ENERGY TRUSTS / Petrobank Energy - Record Results in First Quarter
1998
TSE SYMBOL: PBG
MAY 19, 1998
CALGARY, ALBERTA--The first quarter of 1998 saw Petrobank post
record operating and financial results despite weak commodity
prices. Production averaged 2041 BOE per day, up 28 percent from
the previous quarter and up 99 percent from the first quarter of
1997.
Product revenue in the quarter climbed to a new high of $3.2
million. Product sales price averaged $17.26 per BOE down 13
percent from the previous quarter and down 23 percent from the
year ago average of $22.28 per BOE. Oil prices averaged $21.31 per
barrel in the quarter while gas prices averaged $1.66 per thousand
cubic feet. Natural gas sales represented 80 percent of
Petrobank's product revenue in the quarter. Prices for natural gas
have strengthened significantly since January and the outlook
through year end is encouraging.
Operating and administrative costs continued to decline in
response to efforts to conduct operations as efficiently as
possible. Production expenses averaged $2.00 per BOE in the
quarter down 10 percent from the previous quarter and down 67
percent from the year ago average of $4.05 per BOE. General and
administrative expenses declined 38 percent from the previous
quarter averaging $1.77 per BOE, down from $2.91 per BOE in the
first quarter of 1997.
Despite the low commodity prices, cash flow from operations
increased 30 percent to $2.1 million in the quarter up from $1.6
million in the previous quarter. Cash flow for the quarter was
$11.22 per BOE and $0.08 per share.
During the quarter, Petrobank (100 percent WI) initiated expansion
of its Alder Flats gas plant. Completed April 20, the expansion
doubled the plant capacity to 35 million cubic feet per day and
will improve liquids recoveries. Following spring breakup,
Petrobank will complete and evaluate three unconnected wells for
tie-in to the plant. Petrobank has also budgeted to drill five new
wells in Alder Flats during the remainder of the year with several
additional locations identified for 1999.
At Blood Magrath, Petrobank has commenced its deep exploration
program with the first of two earning wells down and cased.
Completion and evaluation of the first of four hydrocarbon-bearing
formations in this wellbore is underway. The second earning well
is currently drilling. Petrobank has budgeted for six exploration
wells on the property for the current year.
Petrobank controls approximately one hundred thousand net
undeveloped acres on the Blood Magrath block. The acreage is
contiguous and relatively unexplored. At least nine separate
formations are prospective for hydrocarbon potential, three of
which are currently commercially productive in the immediate area.
Successful exploration efforts will provide large reserve
potential development opportunities in an area with year round
surface access and established infrastructure.
Through a persistent application of its exploration and
development strategy, Petrobank is now well positioned to
capitalize on several industry trends. The outlook for gas prices
next winter is very positive with new export pipeline capacity
coming onstream. Low oil prices are impacting budgets for
oil-weighted companies resulting in reduced competition for
drilling rigs and other services. Gas-weighted companies like
Petrobank will be able to conduct field operations this year on
more favorable terms than last year. With an extensive portfolio
of drillable prospects together with production infrastructure in
place, Petrobank is poised to continue to generate exceptional
growth and shareholder value.
/T/
PETROBANK ENERGY AND RESOURCES LTD.
Quarterly Information With Comparatives
(Unaudited)
1997 1998 Comparatives
Q1 Q4 Q1 98Q1/ 98Q1/
97Q4 97Q1
Sales Rate (Percent)
Oil (Bbl/d) 9 19 20 4.9 126.0
Gas (mcf/d) 8,373 13,155 16,873 28.3 101.5
NGL's (Bbl/d) 181 255 334 30.8 84.4
BOE (Bbld/d) 1,027 1,590 2,041 28.4 98.7
Prices
Oil ($Bbl) 28.76 26.56 21.31 -19.8 -25.9
Gas ($/mcf) 2.07 1.86 1.66 -10.6 -20.0
NGL's ($/Bbl) 27.78 25.32 20.47 -19.1 -26.3
BOE ($/Bbl) 22.28 19.73 17.26 -12.5 -22.5
Product
Revenue($) 2,059,555 2,885,188 3,170,858 9.9 54.0
Other
Income ($) 11,624 91,797 70,692 -23.0 508.2
Net Royalties
(after ARTC)($)(195,191) (454,515) (280,923) -38.2 43.9
Net Revenue($) 1,875,988 2,522,470 2,960,627 17.4 57.8
Expenses($)
Production 556,143 323,281 366,564 13.4 -34.1
General and
Administrative 269,316 414,774 324,313 -21.8 20.4
Interest 73,872 130,460 193,527 48.3 162.0
Current Taxes - 54,380 16,000 -70.6 -
Cash Flow from
Operations($) 976,657 1,599,575 2,060,223 28.8 110.9
Depletion,
depreciation, site
restoration($) 458,039 1,793,482 1,429,526 -20.3 212.1
Deferred Taxes($) - 273,125 101,361 -62.9 -
Net Income
(loss)($) 518,618 (467,032) 529,336 -213.3 2.1
Share Capital
Weighted basic 21,185,208 22,102,491 25,366,597 14.8 19.7
Fully diluted 23,592,708 25,594,158 27,524,374 7.5 16.7
Outstanding 22,172,708 25,227,708 25,517,708 1.1 15.1
Cash Flow per
share ($/share)
Basic 0.05 0.07 0.08 14.3 60.0
Fully Diluted 0.04 0.06 0.07 12.9 75.0
Earnings per
share ($/share)
Basic 0.02 (0.02) 0.02 - -
Fully Diluted 0.02 (0.02) 0.02 - -
Per BOE Operating
Statistics ($/BOE)
Production
Expenses 6.02 2.21 2.00 -9.7 -66.8
Cash Flow 10.57 10.94 11.22 2.6 6.2
G&A 2.91 2.84 1.77 -37.7 -39.4
PETROBANK ENERGY AND RESOURCES LTD.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
--------------------------------------------------------------
As at March 31
1998 1997
ASSETS
Current
Cash $ 0 $ 0
Accounts receivable and deposits 4,379,405 2,451,630
--------------------------------------------------------------
4,379,405 2,451,630
Deferred income tax 197,255 494,926
Fixed Assets
Property and equipment 46,137,895 24,172,146
Accumulated depletion and
Depreciation (5,127,692) (767,899)
--------------------------------------------------------------
41,010,203 23,404,247
--------------------------------------------------------------
$45,586,863 $26,350,803
--------------------------------------------------------------
--------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable $ 6,580,254 $ 2,132,758
Capital taxes payable 70,960 23,000
Loan payable 719,500 0
Prepaid gas sales
contract-current portion 481,800 481,800
--------------------------------------------------------------
7,852,514 2,637,558
Long term debt 16,783,204 5,336,551
Loan payable 570,152 1,375,819
Prepaid gas sales contract 2,405,980 2,885,920
Future site restoration 80,234 12,148
--------------------------------------------------------------
Total liabilities 27,692,084 12,247,996
--------------------------------------------------------------
Shareholders' Equity
Share capital 16,268,393 13,226,849
Limited partnership units 552,092 552,092
Retained earnings 1,074,294 323,866
--------------------------------------------------------------
17,894,779 14,102,807
--------------------------------------------------------------
$45,586,863 $26,350,803
--------------------------------------------------------------
--------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(Unaudited)
For the three month period ended March 31
1998 1997
REVENUE
Oil and gas $3,170,858 $2,017,046
Processing revenue 70,692 0
Royalties (net of Alberta Royalty
Tax Credit) (280,923) (195,191)
-----------------------
2,960,627 1,821,855
Other income 0 54,133
-----------------------
2,960,627 1,875,988
EXPENSES
Production 366,564 556,143
General and administrative 324,313 269,316
Interest 193,527 73,872
Depletion, depreciation and
site restoration 1,429,526 458,039
-----------------------
2,313,930 1,357,370
Income taxes 117,361 0
-----------------------
Net income for the period 529,336 518,618
Retained earnings (deficit),
beginning of period 544,958 (194,752)
------------------------
Retained earnings, end of period $1,074,294 $ 323,866
------------------------
------------------------
Net income per common share
Basic 0.02 0.03
Fully Diluted 0.02 0.03
------------------------
------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the three month period ended March 31
1998 1997
OPERATING ACTIVITIES
Net income (loss) for the period $ 529,336 $ 518,618
Items not affecting cash
Depletion and depreciation 1,429,526 458,039
Deferred taxes 101,361 0
-----------------------
Funds from (used in) operations 2,060,223 976,657
Net change in non-cash working
capital 1,440,270 (811,414)
------------------------
3,500,493 165,243
FINANCING ACTIVITIES
Proceeds from long term debt 6,419,028 2,534,033
Repayments of loan payable (175,000) 0
Proceeds from loan payable 25,651 19,323
Proceeds from prepaid gas contract 0 51,000
Deliveries on prepaid gas contract (116,940) (104,188)
Proceeds from issuance of
common shares 120,235 18,000
Tax benefits renounces to flow-through
shareholders (1,250,000) 0
-----------------------
5,022,974 2,518,168
Cash available for investment 8,523,467 2,683,411
INVESTING ACTIVITIES
Expenditures on property
and equipment (8,502,031) (2,245,801)
Other assets (21,436) (0)
Net change in non-cash working
capital (0) (5,571,360)
------------------------
(8,523,467) (7,817,161)
Increase(decrease) in cash
during the period 0 (5,133,750)
Cash, beginning of period 0 5,133,750
------------------------
Cash, end of period $ 0 $ 0
------------------------
-------------------------
Funds from operations per share
Basic 0.08 0.05
Fully diluted 0.07 0.04
------------------------
------------------------
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