EARNINGS / Newquest Releases 1997 Results, 1998 Capital Program and
First Quarter 1998 Drilling Results
ASE, TSE SYMBOL: NQE.A
ASE SYMBOL: NQE.B
APRIL 14, 1998
CALGARY, ALBERTA--Newquest Energy Inc. announced today financial
results for 1997, the Company's second year of commercial
operations.
During 1997 Newquest participated in the drilling of 56 wells with
an average working interest of 83 percent. This drilling program
resulted in 24 (22.4 net) gas wells, 10 (5.0 net) oil wells and 22
(19.2 net) dry and abandoned wells for an overall drilling success
rate of 61 percent. The drilling program resulted in two major
gas discoveries in the Shunda and Elkton Formations at Slave in
the Company's North Central Core Area.
Newquest increased its average production 234 percent from 162
boepd during 1996, comprised 99 percent medium and light quality
crude oil and 1 percent natural gas, to an average 541 boepd
during 1997, comprised 34 percent medium and light crude oil and
66 percent natural gas. Newquest exited 1997 producing 1,500
boepd (87 percent natural gas and 13 percent oil) plus an
additional 600 boepd behind pipe that has since been brought on
stream during the first quarter of 1998.
Limited rig availability during the first two quarters of 1997
restricted the Company's drilling program until the second half of
the year, when Newquest contracted two rigs on a long-term basis.
As a result, much of the Company's production additions occurred
late in the year and did not contribute to cash flow and earnings
for the full 12 months. Cash flow from operations increased 101
percent during 1997 to $1,873,000 ($0.26 per basic share, $0.23
per fully diluted share) from $931,000 in 1996 ($0.26 per basic
share, $0.18 per fully diluted share). Net income increased to
$298,000 in 1997 ($0.04 per basic share, $0.04 per fully diluted
share) from $258,000 in 1996 ($0.07 per basic share, $0.05 per
fully diluted share).
Total proven reserves, independently evaluated December 31, 1997,
are 39.8 bcf of natural gas and .5 million bbls of crude oil and
natural gas liquids for a total 4.5 million boe, an increase of
325 percent over 1996.
Total proven plus probable reserves as at December 31, 1997 are
74.7 bcf of natural gas and 1.1 million bbls of crude oil and
natural gas liquids for a total 8.6 million boe, an increase of
268 percent over 1996.
Newquest increased its undeveloped land position from 41,574 gross
acres (20,669 net) as at 1996 year end to 130,482 gross acres
(108,904 net) as at the end of 1997. All additions to land
holdings were concentrated in the Company's North Central and
South Eastern Core Areas.
Capital expenditures during 1997 totalled $38 million, as compared
to $8.6 million during 1996. Capital expenditures were comprised
of $19 million for drilling, $11 million for land, $2 million for
seismic and $6 million for facilities and equipment. Land costs
during the year included $7.8 million paid to a major oil and gas
company to acquire 25,120 net acres in Newquest's North Central
Core Area, which property acquisition closed September 26, 1997.
Including this large acquisition of predominately undeveloped
land, Newquest's proved plus half probable finding costs totalled
$6.26 per boe during 1997, with finding and on-stream costs of
$7.52 per boe.
The average selling price that the Company received for its crude
oil fell 4 percent to $25.60 per bbl in 1997 from $26.79 in 1996.
Gas prices increased to $1.72 per mcf in 1997 from $1.07 in 1996.
Overall netbacks decreased from $18.85 during 1996 to $12.10 in
1997 reflecting Newquest's production base change from 99 percent
oil during 1996 to 66 percent natural gas during 1997. The
Company exited 1997 with no bank debt.
Newquest has established a $30 million capital expenditures budget
for 1998 which can be funded internally through cash flow and bank
debt approximating one and one half times 1998 cash flow. The
capital program provides for the drilling of over 60 high working
interest wells in the Company's three Core Areas in Alberta.
Newquest forecasts exiting 1998 producing 4,000 boepd comprised of
75 percent natural gas and 25 percent medium and light quality
crude oil, and expects production to average in the 2,500 to 3,000
boepd range.
During the first quarter of 1998 Newquest participated in the
drilling of 15 wells with a 99.6 percent average working interest
and 73 percent drilling success rate. The 1998 first quarter
drilling program resulted in 10 Shunda and Elkton gas wells and
one light oil well, all drilled on a 100 percent working interest
basis in the Company's North Central Core Area, and four (3.9 net)
dry and abandoned wells. Production has increased from an average
541 boepd during 1997 to an average 1,500 boepd during the first
quarter of 1998. Newquest exited the first quarter producing
approximately 2,250 boepd, comprised of 90 percent natural gas and
10 percent medium and light quality crude oil.
Newquest is a Calgary based junior oil and gas exploration company
with properties located in three core areas in the Province of
Alberta. Newquest's securities are traded on The Toronto Stock
Exchange under the trading symbol "NQE.A" and on The Alberta Stock
Exchange under the trading symbols "NQE.A"and "NQE.B". |
