KERM YERMAN'S POSTING USING FIXED FONT
NETSCAPE COMMUNICATOR STANDARD VERSION 4.04
NEWS RELEASE TRANSMITTED BY CANADIAN CORPORATE NEWS
FOR: NORCEN ENERGY RESOURCES LIMITED
TSE, ME SYMBOL: NCN
FEBRUARY 3, 1998
Part 1 of 2 - Norcen Closes 1997 with Record Cash Flow,
Earnings and Capital Program
CALGARY, ALBERTA--
HIGHLIGHTS
Year-end Results:
- Earnings of $140 million achieve new Norcen record
- Cash flow of $584 million for the 12 months marks 19 percent
increase over 1996
- Production up 17 percent to 142 mboe/d for the year
- Oil and gas capital spending increased 60 percent over 1996 to
$868 million in 1997 - Norcen's largest program in history
- Proved reserves of 136 mmboe added at finding and development
costs of $6.38 per boe
- 262 percent reserve replacement through exploration and
development drilling
Fourth Quarter:
- Cash flow 41 percent above 1996 levels
- Earnings stable over same period in 1996 despite weaker oil and
liquids prices
- Production increased 32 percent to average 160 mboe/d
- Capital expenditures up 64 percent over fourth quarter 1996
- Boomvang deep water discovery in Gulf of Mexico commences
delineation phase
/T/
three months ended twelve months ended
December 31 December 31
1997 1996 1997 1996
--------------------------------------------------------------
FINANCIAL (millions of dollars
except per share amounts)
Sales and other Revenues $ 263 $ 378 $ 1,222 $ 1,307
Net Earnings $ 36 $ 35 $ 140 $ 92
Per common share (1) basic
and fully diluted $ 0.19 $ 0.19 $ 0.75 $ 0.53
Cash Flow $ 180 $ 127 $ 584 $ 489
Per common share (1) basic
and fully diluted $ 0.95 $ 0.67 $ 3.12 $ 2.82
Capital Expenditures $ 301 $ 184 $ 870 $ 561
Long-term Debt
(net of cash and accrued
sales proceeds) $ 1,185 $ 420
Common Shareholders' Equity $ 1,581 $ 1,496
Common Shares Outstanding (000's) (1) 187,028 186,600
OPERATING
Production
Oil (mb/d) 99.1 65.7 84.0 64.0
Natural gas liquids
(mb/d) 8.2 5.9 6.8 6.3
Natural gas (mmcf/d) 529 497 516 502
Average Prices Received
Oil (per bbl) $17.52 $20.76 $18.45 $20.06
Natural gas liquids
(per bbl) $18.64 $19.55 $19.84 $17.20
Natural gas (per mcf) $ 2.49 $ 2.08 $ 2.23 $ 1.93
Wells Drilled
Gross 220 237 698 669
Net 160 148 526 445
Success ratio (percent) 83 89 85 85
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/T/
(1) 1996 common shares outstanding and per share information have
been restated to reflect the stock dividend declared in 1997,
which effectively split the shares two for one.
FOURTH QUARTER RESULTS:
Norcen's fourth quarter results reflect a year of success and
growth for Norcen. The Guatemala acquisition earlier in the year
had an immediate impact, contributing to production, cash flow and
earnings growth. Improvements in the financial and operating
results over the fourth quarter of 1996 reflect higher liquids
production and increased gas prices as well as a continued
commitment to efficient operations.
FINANCIAL:
Net earnings for the fourth quarter were $36 million, up from $35
million for the same period last year. Earnings of $140 million
for the 12 months represent a 52 percent increase over 1996
earnings of $92 million, and mark the achievement of a new Norcen
earnings record. Cash flow for the quarter was $180 million, up
42 percent from the same period one year ago. Cash flow for the
year was $584 million, up 19 percent, from $489 million in 1996.
Cash flow from oil and gas operations was $177 million for the
fourth quarter, an increase of 50 percent over the same period in
1996. Full year oil and gas cash flow was $563 million, up 26
percent over last year. Cash flow performance was boosted by
higher earnings, increased production and, lower cash taxes
incurred as a result of the increased capital program. Prices
received for oil in the quarter, and for the year, were lower than
in the same periods last year. Relative to 1996, natural gas
prices were stronger for both the fourth quarter and year over
year.
A net gain of $34 million after tax from other items was recorded
in 1997. This resulted from a $84 million after tax gain on the
sale of a 40 percent interest in Superior Propane, which was
partially offset by a $50 million income tax charge related to
various income tax exposures. Both of these items were recorded
in the third quarter of 1997. 1996 results include a net gain,
after tax, of $3 million which was recorded in the fourth quarter
of 1996.
OPERATING EFFICIENCY:
Oil and gas operating earnings were $33 million in the fourth
quarter, up $3 million over the same period last year. For the
year, oil and gas earnings were $97 million, a 28 percent increase
over 1996. Operating costs were $4.13 per boe in 1997, compared
to $3.70 in 1996. Operating costs remain competitive given the
heated market in 1997 for oil and gas services. Norcen continued
its steady track record of G&A cost improvement, achieving G&A
costs of $0.76 per boe in 1997.
Production for the quarter was 160 mboe/d, up significantly from
the same period last year and representing an 8 percent increase
over the third quarter of 1997. Overall, production for the year
was 142 mboe/d, up 17 percent from 121 mboe/d for the prior year.
The bulk of this growth resulted from increases in oil and liquids
production which grew from 70 mboe/d in 1996 to 90 mboe/d in 1997.
Gas production was up 3 percent for the year from 502 mmcf/d in
1996, to 516 mmcf/d in 1997. Production growth has been achieved
through production increases in Norcen's Guatemala operations,
good well performance in the fourth quarter in the Gulf of Mexico
and steady exploration and development growth in the Western
Canada core areas.
CAPITAL PROGRAM:
1997 was a record setting year for Norcen's capital program. Oil
and gas capital expenditures, excluding acquisitions and
divestitures, were $301 million in the fourth quarter of 1997, 75
percent higher than the same period last year. For the year, a 60
percent increase in capital spending was achieved as 1997
expenditures of $868 million were well above the $542 million
recorded in 1996.
Drilling was again very active in 1997. A total of 698 gross
wells were drilled, ahead of last year's record setting 669 wells.
Drilling success also remained consistent. The 85 percent
drilling success ratio that was achieved in 1996 was maintained in
1997. Proved reserves of 86 mmbbls of oil and gas liquids and 502
bcf of gas were added through the exploration and development
drill bit. Combined, this represents the achievement of a 262
percent proven reserve replacement ratio for the year. This was
accomplished at a very competitive proven finding and development
cost of $6.38 per boe, consistent with our prior year experience.
Reserve additions, including acquisitions and dispositions,
totaled 195 mmboe at a proven reserve addition cost of $6.93 per
boe, generating a reserve replacement ratio of 376 percent.
CORPORATE:
On January, 26, 1998, Norcen announced that it had reached an
agreement with Union Pacific Resources Group Inc. (UPR) under
which UPR will make a cash offer of CDN$19.80 per share, amounting
to a total of CDN$3.7 billion, for all of the issued and
outstanding shares of Norcen. This agreement has the unanimous
support of the Boards of Directors of Norcen and UPR. The UPR
Cash Offer and Circular was mailed to Norcen Shareholders on
January 30, 1998, and the Norcen Directors Circular will be mailed
to Norcen Shareholders on February 4, 1998. As a result of this
agreement, Norcen does not intend to declare its customary
quarterly dividend of $0.075 per share.
If you would like to listen to a recording of Norcen's quarterly
investment analyst conference call, dial (416) 626-4100 and enter
786462. The line will be available for review from Wednesday,
February 4 until Friday, February 13. |
