EARNINGS / S.R.I. Oil and Gas Inc. Announces 41 Percent Growth in
Revenues in Fiscal 1997 - Cash Flow up 62 Percent - Very
Promising 1998 Outlook
ME SYMBOL: SEL
APRIL 28, 1998
MONTREAL, QUEBEC--S.R.I. OIL & GAS INC. announced today the
results for its fiscal year ended December 31, 1997. During this
period, the Company recorded a cash flow from operations of
$1,403,361 ($0.40 per share - undiluted), an increase of 62
percent when compared to $863,137 ($0.35 per share - undiluted)
for the previous year ended December 31,1996. Net income for the
year was $385,110 ($0.11 per share - undiluted) compared to
$186,892 ($0.08 per share - undiluted) for the previous year,
representing an increase of 106 percent.
Oil and gas revenues, net of royalties, of $2,080,871, represent
an increase of 41 percent when compared to the revenues of
$1,471,493 achieved in 1996. More than 90 percent of the
Company's revenue comes from natural gas sales.
Strong Growth Outlook
S.R.I. Oil & Gas Inc. is dedicated to creating value for its
shareholders through investment in the Canadian western
sedimentary basin as a joint venture partner and by acting as a
merchant banker to public and private oil and gas companies. "We
are pleased with the 1997 results. Based on the recent
strengthening of natural gas prices and new export capacity, the
Company's outlook for fiscal 1998 is very positive," commented
Harry H. Feldman, Chairman of S.R.I.
We are participating in a number of very promising projects,
including those operated by publicly traded Remington Energy Ltd.
S.R.I. is now using the same investment concepts with two
privately held companies. "These results emphasize our potential.
We plan to list on at least one other market this year, and we
look forward to announcing more good news."
The Canadian oil and gas sector appears to be poised for growth
according to the US Department of Energy, and many analysts. The
US market will grow at 2 percent, and Canadian producers will
continue to provide almost all of that increase, as they have in
the past. Canadian producers are clearly positioned to get the
lion's share for a number of reasons.
According to Feldman, "Analysts continue to project increased
demand based on the new pipeline capacity into the US market. We
are clearly moving from an over supply situation, to one of strong
demand. In fact, we may have already reached that point."
New capacity will maintain this demand in the long term. Two
major export pipelines, Alliance, and TransCanada Pipeline Viking
Voyageur, have been announced for completion in 1999. Either one
of these projects will ensure that the over-supply bottleneck that
has created artificially depressed prices, is eliminated in the
long term. With the bottleneck gone, analysts point out that the
price differential between Alberta and US prices will be almost
eliminated.
The average difference between NYMEX gas and AECO-C gas has been
$1.14 US/mmbtu over the last year, $1.35 over the last two years
and $1.20 over the last three years. Analysts forecast a
reduction of 75 percent in the Alberta-US price differential.
Other factors that will influence the price of oil and gas are
current projections for colder winters, as we enter the beginning
of a 20 year cool weather cycle. In the past, cold winters have
driven up the price substantially, as commodity prices tend to be
very sensitive to supply and demand economics.
/T/
Financial Highlights
For the fiscal years ended
December 31
1997 1996 Variation
______________________________________
Revenues, net of
royalties $2,080,871 1,471,493 41 percent
Cash flow $1,403,361 863,137 62 percent
Basic cash flow
per share (undiluted) $0.40 0.35
Net earnings $385,110 186,892 106 percent
Basic net earnings
per share (undiluted) $0.11 0.08
Basic outstanding shares
at year end 3,401,841 3,475,541
/T/
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