EARNINGS / Panatlas Energy - First Quarter Results Oil And Gas
Production Increases 49 Percent
TSE SYMBOL: PA
MAY 20, 1998
CALGARY, ALBERTA--The growth of PanAtlas Energy continued in the
first quarter of 1998, reflected in a 49 percent increase in
average production to 2,140 barrels of oil equivalent per day
compared to 1,439 barrels of oil equivalent in the three month
period ended March 31, 1997. Last year, PanAtlas changed its
fiscal year end to December 31 from September 30 and our fiscal
quarters now coincide with calendar quarters.
An increased focus on natural gas prospects has shifted our
production balance such that 38 percent of our production volume
in the first quarter was natural gas. Our first quarter natural
gas production rate increased 189 percent to 8.2 million cubic
feet per day compared to 2.8 million cubic feet per day a year
ago. Oil production in the quarter was up 14 percent to 1,321
barrels per day compared to 1,156 barrels per day in the first
quarter of 1997. These production increases are the result of
additions from the acquisition of Pointer Exploration Corp. and an
active and successful production optimization and development
drilling program at Drumheller, Craigmyle and Byemoor.
Oil prices averaged $27.23 per barrel during the first quarter of
1997. Our average oil price in the first quarter of 1998 declined
dramatically to $18.19 per barrel, 33 percent lower than last year
during the same period. Our average oil quality is light at 33
degree API and has not been adversely affected by the widening
price differential between light and heavy crude oils. Natural
gas prices were higher last year as well. Our realized price of
$1.80 per thousand cubic feet in the first quarter was seven
percent lower than the price received in the corresponding period
last year.
The 49 percent increase in production resulted in only a six
percent increase in gross revenue to $3,570,000 from $3,359,000 in
the first quarter of 1997. These significant production increases
were unable to compensate for the decline in product prices and,
as a result, cash flow declined 11 percent to $1,418,000 or $0.03
per share.
In the first quarter of 1998, the Company is reporting its first
loss since 1992. The net loss was $210,000 (nil per share)
compared to positive earnings of $685,000 ($0.02 per share) during
the same period in 1997. Total deductions from gross revenue
affecting net earnings in the first quarter were $19.78 per barrel
of oil equivalent, five percent lower than last year on an
equivalent basis. The reduction in net earnings is attributable
to the 31 percent drop in the average per barrel of oil equivalent
price realized for oil and natural gas sales.
/T/
OPERATING AND FINANCIAL HIGHLIGHTS
--------------------------------------------------------------
Percent
Three months ended March 31, 1998 1997 Change
--------------------------- ----------- --------- -------
OPERATIONS
Daily Oil (Bopd) 1,321 1,156 14
Daily Gas (Mcfd) 8,190 2,830 189
Daily Boe (Boepd) 2,140 1,439 49
Average Oil Price (Bbl) $ 18.19 $ 27.23 (33)
Average Natural Gas
Price (Mcf) $ 1.80 $ 1.93 (7)
Average Production
Costs (Boe) $ 5.47 $ 3.97 38
Field Netback (Boe) $ 10.00 $ 15.18 (34)
Percent
1998 1997 Change
----------- ---------- -------
FINANCIAL (000'S, EXCEPT
PER SHARE)
Revenue (net of royalties)$ 3,005 $ 2,491 21
Funds from Operations $ 1,418 $ 1,599 (11)
per share $ 0.03 $ 0.05
Net Earnings (loss) $ (210) $ 685
per share - $ 0.02
Net Capital Additions $ 3,186 $ 3,201
Long-term Debt $13,271 $ 6,382
WEIGHTED AVERAGE SHARES
OUTSTANDING (000'S) 49,676 32,502
/T/
The first quarter of 1998 was an active period in which PanAtlas
invested $3.2 million in its capital program. Twelve gross (4.2
net) wells were drilled of which 8 (3.4 net) were oil, 1 (0.3 net)
was gas, 3 (0.5 net) were dry and abandoned. Sixty-seven percent
of the gross and 87 percent of the net wells drilled were operated
by the Company.
Our most significant well of the quarter was drilled into the
Nisku Formation within the Meekwap D-2A Unit. Three dimensional
seismic identified the previously unmapped step out drilling
location. Over a 14 day test period in April the well flowed at
average rates of 1,791 barrels of oil equivalent per day (313 boe
per day net PanAtlas) consisting of 1,608 barrels of oil per day
and 1.8 million cubic feet per day of natural gas. In late April,
the well was flowlined to the Unit facilities. Follow-up
locations have been identified and the next well is expected to
spud in the second quarter.
Five (2.6 net) of our successful oil wells were drilled in our
core area near Drumheller where there is considerable well control
and three dimensional seismic. We are pleased with the progress
of our production optimization and development drilling program.
Initial production results have met our expectations. However,
low oil prices are challenging us. Our original plan was to drill
up to 20 development wells in this area in 1998 but recent low oil
prices have forced us to reconsider the timing of planned capital
expenditures.
Outlook
The price of oil will continue to challenge our budget management
in 1998. Fortunately, we have already substantially increased our
natural gas production which is expected to enjoy higher pricing
as the year progresses. We will be careful to adjust our capital
spending plans to match our cash flow and credit lines.
Subsequent to the first quarter, forest fires at Meekwap, Alberta
temporarily shut in Meekwap production in early May. The Meekwap
facility is insured including provisions for loss of production.
Approximately 50 percent of the Meekwap oil production resumed
production May 17, 1998.
PanAtlas is a public oil and gas company with a current daily
production capability of 2,400 barrels of oil equivalent and an
experienced management team based in Calgary. The Company's
common shares trade on The Toronto Stock Exchange under the symbol
"PA".
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