ENERGY TRUSTS / PrimeWest Energy Trust reports 1997 Results
PrimeWest Energy Trust is pleased to announce its results for the 12 month
period ending December 31, 1997. Highlights of the year's performance
include:
* achieved annual distribution target of $1.34 per unit
* exceeded 1997 production target of 8,950 BOE/d with production averaging
9,096 BOE/day
* achieved year end exit production rate of 9,600 BOE/day below the target
of 10,000 BOE/d
* corporate debt levels increased; debt to cash flow increased from 0.42 to
1.99
* for tax purposes, distributions received in 1997 were a return of capital
and as such were fully tax deferred
Based on the Gilbert Laustsen Jung and Associates (GLJA) Report results
released on February 5, 1998, PrimeWest achieved outstanding reserve
additions during 1997:
* established (proved plus half probable) reserves increased 23 percent to
44.6 million barrels of oil equivalent
* total established reserve additions replaced 365 percent of 1997
production at a cost of $4.61 per barrel of oil equivalent
* using industry consensus pricing, the present worth of PrimeWest's
established reserves, discounted at 10%, increased by 32%, to $298 million
* net asset value increased by 11% to $9.75 per unit despite having paid out
$1.34 in distributions
Operating Highlights
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Year Ended Dec. 31/97 Four Months Ended Dec. 31/96
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Production
Oil and NGL (Bbls/day) 4,874 4,365
Natural Gas (mmcfd) 42.22 31.47
Total Production (BOE/day) 9,096 7,512
Pricing
Oil and NGL ($/Bbl) $25.16 $29.35
Natural Gas ($/mcf) $1.85 $1.59
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Financial Highlights (in $ Millions except as indicated)
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Year Ended Dec. 31/97 Four Months Ended Dec. 31/96
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Revenues
Total Revenue $ 73.8 $ 21.8
Royalties (14.2) (3.8)
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Net Revenue 59.6 18.0
Expenses
Operating 21.3 5.2
G & A / Management Fees 5.0 1.8
Interest 2.1 .1
Depletion, Depreciation & Amortization 28.0 8.9
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Total Expenses 56.4 16.0
Net Income 3.2 2.0
Cash Available to Trust Unitholders 33.4 11.0
Cash Available for Distribution
per Trust Unit $1.34 $0.44
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Balance Sheet
Working Capital $ 1.8 $ 1.3
Total Assets 285.8 254.5
Long Term Debt 66.7 14.2
Unitholders' Equity 193.3 223.6
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Reserve Additions Replace 365 Percent of Production
The GLJA Report assessed PrimeWest's established reserves to be 44.6 million
barrels of oil equivalent ('boe'), as at January 1, 1998. This is a 23
percent increase from the 36.1 million boe assessed by GLJ for PrimeWest's
established reserves as at January 1, 1997.
Total established reserve additions of 12.1 million boe replaced 365 percent
of 1997 production of 3.3 million boe.
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Reserves Summary Crude Oil Natural Gas Nat. Gas Liquids Oil Equiv.
(January 1, 1998) (MMbbl) (BCF) (MMbbl) (MMboe)
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Proved 12.3 184.2 4.6 35.2
Probable 5.9 86.2 4.3 18.8
Total Proved + Probable 18.2 270.4 8.9 54.0
Established 15.2 227.3 6.7 44.6
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(MMbbl means millions of barrels)
(BCF means Billion Cubic Feet)
(MMboe means millions of barrels of oil equivalent)
Reserve Value Increases by 31 Percent
The present worth of PrimeWest's established reserves at January 1, 1998,
evaluated at a discount rate of 10%, has increased to $298.0 million from
$226.6 million from a year earlier. This represents a 31 percent increase.
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January 1, 1998 January 1, 1997
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Present Worth of
Established Reserves (pre-tax) $ Million $ Million
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Undiscounted 627.4 479.2
Discounted at 10% 298.0 226.6
Discounted at 12% 268.3 204.1
Discounted at 15% 233.2 177.5
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Reserve Replacement Costs Below Industry Average
PrimeWest's 1997 total reserve addition costs were $4.61 per boe, for
established reserves added through its capital development and acquisition
programs. This performance would place PrimeWest in the top decile of
industry rankings, when compared to 1996 published industry average reserve
addition costs of approximately $7.10 per boe.
PrimeWest replaced 182 percent of its 1997 production through acquisitions at
an average cost of $5.42 per boe. Based on information provided by Sayer
Securities, a recognized industry source, median industry acquisition costs
for 1997 are $6.59 per boe.
PrimeWest replaced 143 percent of its 1997 production through its capital
development program at an average cost of $3.28 per boe. Comparable industry
average costs published for 1996 were $7.40 per boe.
Net Asset Value Increases 11%
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Net Asset Value 1997 1996 % Change
($ millions except as indicated)
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Established Oil and Gas Reserves $298.0 $226.6 32%
Undeveloped Land Value 8.4 2.3
Reclamation Fund Balance 1.7 2.2
Working Capital 1.8 1.3
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309.9 232.4
Less: Long Term Debt (66.7) (14.2)
Net Asset Value 243.2 218.2
Number of Units Outstanding 24.95 24.90
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Net Asset Value per Unit $ 9.75 $ 8.76 11%
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* discounted at 10%
Net Asset Value is a measure of the "worth" of the assets of PrimeWest and
when expressed on a per unit basis provides an indication of the underlying
value of the assets for comparison to the trading value. The assets of
PrimeWest consist primarily of PrimeWest's share of oil and gas reserves,
whose value is established by GLJA.
It should be noted that the increase in net asset value was achieved despite
distributions paid to unitholders during 1997 of $33.4 million ($1.34 per
unit) and a marginally lower commodity price forecast applied at the end of
1997 compared to 1996.
Trust Units of PrimeWest Energy Trust are traded on The Toronto Stock
Exchange under the symbol "PWI.UN".
This press release is not for distribution to United States newswire services
or dissemination in the United States.
For further information, please contact: Jake Roorda
Vice President, Corporate
PrimeWest Energy Inc.
1-888-234-6866 (toll free) |
