EARNINGS / WestCastle Releases March 31, 1998 Results
TSE SYMBOL: WCL.UN
OTC Bulletin Board SYMBOL: WCTS
MAY 22, 1998
CALGARY, ALBERTA--WestCastle Energy Trust announces the unaudited
financial results for the period from January 1 to March 31, 1998
and other corporate initiatives.
Results for the period ended March 31, 1998 showed production of
6,884 BOEs per day and revenue (net of royalties) of $10.2
million. WestCastle received average prices of $18.51 per BOE,
general and administrative costs were $0.63 per BOE, interest
costs were $0.90 per BOE and royalty rates were in line with
expectations. After all first quarter cost information was
processed, operating costs were $7.79 per BOE, well above
expectations. This reduced the cash available for distribution to
$3.6 million or $0.18 per unit versus $4.0 million or $0.20 which
was actually distributed. The two cent deficit will be amortized
over the remaining three quarters of the fiscal year.
The Board of Directors also announces that Michael Smith has
resigned as President. Mr. Smith will remain as a director and
will continue to contribute to the management team in the areas of
acquisitions and assessing strategic alternatives. Brad
Hurtubise, who was recently appointed as CEO of WestCastle, has
identified the reduction of operating costs as the number one
priority of the Trust. In order to accomplish this it is
necessary to strengthen the technical and operating expertise
within management and staff. The Trust is seeking to hire a new
Chief Operating Officer with strong operating and executive
abilities as well as additional staff in the operations group.
Mr. Hurtubise has also initiated the development of a new plan and
budget for the remainder of 1998 and 1999. The process is
expected to be completed before the end of the second quarter and
will be critical as we change from quarterly to monthly
distributions. This budget will be based on the historical
performance of the Trust over the past twelve months, including
actual operating costs. Although it is too early in the process
to project with certainty, the Board expects that in the event
current commodity prices remain for the balance of the year, the
Trust will distribute approximately $0.73 per unit during 1998.
Any improvements in prices, production or operating or
administrative efficiencies developed by the new operating staff
should increase these numbers. During the first quarter, WTI oil
prices averaged US $15.90 per barrel and WestCastle's natural gas
price averaged $1.70 per mcf. Unit distributions will increase
approximately $0.06 for each $1.00 increase in WTI oil price or
for each $0.10 increase in natural gas prices.
On the operating side, the Trust exited the first quarter
producing in excess of 6,900 BOEs per day. Although demand for
infrastructure in the industry has resulted in delays, the
addition of compression in Parkland and Crossfield is expected to
increase production from current levels. In Medicine Hat, a
program of perforating additional formations in existing wells
will be implemented at the end of the second quarter which should
add to production and reserves in the second half of the year.
Also in Medicine Hat, a pilot project to clean up formation clay
and other contaminants in well bores is currently being
undertaken. The program is expected to result in increased
productivity from many of WestCastle's wells.
WestCastle Energy Trust is a publicly listed Trust, whose Units
trade under the symbol WCL.UN on the Toronto Stock Exchange.
There are currently 20,292,652 units issued and outstanding. |
