstones.
Gravity of the crude ranged between 40 degree API to 43 degree API
and the well will be placed onstream in early-1998. At least two
follow-up locations in proximity to Camar-6 will be drilled next
year. Camar-6 is the best well yet drilled in the Camar Field and
the new locations are expected to yield similar or better results.
During the reporting period, various agreements were entered into
with two drilling contractors to provide rigs for planned activity
at Camar, Langsa and Natuna during the first half of 1998. At
Camar, the Pennsylvania Pride jack-up rig has been secured for a
firm period of four months (with up to six additional months under
option) to complete an aggressive drilling, tie-back and workover
program. At Langsa, a jack-up rig will be used for up to 80 days
to complete three wells which will be tied-in to a storage tanker
during the third quarter, 1998. At Natuna, the Sedco 601
semi-submersible has been secured to drill one firm and a
contingent second exploratory well commencing in May, 1998.
Today, Carmanah's Board of Directors approved an $84 million
capital budget for 1998, which includes planned activities at
Camar, Langsa and Onado, Venezuela during the year. Included in
plans at Camar are drilling, completion and tie-back of five
wells, workovers and facilities installation, and construction of
a pipeline and installation of compression to deliver Camar gas to
onshore Java markets. At Langsa, three wells will be subsea
completed and tied-in to a storage tanker. At Onado,
reactivations, workovers and new drilling is scheduled. Also, at
no cost, Carmanah will participate in and operate a multi-million
dollar exploratory program at Natuna.
In a report with an effective date of September 1, 1997, McDaniel
& Associates Consultants Limited, independent consultants of
Calgary, estimated Carmanah's remaining reserves to be 29.1
million barrels of proved and probable crude oil and 29.2 Bcf of
natural gas. McDaniel estimated these reserves would generate
$428 million of future revenue with a 12 percent present worth of
$229 million ($174 million risking probable reserves at 50
percent). This translates into approximately $5.00 per common
share, without any value being assigned to Carmanah's Natuna
interests and other exploratory potential at Bawean/Camar, Langsa
and Onado. During 1997, Carmanah added new reserves at a cost of
approximately $4.00 per proven equivalent barrel, well below
industry averages.
Carmanah remains debt-free through September 30, 1997. To
supplement forecast cash flow in 1998, the Company is currently
engaged in negotiations to secure additional development capital
to conduct planned operations at Camar, Langsa and Onado. These
discussions are well advanced and commitments are expected to be
in place before year-end.
Carmanah's third quarter and nine-month results continue to
reflect normal declines at Camar until new wells can be tied-in in
early-1998. This has been constrained by rig availability during
1997, which will be remedied in early-1998 when five wells with
significant productive capacity will be placed onstream at Camar,
along with four new wells at Langsa.
Next year is expected to produce major improvements in revenue,
cash flow and earnings with average daily production targeted at
9,400 BOPD for the full year, as the Company realizes productive
potential at Camar, Langsa and startup levels at Onado, Venezuela.
Additionally, drilling at Natuna exposes Carmanah to a
world-class prospect at no financial cost.
/T/
Summary Financial Results
(Period ended September 30, 1997)
--------------------------------------------------------------
Nine months Three months
1997 1996 1997 1996
------- ------- ------- -------
(unaudited) (unaudited)
Financial Results
Revenue, $MM 10.2 20.5 3.5 6.6
Cash flow, $MM 2.5 11.5 .9 3.9
Per common share, $ .09 .54 .03 .18
Net Income (Loss), $MM (.3) 8.4 (.4) 3.5
Per common share, $ (.01) .39 (.01) .16
Weighted average shares
outstanding, MM 27.3 21.3 27.3 21.3
Capital expenditures, $MM 58.4 9.0 45.2 4.4
Working capital
(deficiency), $MM (.1) 11.6 (.1) 11.6
Operating Results, Camar
Production, BOPD 1,399 2,565 1,420 2,485
Sales price, $/Bbl 26.13 27.27 25.71 28.14
/T/ |
