EARNINGS / Millennium Releases Year-End Results; Company Also
Updates Proposed $4.2 Million Acquisition and Drilling
Projects
ASE SYMBOL: MLN
MAY 13, 1998
CALGARY, ALBERTA--Millennium Energy Inc. released today its
results for the 12-month period ended December 31, 1997. All
financial results were substantially ahead of the same period last
year.
Revenue for the period amounted to $223,736 and income before
taxes was $11,593, representing increases of 43 percent and 186
percent, respectively, over the same period last year. The
company's principal asset was an overriding royalty on the
production from 7 gas wells in the Liege area of North Central
Alberta, which averaged 330 mcf/d net to Millennium; accordingly,
there were no operating costs associated with the production.
/T/
INCOME STATEMENT Year-ended Year-ended
December 31, 1997 December 31, 1996
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Revenues
Royalty income $222,381 $148,208
Interest income 1,355 7,820
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223,736 156,028
Expenses
General and administrative 52,830 41,395
Interest on long-term debt 32,551 27,588
Depletion 126,762 83,000
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212,143 151,983
Income before income taxes 11,593 4,045
Deferred income taxes 5,911 1,805
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Net income for year $ 5,682 $ 2,240
/T/
During the year, the company participated in the drilling of 1
well (0.25 net), resulting in a gas well near Morinville, Alberta.
The well has not yet been tied-in and is shut-in pending further
tests.
Millennium's balance sheet also improved during the year. In
addition to raising new equity, the company reduced its long-term
debt.
/T/
BALANCE SHEET December 31, 1997 December 31, 1996
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Assets
Current assets $ 476,285 $130,967
Capital assets 872,511 864,039
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$1,348,796 $995,006
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Liabilities
Current liabilities $ 228,840 $137,267
Long term debt 285,000 410,000
Deferred taxes 138,982 (23,308)
Shareholders' Equity
Share capital 686,343 467,098
Retained earnings 9,631 3,949
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$1,348,796 $995,006
--------- --------
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/T/
On December 29, 1997, the company issued 1.5 million flow-through
shares and 1.5 million flow-through share warrants (news release
dated December 30, 1997). The agent on the company's initial
public offering also exercised its option to acquire 250,000
shares on May 1, 1997. Accordingly, there were 9.25 million common
shares issued at year-end. The average number of shares
outstanding during the year was 7,679,452.
ACQUISITION UPDATE
In other news, Millennium released additional information
regarding its previously-announced $4.2 million acquisition of
assets (the "Transaction"). At the request of The Alberta Stock
Exchange (the "ASE"), a revised engineering evaluation was
commissioned by the Vendor, using constant commodity pricing. This
evaluation was audited by Sproule Associates Limited, independent
engineers. Millennium was only provided with the constant price
evaluation on proved plus probable case. However, detailed
independent engineering will be completed for inclusion in an
information circular, which will be provided to shareholders prior
to the special and annual general meeting.
Reserve volumes, using constant prices, have been estimated at 713
mboe (proved plus unrisked probables), versus 823 mboe at
escalated prices. The decrease is attributable to production
becoming uneconomic in later years at the lower constant price.
Meanwhile, reserve values were $3.76 million at NPV 12 percent
using constant prices (proved plus unrisked probables), and $5.52
million at escalated prices.
This evaluation assumed the following constant prices:
/T/
Product Constant Price (Cdn.$)
--------------------------------------------------------------
Oil - Edmonton Par (per bbl) 24.75
Oil - Hardisty Medium (per bbl) 17.75
Oil - Hardisty Heavy (per bbl) 10.75
Gas - Alberta (per mmbtu) 1.79
/T/
As reported in a March 25, 1998 news release, the purchase price
for the assets will be satisfied by Millennium issuing 16.8
million common shares at $0.25 per share and will be accounted for
following the reverse take-over accounting rules. It is
contemplated that the vendors of the assets, two limited
partnerships managed by EnerVest Resource Management Ltd.
("EnerVest"), will then be wound-up and the Millennium shares will
in turn be distributed to approximately 913 limited partners, who
will then become shareholders of Millennium.
Upon closing the Transaction, Millennium has agreed to nominate
two representatives of EnerVest, David Fischer and Neil Sedgwick,
to the five-person Millennium board of directors.
Mr. Fischer is a chartered accountant and has been the Chief
Financial Officer of EnerVest since March of 1997. EnerVest is a
resource management company which structures oil and gas limited
partnerships. It is also the manager of EnerVest Diversified
Income Trust, a royalty trust whose units trade on The Toronto
Stock Exchange. Prior to March 1997, Mr. Fischer was a
self-employed consultant.
Mr. Sedgwick is a professional engineer and a partner with the
consulting firm of Martin Petroleum Consultants Inc. Prior to
January 1995, Mr. Sedgwick was the President of Principal
Petroleum Consultants Inc. He is currently a director of EnerVest
Diversified Income Trust.
Nancy Penner, currently an independent member of Millennium's
board of directors, will be resigning upon shareholder approval of
the Transaction and election of the directors.
The ASE has halted trading in the company's common shares, as is
typical for a transaction of this nature. As a result of providing
the foregoing information, Millennium has been advised by the ASE
that trading will resume on Thursday, May 14, 1998. The
Transaction is subject to approval by the ASE, Millennium's
shareholders and the limited partners of the vendors.
DRILLING UPDATE
Meanwhile, the company confirmed that it and its partners have
elected to drill a well at Rumsey, Alberta, pursuant to a 3-D
seismic option entered into last year. The seismic was completed
and confirmed the presence of an anomaly in the Leduc formation.
Spudding is scheduled to occur before June 30, 1998. Millennium
already has a 12 percent interest in the lands as a result of
shooting the seismic, and can ultimately earn a working interest
of up to 30 percent, depending on certain elections to be made by
the farmor.
At Craigend (Lac la Biche), Millennium confirmed that it will be
making an application to license a well in 08-064-11W4M. The
primary targets are the gas-bearing Colony and Wabiskaw
formations. Millennium's interest, pursuant to the farmout, is 50
percent, subject to a non-convertible overriding royalty of 10
percent. Drilling is expected to commence as soon as a rig becomes
available in the area.
Millennium also updated its progress on the proposed acquisition
of a 250,000 (167,500 net) acre exploration concession in
Colombia, South America. Ecopetrol, the state-owned oil and gas
agency, has confirmed that Millennium and its partner have
satisfied certain working capital requirements. The proposal was
placed before the contracting division for approval, which has
responded with several comments. Pending satisfactory resolution
of the remaining issues, Millennium and its partners expect to
complete negotiations within the next two weeks. A favourable
recommendation by the contracting division will then require the
final authorization of the board of directors of Ecopetrol. The
company expects to update the status of this approval process next
month.
ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
As a result of the announcement of the Transaction, the company's
annual meeting of shareholders, originally contemplated for late
May, will now be held in July. Once further due diligence has been
completed, including the preparation of a detailed information
circular respecting the Transaction, a new date for an annual and
special meeting will be selected. |
