EARNINGS / Lexxor Resources reports 1997 Results
CALGARY, April 13 /CNW/ - After assessing the results of a challenging
year ended December 31, 1997, which included a ceiling test write down, Lexxor
Energy Inc. has commenced its $3 million 1998 capital expenditure program with
a commitment to establishing an increasing level of operational control over
its projects. The Company has expanded its exploration group, has generated
prospects in new core gas project areas and brought these plays to the
drilling and production stage during the recent winter drilling season.
Effective January 1, 1997 Lexxor moved from the pre-production phase to
commercial production and commenced to account for oil and gas revenues and
exploration and development costs in accordance with the full cost method of
accounting. Accordingly, there is no comparable statement of earnings or
corresponding cash flow figure for the year ended December 31, 1996.
A ceiling test writedown of $3 million impacted 1997 earnings for Lexxor
Energy Inc. The writedown does not affect reserves, asset values or cash
flow.
Oil and gas revenues for the twelve month period ended December 31, 1997
were $2,033,187 with Lexxor's average price for crude oil and natural gas
liquids averaging $23.61 per barrel. Natural gas pricing averaged $1.91 per
thousand cubic feet (mcf). Netbacks for oil and liquids averaged $18.24 per
barrel and $0.87 per mcf for natural gas.
Cash flow for the year amounted to $817,699 ($0.11 per share basic, $0.06
per share fully diluted), while loss was $2,805,301 ($0.38 per share basic).
Capital expenditures in 1997 were $8.5 million, or $5.76 million net of
the sale of $2.74 million in oil and gas property during the year.
Proven and risked probable reserves as evaluated by Paddock Lindstrom and
Associates Ltd. effective December 31, 1997 totaled 919 thousand barrels of
oil equivalent of which 92 percent is considered proven. Finding costs for
reserves discovered in the twelve month period were $7.68 per barrel of oil
equivalent for proven plus risked probable reserves ($9.19 per BOE for proven
only).
Natural gas production averaged 1,824 mcf per day versus 418 mcf per day
in 1996 while oil and liquids production averaged 88 barrels per day versus 10
barrels per day a year earlier
In a recent development, Lexxor (15 percent) and its partner have agreed,
subject to certain conditions being met, to sell the Conroy/Tommy, British
Columbia gas property to a third party for an effective consideration of
$10.25 million ($1.54 million net). The offer consists of a cash component of
$4.57 million ($686,000 net) and the assumption by the purchaser of a $5.7
million ($852,000 net) financing obligation against production facilities.
Lexxor's first quarter production from this property averaged approximately 90
barrels of oil equivalent per day. The sale is slated to close in late April.
Winter drilling activity saw Lexxor drill four locations including three
wells is a new Company operated gas project area in northern Alberta. All of
the wells were cased for gas potential. At Haro, in north western Alberta,
Lexxor has a 100 percent interest before payout in two gas wells and a 65
percent interest before payout in a third indicated discovery. Gas production
from the area commenced April 1 at a pipeline restricted rate of 500 mcf/d
from one well. Lexxor has acquired drilling rights on 22 sections of acreage
in this area (14,000 acres) and plans a multiwell drilling program and
expansion of the project area along the productive trend next winter. The
Company is pursuing prospects in another northern gas project area and intends
to acquire an acreage position through seismic option agreements and drilling
commitments entailing field activity later this year. Lexxor is also
evaluating opportunities to purchase producing properties utilizing, in part,
proceeds from the sale of the Conroy property.
Lexxor Energy Inc. is a Calgary-based oil and gas exploration company
which trades on The Alberta Stock Exchange, symbol LXX.A. |
