EARNINGS / Ranger Oil Ltd reports 1997 Results
CALGARY, Feb. 24 /CNW/ - Ranger Oil Limited announced today its 1997
Financial and Operating results. Highlights include the following:
- Total proven and probable reserves increased 125 percent, from 174 to
392 million barrels of oil equivalent (BOE)
- Additions to proven and probable conventional oil and gas reserves from
extensions, discoveries and revisions replaced 250 percent of 1997
production
- Oil production increased 32 percent
- ELAN Energy Inc. acquired September 29, 1997
- Shares in issue increased 27 percent broadening the shareholder base
- Substantial additional acreage acquired in West Africa and West of
Shetlands
- Two potentially high impact wells in the Northwest Territories
currently testing
''1997 was a year of building foundations,'' said Ranger President and
Chief Executive Officer, Fred Dyment. ''In North America, the ELAN acquisition
has added a new heavy oil division with a tremendous resource base as well as
tripling light oil production. North Sea reserves have increased 25 percent
and significant production growth will follow later this year. Exciting new
exploration and exploitation opportunities have been added in West Africa and
West of the Shetlands. Together, these achievements position Ranger for
continued growth over the next five years.''
PRODUCTION
Oil production increased 32 percent to 38,403 barrels per day. The
acquisition of ELAN in the fourth quarter contributed 7,632 barrels per day to
annual average production. North Sea oil production increased 12 percent to
26,863 barrels per day with the benefit of a full year's production from the
Ninian area acquisition in October 1996.
Gas production declined slightly from 170 to 165 million cubic feet per
day in 1997. Non-core property sales and normal reservoir declines in Canada
were responsible for the decrease.
FINANCIAL RESULTS
Total revenues were US$351 million compared to US$299 million for 1996.
Oil prices fell 15 percent averaging US$17.43 per barrel, down from US$20.49
in 1996. This reflected lower world prices as well as the addition of a heavy
oil component in the fourth quarter of 1997. Gas prices increased 18 percent,
averaging US$1.70 per thousand cubic feet in 1997. Higher prices in North
America accounted for the increase.
Operating expenses increased 39 percent to US$124 million in 1997. On a
unit-of-production basis costs were US$5.93 per barrel of oil equivalent
compared to US$5.14 in 1996. The increase reflects the greater proportion of
production coming from high cost producing fields in the northern North Sea
and Northeast British Columbia.
Interest charges increased to US$16 million from US$9 million in 1996.
Higher average debt levels associated primarily with the ELAN Acquisition
accounted for the increase.
Funds Generated from Operations before tax were US$195 million, compared
to US$190 million in 1996. Current Income Taxes increased from US$1 million
to US$11 million in 1997. The North Sea accounted for most of the increase,
with taxable revenues in 1996 being sheltered from income tax by deductions
brought forward from previous years. Current North Sea Petroleum Revenue
Taxes fell from US$44 million to US$38 million as a result of lower oil
prices. Funds Generated after tax were US$146 million (US$1.38 per share)
compared to US$144 million (US$1.46 per share) in 1996.
Depletion and depreciation charges increased to US$131 million compared
to US$123 million in 1996. Higher production volumes were responsible for the
increase. On a unit of production basis, oil and gas depletion fell from
US$6.41 to US$5.85 per BOE. During 1997 the Company also wrote-off US$8.8
million of unsuccessful exploration costs primarily in Algeria.
Earnings before tax were US$54 million compared to a loss of US$14
million in 1996. The loss in 1996 reflected a US$71 million write-down in
Angola. Earnings after tax amounted to US$9 million (US$0.09 per share)
compared to a loss of US$56 million (US$0.57 per share) in 1996.
ELAN ACQUISITION
Effective September 29, 1997 Ranger acquired ELAN Energy Inc. The
purchase consideration of US$517 million included 26.7 million new Ranger
shares and US$276 million of additional debt. Proven and probable reserves
acquired amounted to 214 million BOE, of which 179 million BOE represented
heavy oil. At year end proven and probable reserves, primarily at Cold Lake,
were revised downwards by 16 million barrels, mainly due to the decline in
heavy oil prices. Average daily production in the fourth quarter of 1997 from
ELAN amounted to 8,855 barrels of light oil, 21,424 barrels of heavy oil and 9
million cubic feet of gas. Heavy oil operating costs averaged US$4.87 per
barrel. Since the acquisition approximately 2,000 barrels of daily production
has been shut-in in response to declining world oil prices and widening
differentials between heavy and light oil.
Ranger acquired ELAN's heavy oil business on the basis of adding
long-term value for shareholders. Notwithstanding the recent weakness in
commodity prices, the Company remains confident of the long-term future for
heavy oil in Canada.
OIL AND GAS RESERVES
Including the ELAN acquisition, total proven and probable reserve
additions in 1997 amounted to 238 million BOE. The North Sea accounted for 37
million BOE of additions, reflecting new field developments at Kyle and
Columba E, upward revisions for Pierce, Columba B, and Columba D, and the
acquisition of further Anglia field gas reserves. In Angola, 8 million BOE
was added in respect of the Kiame oil field development. Proven and probable
reserves at year-end amounted to 392 million BOE, an increase of 125 percent
from 1996. Based on annualized fourth quarter production volumes, the
Company's proven and probable reserve life index increased to 13.7 years (9.6
years for proven).
Finding, development and net acquisition costs for additions to
proven and probable reserves in 1997 amounted to US$4.25 per BOE for
conventional reserves and US$1.98 per BOE for heavy oil reserves.
CAPITAL EXPENDITURES
Excluding the ELAN acquisition, net capital expenditures in 1997 amounted
to US$128 million. Exploration expenditures of US$93 million included US$42
million in North America, US$16 million in the North Sea and US$35 million for
International, mainly Angola. Development expenditures of US$95 million were
concentrated in the North Sea (US$50 million) and Canada (US$36 million).
Property acquisitions of US$21 million were in the North Sea while property
dispositions of US$78 million were in Canada
North America
Exploration well P-66 was spudded in January 1997 on a large potential
gas prospect in the Fort Liard area of the Northwest Territories. In the Fort
Norman area an exploration well has been drilled at Nota Creek. Both wells
are currently being tested and results are expected shortly. In addition, two
new wells have recently spudded in the Fort Norman area.
In March 1997, the Company was successful bidder on 11 offshore Blocks in
the US Gulf of Mexico. Seismic evaluation has been carried out and the first
exploration well drilled, unsuccessfully. A second well has recently spudded
on West Cameron Block 478.
Disposition proceeds of US$50 million resulted from an alliance between
the Company and Chesapeake Energy Corporation. Under the alliance,
Chesapeake purchased 40 percent of Ranger's interest in the Helmet area of
Northeastern British Columbia, outside of the July Lake pool, and future
operations in the area will be conducted on a 60/40 basis. Other dispositions
included non-core heavy oil properties and the Company's ownership interest in
the proposed Alliance gas pipeline.
North Sea
Significant development activity occurred during the year. The Banff and
Pierce oil fields were moved towards full-scale production in late 1998 and an
additional 20 percent of Kyle was acquired doubling the Company's interest in
this oil field satellite development. Infill drilling progressed at several
fields with an important horizontal sidetrack successfully completed in the
Anglia gas field.
Two unsuccessful exploration wells were drilled in 1997, one an appraisal
of the Selkirk oil discovery and the other a farm-in well on Block 20/10b. A
well is currently drilling on Block 44/17a in the Southern gas basin.
In a mini-round award, Ranger acquired a 17.5 percent interest in Blocks
204/14 and 15 West of the Shetlands. This highly prospective acreage is
adjacent to the Suilven oil discovery announced by BP earlier in 1997.
Drilling of a possible Suilven extension as well as a separate exploration
prospect is planned in 1998.
International
During 1997 approval was received for Ranger's first International
development, the 8 million barrel Kiame oil field in Angola. The field is
owned (100 percent) and operated by the Company. Elsewhere in West Africa,
Ranger acquired a 24 percent interest in and became operator of Block CI-26 in
the C“te d'Ivoire containing the previously relinquished Espoir oil field.
Plans to develop this 100 million BOE field are currently under consideration.
Exploration wells were drilled during the year in Angola (three), Ecuador
and Algeria. All were unsuccessful. Further drilling on Angola Block 4 and
Ecuador Block 19 is planned for later this year or early 1999.
New exploration licenses have been acquired in Angola deepwater (Block
19), the C“te d'Ivoire (Blocks CI-26, CI-101, 102 and 103) and Peru (Block
Z-29). First drilling on each of these substantial tracts is anticipated in
1999. Several giant oil fields have been discovered in the Angolan deepwater
over the past year.
FINANCING
As a result of the ELAN acquisition, total long-term debt, less net
current assets, increased to US$423 million at year-end. This represents a
debt to cash flow ratio of 2.6, based on the annualized fourth quarter cash
flow. The ratio should fall below 2.0 as new production and cash flow comes on
stream in the North Sea and Angola.
During 1997 the Company's previous short-term bank facilities were
replaced with a US$425 million syndicated credit agreement. It is expected
that a portion of this will be refinanced in 1998 with fixed-rate long-term
notes. A prudent financial position is a key corporate objective and the
Company remains committed to maintaining a strong balance sheet.
Issued by: F. J. Dyment
President and Chief Executive Officer
<<
SUMMARY
(millions of US dollars,
except prices and per share amounts)
Three Months Year Ended
Ended December 31, December 31,
1997 1996 1997 1996
------------------------------------------------------------------------
FINANCIAL
Revenues $ 110.9 $ 108.2 $ 351.0 $ 299.0
Funds generated from
operations before tax $ 55.7 $ 70.7 $ 194.9 $ 189.8
Funds generated from
operations $ 40.9 $ 51.1 $ 145.9 $ 144.1
Earnings (loss) before tax $ 16.7 $ (38.5) $ 53.8 $ (14.0)
Earnings (loss) $ 3.9 $ (60.5) $ 9.1 $ (55.8)
Per common share
Funds generated from
operations $ 0.32 $ 0.52 $ 1.38 $ 1.46
Earnings (loss) $ 0.04 $ (0.62) $ 0.09 $ (0.57)
Dividends $ - $ - $ 0.08 $ 0.08
Capital expenditures, net $ (0.8) $ 100.4 $ 644.8(x)$ 179.4
(x)Includes acquisition of ELAN for $517.0 million effective September
29, 1997.
AVERAGE PRICES
Crude oil and natural gas liquids (per barrel)
North Sea $ 18.77 $ 23.58 $ 19.19 $ 20.95
North America
- Conventional $ 18.20 $ 20.88 $ 18.17 $ 18.35
- Heavy $ 7.87 $ - $ 7.87 $ -
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Weighted Average $ 14.67 $ 23.24 $ 17.43 $ 20.49
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Natural gas (per thousand cubic feet)
North Sea $ 3.09 $ 3.52 $ 3.14 $ 3.19
North America $ 1.66 $ 1.57 $ 1.51 $ 1.26
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Weighted Average $ 1.85 $ 1.70 $ 1.70 $ 1.44
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DAILY PRODUCTION, BEFORE ROYALTIES
Crude oil and natural gas liquids (barrels)
North Sea 24,850 35,488 26,863 24,067
North America
- conventional 12,471 5,053 6,140 5,151
- heavy oil 21,424 - 5,400 -
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58,745 40,541 38,403 29,218
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Natural gas (million cubic feet)
North Sea 24.6 10.9 19.5 16.3
North America 154.0 151.6 145.6 154.0
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178.6 162.5 165.1 170.3
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OIL AND GAS RESERVES
Proved and probable
Conventional Reserves Heavy
(millions of barrels North North Oil
of oil equivalent) America Sea Angola Total Reserves TOTAL
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Reserves
January 1, 1997 68.9 105.5 - 174.4 - 174.4
Purchases 37.2 6.9 - 44.1 178.5 222.6
Extensions, discoveries
and revisions 7.3 30.3 8.5 46.1 (15.6) 30.5
Sales (11.9) (0.4) - (12.3) (3.1) (15.4)
Production (7.5) (11.0) - (18.5) (2.0) (20.5)
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Reserves
December 31, 1997 94.0 131.3 8.5 233.8 157.8 391.6
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These amounts include Ranger's fields in production or approved for
development. They do not include an additional 50 million BOE of reserves
attributable to potential field developments and extensions in the North Sea
and C“te d'Ivoire.
Gas is converted to oil at 6, 8 and 10 to 1 for the North Sea, U.S.A. and
Canada, respectively.
CONSOLIDATED BALANCE SHEET
(millions of US dollars)
December 31, December 31,
1997 1996
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ASSETS
Current Assets
Cash $ 22.4 $ 14.6
Accounts receivable 109.2 93.0
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131.6 107.6
Property, Plant and Equipment 1,237.6 729.7
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$ 1,369.2 $ 837.3
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LIABILITIES
Current Liabilities
Bank loans $ - $ 71.4
Accounts payable and accrued
liabilities 82.7 72.6
Royalties payable 13.7 13.9
Tax payable 16.1 18.3
Current portion of long-term debt 15.1 -
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127.6 176.2
Long-Term Debt 427.0 100.0
Deferred Credits 5.3 -
Future Site Restoration 75.9 58.7
Deferred Tax 88.0 93.0
SHAREHOLDERS' EQUITY
Capital Stock
Authorized
Preferred and common shares
without par value in unlimited
number
Issued
Common shares (thousands)
125,864 (1996 - 98,971) 528.3 293.5
Retained Earnings 117.1 115.9
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645.4 409.4
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$ 1,369.2 $ 837.3
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CONSOLIDATED STATEMENT OF EARNINGS
(millions of US dollars,
except per share amounts)
Three Months Year Ended
Ended December 31, December 31,
1997 1996 1997 1996
------------------------------------------------------------------------
REVENUES
Oil and gas revenue $ 109.8 $ 112.2 $ 346.9 $ 309.1
Royalties (14.3) (11.5) (43.6) (36.6)
------------------------------------------------------------------------
95.5 100.7 303.3 272.5
Transportation and
processing 9.9 9.6 37.9 27.9
Other 5.5 (2.1) 9.8 (1.4)
------------------------------------------------------------------------
110.9 108.2 351.0 299.0
EXPENSES
Operating 38.6 31.1 123.7 89.2
General and administrative 3.5 3.7 10.6 10.6
Interest 6.9 2.8 15.5 9.4
Depletion and depreciation 41.3 33.8 130.9 123.2
International asset
write-downs 2.2 72.7 8.8 73.6
Future site restoration 1.7 2.6 7.7 7.0
------------------------------------------------------------------------
94.2 146.7 297.2 313.0
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EARNINGS (LOSS) BEFORE TAX 16.7 (38.5) 53.8 (14.0)
TAX
Petroleum Revenue Tax 8.2 12.5 29.7 19.4
Income tax 4.6 9.5 15.0 22.4
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12.8 22.0 44.7 41.8
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EARNINGS (LOSS) $ 3.9 $ (60.5) $ 9.1 $ (55.8)
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------------------------------------------------------------------------
Weighted average number of
common shares outstanding
(millions) 125.9 98.9 106.0 98.7
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------------------------------------------------------------------------
Earnings (loss) per common
share, basic and fully
diluted $ 0.04 $ (0.62) $ 0.09 $ (0.57)
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CONSOLIDATED STATEMENT OF CHANGES IN CASH
(millions of US dollars)
Year ended December 31, 1997 1996
------------------------------------------------------------------------
OPERATING ACTIVITIES
Earnings (loss) $ 9.1 $ (55.8)
Non cash items:
Depletion and depreciation 130.9 123.2
International asset write-downs 8.8 73.6
Future site restoration 7.7 7.0
Deferred tax (4.3) (3.9)
Other (6.3) -
------------------------------------------------------------------------
Funds generated from operations 145.9 144.1
Changes in non-cash working capital 45.0 (7.2)
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Cash provided by operating activities 190.9 136.9
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FINANCING ACTIVITIES
Long-term debt 349.4 50.0
Common shares issued 234.7 2.1
Common share dividends (7.9) (7.9)
------------------------------------------------------------------------
Cash provided by (used for) financing
activities 576.2 44.2
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INVESTING ACTIVITIES
Property, plant and equipment (188.5) (153.5)
Corporate acquisition (517.0) -
Property acquisitions (21.3) (71.3)
Proceeds on sales of property and
equipment 77.8 45.4
Proceeds on sale of investments(net) 4.2 -
Changes in non-cash working capital (43.1) 6.7
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Cash used for investing activities (687.9) (172.7)
------------------------------------------------------------------------
INCREASE IN CASH 79.2 8.4
Cash position, beginning of period (56.8) (65.2)
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Cash position, end of period $ 22.4 $ (56.8)
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Cash is net of current bank loans
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