EARNINGS / Bitech Petroleum Corp reports 1997 Results
TORONTO, April 13 /CNW/ - BITECH PETROLEUM CORPORATION: (TSE - BPU) is
pleased to announce its 1997 Financial and Operational Results.
1997 was a very successful year for Bitech. The key highlights for the
year were:
- At South Kyrtayel, the well drilling at the end of 1996 was completed,
three new wells were drilled and completed, and a further well was
drilling at year-end. These included the first horizontal wells
drilled in the Komi Republic;
- Development of Bitech's second field commenced;
- Production rose from 1,400 barrels of oil per day (''bopd'') to
approximately 12,000 bopd;
- Oil reserves at South Kyrtayel doubled;
- Positive income and cash flow generated for the year;
- Successful US $ 25 million financing completed;
- Retained earnings became positive in 1997.
For the years ended 31st December, Bitech recorded:
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Expressed in US Dollars
1997 1996
Total Revenues 19,609,122 2,392,786
Pre-tax Income (Loss) from Operations 1,721,709 (2,658,824)
Net Income (Loss) 1,208,053 (2,708,423)
Cash flow per share 0.15 (0.19)
Income (Loss) per share 0.03 (0.16)
Cash and short term investments
at year end 13,837,967 7,720,686
>>
The statistics noted above demonstrate the substantial growth which
Bitech achieved in 1997. Bitech had a truly successful year in 1997. It was
the year in which the Company proved it could operate in Russia and deliver
its promises.
Production rose steadily during the course of the year as each new well
was added.
This success was achieved as a result of combining the strengths of the
Russian work force with western experience of developing oil fields in similar
climatic environments. It was also done within the framework of the Russian
economy and not by attempting solely to use western equipment. Key to our
success has been the fact that Bitech is a true integration of Russia and the
West. The Company's licences are not held through a joint venture but within a
95% subsidiary, Bitech-Silur JSC, with Russian involvement obtained as part of
the management team of Bitech. In Russia, Bitech is accepted as a Russian
company.
At South Kyrtayel, development continued during the course of the year.
Three new wells were drilled and completed, including the first two horizontal
wells in the Komi Republic. The well drilling at the end of 1996 was completed
and brought on stream in late February 1997. At 31st December 1997, a further
well was drilling. Additional storage capacity was added at the gathering
station.
Government approval for the development of the Lekker Field was obtained
in August 1997 and actual development commenced with:
- site clearance
- the stock-piling of equipment
- the creation of a tie-in to the Northern Transneft pipeline
- the construction of winter roads between Pechora and Lekker
(approximately 100 kilometres) and Lekker and Usinsk (approximately
35 kilometres)
First production from the field was achieved in March 1998 through a
work-over of an existing well. A second work-over well is near completion and
the drilling of the first new development well is expected in mid 1998.
The 1997 production was sold on both the export and domestic markets. Due
to the high level of production in the fourth quarter, which accounted for
approximately 49% of 1997's total sales, and due to the way access to the
export points is controlled, exports only averaged 36% of total sales for
1997. To mitigate the increased level of domestic sales in the fourth quarter,
a long-term sales agreement was entered into with a significant Moscow-based
refiner. The structure of the contract allows both a high price and reduced
payment period to be obtained. In the case of Bitech, export sales are of
Urals Blend crude. In 1997, Bitech achieved an average sales price of US
$11.35 per barrel.
The independent engineers reserve report, issued in March, showed proved
and probable additional reserves to be significantly higher than those of
1996. Similarly the value attributed to these, at a 10% discount, was some US
$86 million higher than the comparable 1996 valuation at US $236.4 million as
opposed to US $150.4 million.
No separate report is made for the fourth quarter results, which are
subsumed in those for the entire year. The absence of this individual report
conceals the financial advances that were made late in 1997 together with the
implications these may have in 1998. Oil sales in the fourth quarter were US
$8,212,231, net income US $1,091,431 and cash flow per share was US $0.14.
In 1998, the Company plans to continue the development of the South
Kyrtayel Field through the completion of the well that was drilling at
year-end and the drilling of two further wells. In the case of Lekker,
development will take the form of two work-overs of existing wells, the
drilling of up to three new wells and the completion of the necessary
infrastructure for full field production. A work-over of an existing well,
followed by a long-term production test will take place on the Subor Field.
The Company is progressing in the acquisition of new assets and licences
in the Timan-Pechora Basin.
In the current period of low oil prices, Bitech is less sensitive than
most other oil producers to lower prices because of the large portion of
production the Company has budgeted to sell into the Russian domestic market,
where prices to date have remained relatively stable.
Bitech ended 1997 in a strong financial position, with high levels of
production, positive cash flow, a healthy cash balance and no debt.
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BITECH PETROLEUM CORPORATION
Consolidated Balance Sheets
As at 31st December
Expressed in US Dollars
1997 1996
ASSETS
Current
Cash and short-term investments 13,837,967 7,720,686
Accounts receivable and other 1,430,690 901,936
Advances to suppliers 319,540 282,898
Crude oil inventory 213,154 967,374
Supplies inventory 3,127,590 1,824,968
------------------------------------
Total Current Assets 18,928,941 11,697,862
------------------------------------
Oil and gas properties 46,190,356 26,351,656
Mineral properties 1,335,503 1,159,941
------------------------------------
Total Assets 66,454,800 39,209,459
------------------------------------
LIABILITIES & SHAREHOLDERS'
EQUITY
Current
Accounts payable and accrued
liabilities 3,936,375 3,420,234
------------------------------------
Total current liabilities 3,936,375 3,420,234
Deferred income taxes 335,519 -
Minority interest 326,936 225,118
------------------------------------
Total liabilities 4,598,830 3,645,352
------------------------------------
Shareholders' equity
Capital stock 60,530,706 45,697,700
Contributed surplus 117,211 117,211
Retained earnings 1,208,053 (10,250,804)
------------------------------------
Total shareholders' equity 61,855,970 35,564,107
------------------------------------
Total liabilities and
shareholders' equity 66,454,800 39,209,459
------------------------------------
BITECH PETROLEUM CORPORATION
Consolidated Statements of Operations and Retained Earnings (Deficit)
For the Years Ended 31st December
Expressed in US Dollars
1997 1996
REVENUES
Oil sales 18,749,951 2,102,000
Interest income 594,231 179,958
Other income 264,940 110,828
------------------------------------
Total revenues 19,609,122 2,392,786
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EXPENSES
Operating expenses 4,311,761 1,098,736
Transportation and other
selling expenses 2,048,312 357,418
General and administrative 3,163,339 1,900,383
Production and other local taxes 4,883,193 885,211
Depreciation, depletion and
amortization 3,480,808 809,862
------------------------------------
Total expenses 17,887,413 5,051,610
------------------------------------
Income (loss) before income taxes
and minority interest 1,721,709 (2,658,824)
Income taxes 411,838 130,684
------------------------------------
Income (loss) before minority
interest 1,309,871 (2,789,508)
Minority interest 101,818 81,085
------------------------------------
Net income (loss) for the year 1,208,053 (2,708,423)
Deficit, beginning of year (10,250,804) (7,542,381)
Elimination of the deficit 10,250,804 -
------------------------------------
Retained earnings (deficit),
end of year 1,208,053 (10,250,804)
------------------------------------
Income (loss) per share - basic 0.03 (0.16)
Income (loss) per share - fully diluted 0.03 (0.16)
------------------------------------
Weighted average number of shares
outstanding 36,673,345 16,710,449
------------------------------------
BITECH PETROLEUM CORPORATION
Consolidated Statements of Changes in Financial Position
For the Years Ended 31st December
Expressed in US Dollars
1997 1996
OPERATING ACTIVITIES
Net income (loss) for the year 1,208,053 (2,708,423)
Add (deduct) items not involving cash
Depreciation, depletion and
amortization 3,480,808 809,862
Loss on sale of Noveder Inc. shares - 6,472
Deferred income taxes 335,519 -
Minority interest 101,818 (81,085)
------------------------------------
Cash flow from operations
before changes in
non-cash working capital 5,126,198 (1,973,174)
Net change in non-cash components of
working capital 322,234 (1,122,217)
------------------------------------
Cash provided by (used in) operating
activities 5,448,432 (3,095,391)
------------------------------------
INVESTING ACTIVITIES
Acquisition of oil and gas properties (1,024,325) -
Expenditures on oil and gas properties (20,733,389) (10,866,453)
Expenditures on pipeline construction (1,381,685) (7,412,793)
Expenditures on mineral properties (190,646) (520)
Decrease in marketable securities - 635,246
Proceeds on optioning mining rights 15,084 15,071
Net change in non-cash components of
working capital (1,100,000) 1,100,000
------------------------------------
Cash used in investing activities (24,414,961) (16,529,449)
------------------------------------
FINANCING ACTIVITIES
Common shares issued 24,559,485 24,692,145
Common shares to be issued 524,325 958,265
Minority interest contributions - 220,631
------------------------------------
Cash provided by financing activities 25,083,810 25,871,041
------------------------------------
Net cash increase during the year 6,117,281 6,246,201
Cash and short-term investments,
beginning of year 7,720,686 1,474,485
------------------------------------
Cash and short-term investments,
end of year 13,837,967 7,720,686
------------------------------------
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Background Notes
Bitech Petroleum Corporation is a company quoted on The Toronto Stock
Exchange (symbol: ''BPU'') and the Frankfurt & Berlin Stock Exchanges. It is
an oil company with ownership of six oil licences in the Komi Republic of the
Russian Federation. The operations are centred on the town of Pechora, which
is approximately 1,500 kilometres to the north east of Moscow and
approximately 50 kilometres to the west of the Ural Mountains. The terrain
around Pechora is similar to that of northern Alberta.
Each licence has a proven oil field. The first of these to be developed
was South Kyrtayel, which commenced production in late 1995. The second field
to be developed is Lekker and the third is Subor. Reserves of each field at
1st January 1998 were as set out in the table below.
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Proved and
Probable Probable
Proved Additional Additional
Reserves Reserves Reserves
MMstb MMstb MMstb
-------------------------------------------------------------------------
Commercial Fields
South Kyrtayel 39.8 6.9 46.7
Lekker 14.5 5.2 19.7
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Subtotal 54.3 12.1 66.4
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Potentially commercial fields
Subor 15.2 15.2
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Subtotal 15.2 15.2
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Technical Reserves
Pyzchel 53.2 53.2
East Pyzchel 2.9 2.9
Aranetz 1.9 1.9
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Subtotal 58.0 58.0
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TOTAL RESERVES 54.3 85.3 139.6
-------------------------------------------------------------------------
>>
These reserves are as audited by Scientific Software-Intercomp (UK)
Limited, a subsidiary of Scientific Software-Intercomp Corporation.
Production from South Kyrtayel is by way of its own 28 kilometre pipeline
which ties in to the Northern Transneft Pipeline, the main pipeline
transmission from this area to Moscow and export from Russia. |
