EARNINGS / Scarlet Exploration Inc. Shows Tremendous Growth With
Year-End Results
ASE SYMBOL: SCO
APRIL 6, 1998
CALGARY, ALBERTA--According to its year-end financial statements
released last week, Scarlet Exploration Inc. (ASE: SCO) achieved
new levels of success in 1997, as well as its goals for cash flow
and production.
"There are many positive numbers which reflect our accomplishments
during this past year - a drilling success rate of 78 percent, our
average daily production of 500 BOEPD, land holdings of 49,000
acres (gross) - and I am proud of them all" said Alan D. Jack,
president and chief executive officer. "The numbers that
demonstrate best the value we are building in the company are cash
flow of $0.23 per share with net income of $0.14 per share."
Scarlet now has three core areas, an inventory of additional
prospects, healthy cash flow and low finding costs.
1997 Results
Scarlet has changed its fiscal year-end to December 31 which
results in a change of comparatives in the year-end statements.
Scarlet's 1997 annual report covers the 14-month period ended
December 31, 1997 which is compared to the year ended October 31,
1996.
Revenues before royalties for the 14-months ended December 31,
1997 was $5,661,586 compared to $434,171 for the year ended
October 31, 1996. Crude oil and NGL revenue for the period was
$5,529,513 and natural gas revenue was $132,073 for the 14-months
ended December 31, 1997 compared to crude oil and NGL revenue of
$431,169 and natural gas revenue of $3,002 for the year ended
October 31, 1996.
The average sales price of oil for the 14-months ended December,
1997 was $ 27.06 / barrel ($29.26 in 1996) and the average sales
price of natural gas was $ 2.18 / mcf ($1.19 in 1996). The
Corporation had a hedging program in place to sell 9,000 barrels
of oil per month at a price of US$21.00 / barrel for the period of
April 1, 1997 to December 31, 1997.
Sales of oil and NGL averaged 480 bopd during the 14-months ended
December 31, 1997 compared to 39 bopd during the year ended
October 31, 1996. Natural gas sales during the 14-months ended
December 31, 1997 averaged 142 mcf / d versus 11 mcf / d for the
year ended October 31, 1996.
The significant increases in oil revenues and oil production are a
direct result of the successful drilling and completion of five
producing oil wells at Zama/Sousa and one productive oil well at
East Rainbow during 1997, as well as the acquisition of producing
properties in southeast Saskatchewan.
Royalties, net of ARTC, were $317,896 for the 14-months ended
December 31, 1997 compared to $24,339 for the year ended October
31, 1996. The increase is due to wells which were acquired and
successfully drilled and are subject to Crown and freehold
royalties.
Operating expenses were $1,414,587 ($6.71 / boe) for the 14-months
ended December 31, 1997 compared to $195,082 ($13.28 / boe) for
the year ended October 31, 1996. The reduction in operating
expenses per boe is the direct result of the Corporation's swap of
non-performing gas assets for oil producing assets in 1996 and the
development of core areas at Zama/Sousa, East Rainbow and
southeast Saskatchewan during 1997.
Depletion, depreciation and amortization was $ 1,295,757 for the
14-months ended December 31, 1997 compared with the year ended
October 31, 1996 when the Corporation recorded a depletion and
depreciation provision of $148,123. The increase in depletion and
depreciation and amortization reflects the higher production in
1997.
Funds from operations increased to $3,092,156 for the 14-months
ended December 31, 1997 as compared to ($233) for the year ended
October 31, 1996. Basic funds from operations per common share was
$0.23 for the 14-months ended December 31, 1997 compared to nil
for the year ended October 31, 1996.
Net income was $1,796,399 or $0.14 per share (basic) for the
14-months ended December 31, 1997 compared to the net income of
$9,644 or nil per share (basic) for the year ended October 31,
1996.
The increase in funds from operations and net income is the result
of the property acquisitions and drilling during 1996-1997 -- five
producing oil wells at Zama/Sousa, one oil well at East Rainbow,
and the acquisition of the oil producing properties in southeast
Saskatchewan.
The capital expenditure program for the 14-months ended December
31, 1997 was $7,007,127 compared to $6,360,582 for the year ended
October 31, 1996. Capital expenditures for the 14-months ended
December 31, 1997 included drilling activities and property
acquisitions. The 1997 capital program was funded from a
combination of cash flow, bank debt and the issuance of
flow-through special warrants.
The weighted average common shares outstanding for the 14-months
ended December 31, 1997 were 13.3 million shares basic and 14.4
million shares fully diluted. At December 31, 1997 there were
15,249,250 shares issued and outstanding.
Scarlet Exploration Inc. is a public junior oil and gas company
involved in the acquisition, exploration and development of
high-quality oil and gas reserves in Western Canada. Its shares
trade on The Alberta Stock Exchange under the symbol "SCO".
/T/
COMPARATIVE HIGHLIGHTS
14-months ended Year-ended
December 31, 1997 October 31, 1996
----------------- ----------------
Production
Oil & liquids - BOPD 480 39
Gas - MCFD 142 11
--- ---
BOEPD 494 40
Average netback price
Oil ($/bbl) $27.06 $29.26
Gas ($/mcf) $2.18 $1.19
Financial (000's)
Revenues, net of royalties $5,344 $409
Cash flow $3,092 ($233)
Cash flow per share (basic) $0.23 $0.00
Earnings $1,796 $9
Earnings per share (basic) $0.14 $0.00
Capital expenditures $7,007 $6,361
Long term debt $2,800 $0
Working capital deficiency ($750) ($1,425)
/T/ |
