May 5, 1998 Financial Statement
STANFORD ENERGY CORP ("STB-V;SNFGF-L")
- Financial Statement
Nick DeMare, Director of Stanford Energy Corp., provides the following
update based on the Company's quarterly financial statements dated
February 28, 1998:
STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED FEBRUARY 28TH
(Unaudited - Prepared by Management)
1998 1997
REVENUES $ $
2,866,833 2,286,993
OPERATING COSTS
Direct 1,212,482 755,381
Depreciation & Depletion 637,494 514,741
1,849,976 1,270,122
INCOME FROM OPERATIONS 1,016,857 1,016,871
OTHER EXPENSES 808,320 381,824
INTEREST & FINANCE CHARGES 578,617 453
GAIN ON SALE OF ASSETS 7,022,702 -
NET INCOME FOR THE PERIOD 6,652,622 441,443
EARNINGS PER SHARE $ 0.30 $ 0.03
The cash flow from operations during the quarter ended February 28th
was $1,654,351. The revenue from oil and gas sales is substantially
all derived from the Enserch portfolio of properties. The actual
revenues from the properties is less than the Company's projections
due to some decrease in production rates but principally due to
decreases in commodity prices. The properties are currently generating
sufficient cashflow to cover all operating costs and substantially all
debt service costs. As management has determined to implement an
exploitation program on these wells discussions ere ongoing with the
bank to reschedule payments.
To date the drill results, on new prospects, have not achieved any
significant successes and consequently the Company's revenue stream
has not been augmented from the drilling efforts. In addition the
costs incurred by certain operators have been significantly higher
than original estimates. These factors have contributed to a
significant decrease in the company's cash position and increase
in accounts payable. The Company is concentrating its efforts on its
core producing prospects and is working with its creditors.
PROPERTY REVIEW
Enserch Property Portfolio
As previously reported, the Company closed on a significant
acquisition of producing properties, known as the Enserch Properties,
effective November 1, 1997. The acquisition was financed from working
capital and by way or a bank loan. These properties, located
principally in Texas, Oklahoma, New Mexico and Louisiana, produced
approximately 27,000 barrels of oil, 423,000 mcf of gas, and 288,000
gallons of NGL's during the three months ended February 28, 1998.
Average prices received during the quarter were US $15.19 per barrel,
US $2.32 per mcf and US $0.29 per gallon. These prices are about
thirty percent lower than those in effect at the time of acquisition.
The Company has established an office in Tulsa, Oklahoma to manage the
Enserch Properties. An aggressive exploitation effort of these
properties will begin in June of 1998 and the Company expects, as a
result of such efforts, to increase daily production by twenty-five to
thirty percent. The increase in production, together with improvements
in commodity prices, should reestablish cashflow to original
projections. The takeover of this large portfolio of producing
properties has not been without some transitional issues. At this time
substantially all transitional matters have bean addressed. A post -
closing is scheduled for early May.
East Lost Hills (San Joaquin Prospect) California
On January 14, 1998, the Company announced its intention to acquire
19.68% of this prospect. The Company has recently determined to reduce
its interest in this prospect to 4.92%. The property is located near
Bakersfield within the San Joaquin Basin, which is the most prolific
basin in the United States. The spud date for the first well, to be
drilled to a depth of 18,500 feet, has now been moved to mid-May. The
Company's share of land acquisition costs plus the cost of drilling
the first well is approximately $715,000. These payments have been
made.
Big Springs Unit, Deuel County, Nebraska
During the quarter ended February 28, 1998, the Company received
regulatory approval to acquire a total 25% working interest in this
prospect by spending $786,500 on drilling and completion costs. To
date a total of 14 wells have been drilled on this prospect. At this
time, due to down stream pipeline pressure issues, only 8 wells are on
stream producing a total of 480,000 cubic feet of gas per day.
East Morgantown, Marion County, Mississippi
The B.O.E. 16-14 #1 well at the East Morgantown prospect has been
drilled to its total depth. The drilling costs were in excess of
original estimates.
The potential producing zones were found to be much tighter than
anticipated prior to drilling. The operator of the well has been
assessing various options for the completion of the well. The
completion cost estimates increased from an initial estimate of
$900,000, revised to $1.5 million and further revised to a final
estimate of $3.7 million. The final estimated costs include an
expensive fracture stimulation. Management had initially agreed to
participate in the completion of this well but the escalation in
estimated completion costs has resulted in management's decision to
not participate in the completion attempt.
As the Company has made this decision the remaining participants will
be entitled to preferential recovery from any production. Assuming
full completion costs are incurred, and at current gas prices, it is
estimated that after the well has produced about 6 bcf of gas the
Company will participate in the well. In addition the Company will be
able to participate In the balance of the prospect.
Jennings Prospect, Jefferson-Davis Parish, Louisiana
The Jennings well has been drilled and completed. The well is expected
to be on production by May 15, 1998. The Company paid 100% of the
estimated drilling costs, however the final costs were significantly
over budget. The final costs to drill the well were almost twice the
original estimates. The estimated production rate for this well is
5,000 mcf of gas per day. The Company has not received final reserve
numbers. The possibility for offset drilling exists but this requires
further review.
Bow Creek Project, North Dakota
The Prociw #44-12 well is currently producing at a rate of 33 BOPD.
The current oil price has caused management to put further development
of this project on hold.
Lahinch Field, Duval County, Texas
The recompletion attempt conducted on the Shallow Wilcox zone was not
successful. The Company paid 100% of estimated costs for this well,
however, the final costs were over budget.
Southeast Monte Christo Prospect, Hidalgo County, Texas
The wall was drilled and was determined to be a dryhole and has been
plugged and abandoned. The Company paid 100% of estimated costs for
this well, however, the final costs were significantly over budget.
Mississippi Prospects
The Company has a 20% working interest in Smithtown, Piave, Hershey
and Marble Creek. The Mississippi properties remain undrilled and the
Company has been advised by the operator that drilling will not take
place until 3D seismic has been completed. This work is not expected
to commence until the end of the 1998 calendar year.
TEL: (604) 685-9316 Nick DeMare, Director FAX: (604) 683-1585 WEBSITE:
www.stanfordenergy.com
______________________________________
(c) Corporate Dissemination Services Inc. All rights reserved.
Tel:(604) 689-1101 Fax:(604) 689-1106
RapidFAX (tm) - To get the NEWS as it happens, call (604) 689-3041.
This Report Updated by Canstock at 6:52:39 Pacific Time |
