EARNINGS / Numac Energy Inc. First Quarter Results
NUMAC ENERGY INC.
TSE, ME, AMEX SYMBOL: NMC
APRIL 23, 1998
Numac Energy Inc. Announces Financial and Operating
Results
CALGARY, ALBERTA--Numac Energy Inc. today announced its
consolidated financial and operating results for the first three
months of 1998.
FINANCIAL
Funds from operations in the first quarter of 1998 amounted to
$22.8 million compared with $38.0 million in the same period a
year ago. Numac incurred a net loss of $3.4 million, or $0.04 per
share, in the first quarter, compared with net income of $8.2
million, or $0.08 per share, in the year earlier period. The
major factor contributing to the reduced financial performance was
a sharp decline in revenues, primarily as the result of a 40
percent drop in the average price realized for crude oil and gas
liquids production compared with the first quarter of last year.
Net revenue from crude oil and gas liquids production amounted to
$22.1 million, compared with $35.7 million in the first quarter of
1997. Prices realized from the sale of crude oil and natural gas
liquids averaged $15.07 per barrel, down from $24.97 per barrel,
reflecting the serious impact of the oil price decline. Net
revenue from natural gas was $24.3 million, up 23 percent from
$19.8 million in the first quarter a year ago, as the result of a
29 percent increase in production volumes. The average price
realized by Numac for its natural gas production in the first
quarter was $2.11 per thousand cubic feet, down from $2.25 per
thousand cubic feet a year earlier.
Capital expenditures on exploration and development activities
totaled $50.6 million in the first quarter, compared with $66.8
million in the same period of 1997. Reflecting the Company's
strategic focus, $28.5 million of first quarter 1998 spending was
allocated to exploration and development opportunities in
northeast British Columbia, primarily for natural gas. Due to low
oil prices, the planned expansion of Numac's heavy oil project at
Manatokan and other heavy oil initiatives have been put on hold
pending an improvement in heavy oil prices.
PRODUCTION
Crude oil and natural gas liquids production averaged 19,682
barrels per day, marginally below the 19,930 barrels per day
recorded in the same period a year ago. First quarter 1998
production volumes reflect the shut-in of heavy oil production,
resulting from low oil prices and widening differentials, and the
curtailment of previously planned heavy oil capital programs. At
Numac's heavy oil project at Manatokan in east central Alberta,
the shut-in of uneconomic wells reduced production from 3,100
barrels per day at year-end 1997 to 1,650 barrels per day at the
end of the first quarter of 1998. In addition, at Suffield in
southern Alberta, approximately 650 barrels per day of net Numac
production has been shut-in until heavy oil economics improve.
Although these production cutbacks adversely affect volume
statistics, they will, in the current heavy oil price environment,
prevent the erosion of cash flow going forward.
Natural gas production in the first quarter of 1998 averaged 156.3
million cubic feet per day, up from 121.4 million cubic feet per
day a year earlier. The improved performance mainly reflected the
Company's continuing production gains in northeast British
Columbia. While exploration and development successes at Martin
Creek, Redeye and Tommy Lakes contributed a major portion of the
gains, significant volumes were also added at Monias and Leo as
the result of the acquisition of the Canadian oil and gas
interests of Wainoco Oil Corporation in mid-1997.
EXPLORATION AND DEVELOPMENT
Exploration and development activity in the first quarter included
the drilling of 40 gross (28.5 net) wells for a success rate of 81
percent on a net basis. A primary focus of the recent winter
drilling program was continued development of earlier natural gas
discoveries in the Tommy Lakes/Martin Creek corridor in northeast
British Columbia. Drilling successes in the 100 percent-owned
Tommy Lakes natural gas field resulted in four new wells being
tied-in, adding 4.7 million cubic feet per day of production.
Activity on the 100 percent-owned Martin Creek property included
the drilling of five new wells and the construction of additional
gathering facilities to support the expanding production base.
Two of the new wells plus five previously drilled wells were
tied-in to the new facility, increasing field production by 11.4
million cubic feet per day.
At Ante Creek in Alberta, a successful exploration well that
extended the limits of an existing Triassic oil pool was placed on
production at approximately 100 barrels of light gravity crude oil
per day. Numac controls 16 sections in the vicinity of this
discovery with approximately eight sections prospective for crude
oil in the Triassic. Follow-up plans include an initial
three-well development program with the possibility of up to eight
additional wells being drilled over the course of 1998, depending
upon success. Other exploration in west central Alberta includes
plans for drilling a Triassic natural gas prospect at Steep Creek.
A wide range of development and exploitation activity is also
planned or underway at a number of other locations in Alberta,
including Crystal, Ferrier and Gold Creek.
OUTLOOK
To improve financial performance in this low oil price
environment, Numac is intensifying its efforts to expand the
Company's natural gas and light gravity crude oil production, has
shut-in approximately 2,600 barrels per day of currently
uneconomic heavy oil production, and has placed a major emphasis
on achieving further operating efficiencies. To maintain balance
sheet strength, exploration and development spending is being
maintained substantially within cash flow expectations.
Numac Energy Inc. trades on the Toronto, Montreal, and American
stock exchanges under the symbol NMC.
/T/
Numac Energy Inc.
Consolidated Financial and Operating Summary
Highlights Three Months Ended
(unaudited) March 31
1998 1997
--------------------------------------------------------------
FINANCIAL
($ thousands, except per
share amounts)
Revenue 56,434 69,383
Funds from operations 22,837 38,029
Per share 0.24 0.39
Net income (loss) (3,363) 8,151
Per share (0.04) 0.08
Average prices
Crude oil and natural
gas liquids ($/Bbl) 15.07 24.97
Natural gas ($/Mcf) 2.11 2.25
Capital expenditures
Exploration and production 50,598 66,766
Property acquisitions 1,905 5,973
Proceeds on sale of
property (25,136) (13,005)
OPERATIONS
Production
Crude oil and natural gas
liquids (Bbls/day) 19,682 19,930
Natural gas (Mmcf/day) 156.3 121.4
Expenses per BOE of production
Operating expense 5.71 4.46
General and administrative
expense 0.59 0.63
Wells drilled
Gross 40 80
Net 28 59
Success rate (net)
(in percent) 81 91
Undeveloped land (thousands
of net acres) 2,103 2,256 |
