EARNINGS / Arakis Reports First Quarter 1998 Results
NASDAQ SYMBOL: AKSEF
MAY 26, 1998
CALGARY, ALBERTA--Arakis Energy Corporation (NASDAQ: AKSEF) today
reported a net loss of $0.8 million, or $0.01 per share, for the
three months ended March 31, 1998, the same result as in the first
quarter of 1997. (All values are in U.S. dollars). Funds applied
to operations also amounted to $0.8 million, compared with $0.5
million in the first three months a year ago. At March 31, 1998,
working capital amounted to $54.7 million, compared with $55.5
million at year-end 1997.
Capital expenditures in the first quarter totaled $67,000,
compared with $1.0 million in the first quarter of 1997. Since
November 29, 1996, Arakis' Consortium partners in the Sudan
Petroleum Project have borne substantially all expenses related to
the Sudan Concession (excluding bonuses and rentals payable) and
will continue to do so until they have matched, on a pro rata
basis, financial credits awarded to Arakis. Based on the
Company's economic evaluations and Consortium spending estimates,
Arakis expects to begin paying its 25 percent share of ongoing
Consortium expenditures in the third quarter of 1998.
Late in April 1998, State Energy Corporation, a wholly-owned
subsidiary of Arakis, filed a preliminary prospectus with Canadian
securities commissions with respect to a proposed issue of
securities to fund part of the Company's financial commitments to
the Sudan Petroleum Project. Pricing of the offering is expected
to occur in early June with closing shortly thereafter.
Seven wells were drilled on the Sudan Concession in the first
quarter of 1998, resulting in four oil discoveries and three dry
holes. Subsequent to quarter end, six additional wells have been
drilled resulting in five further oil discoveries and one dry
hole. Of the nine successful wells drilled so far in 1998, two
have been production tested and designated potential producers;
the remaining seven have yet to be tested. The single service rig
on the Concession, which is used for production testing, has been
employed over much of the past few months on other essential
development activity and this has resulted in a build-up of
untested wells. The arrival of a second service rig on the
Concession, expected by mid-year, should accelerate the testing
program.
The Consortium plans to drill up to 16 wildcat exploration wells,
six appraisal wells and 36 development wells in 1998. The
appraisal and development drilling will focus on the five fields
designated to be the initial project producers, namely the Greater
Heglig, the Greater Unity, the Toma South, the El Nar and the El
Toor fields. The Consortium is targeting startup of commercial
production, at a minimum rate of 150,000 barrels of oil per day,
by mid-1999.
The program for construction of a 250,000 barrel per day pipeline
from the Concession to a marine terminal to be constructed near
Port Sudan on the Red Sea coast also continues to make strong
headway. A major milestone was reached on May 4, 1998 when the
first length of 28" diameter steel pipe was laid at the Port Sudan
end of the 1,500 kilometre pipeline route. The following day,
construction began along another stretch of the route, close to
Khartoum. The target date for completion of the pipeline is the
end of the second quarter of 1999. To meet the fast-track
schedule, construction will be carried out simultaneously along
several stretches of the pipeline right-of-way.
/T/
Selected Data
For the three months ended
(All financial amounts in
thousands of U.S. dollars, March 31
except per share items) 1998 1997
---- ----
(unaudited)
Total revenues $ 852 $ 907
Loss $ 766 $ 759
- per share $ 0.01 $ 0.01
Funds applied to operations $ 750 $ 477
Weighted average common shares
outstanding (in thousands) 89,312 87,725
March 31 December 31
1998 1997
---- ----
Working capital $ 54,670 $ 55,482
Shareholders' equity $ 179,036 $ 179,802
/T/
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