EARNINGS / Lexxor Energy Q1 Results
LEXXOR ANNOUNCES FIRST QUARTER RESULTS, UPDATES ACTIVITY
CALGARY, May 27 /CNW/ - Lexxor Energy Inc. has announced its financial
and operating results for the first quarter of 1998 ended March 31, 1998.
Despite a doubling of production volumes versus year ago figures Lexxor's
first quarter results were influenced by low prices for conventional crude oil
and lower prices and netbacks for natural gas. Oil price averaged $21.13 per
barrel in the 1998 period versus $25.25 per barrel in the corresponding 1997
quarter. With the prevailing low oil price and a wide negative differential
for heavy crude, Lexxor's heavy oil production remained temporarily suspended
during the quarter, with an estimated 150 barrels of oil per day (net) shut
in. Natural gas prices averaged $1.86 per mcf in 1998 versus $2.30 per mcf in
the 1997 period, and increasing natural gas production levels were tempered by
low netbacks due primarily to high operating costs for NE British Columbia
production. (See sale of Conroy, B.C. property below).
Oil and gas revenues for the three month period ended March 31, 1998 were
$528,829 versus $306,873 in the corresponding 1997 quarter. Netbacks for oil
and liquids averaged $15.25 per barrel compared to $15.74 per barrel in the
1997 period while netbacks for natural gas averaged $0.54 per mcf versus $1.30
per mcf last year.
Three month cash flow amounted to $96,126 (one cent per share basic, one
cent per share fully diluted) versus $114,861 (2 cents per share basic, 1 cent
per share fully diluted) in the corresponding 1997 period. Loss for the
period was $49,874 (one cent per share) versus earnings of $4,611 (nil cents
per share) in the 1997 quarter.
Capital expenditures during the first three months were $1,443,862,
versus $2,506,302 last year.
In March, 1998 Lexxor had incurred all of the $500,000 of qualifying
expenditures as required under an agreement with Petrovest IV Limited
Partnership and issued 434,783 Class A shares and received $500,000 from funds
held in trust on April 1, 1998.
In a recent development, Lexxor (15 percent) and its partner have agreed,
subject to certain conditions being met, to sell the Conroy/Tommy, British
Columbia gas property to a third party for an effective consideration of
$10.25 million ($1.54 million net). The offer consists of a cash component of
$4.57 million ($686,000 net) and the assumption by the purchaser of a $5.7
million ($852,000 net) financing obligation against production facilities.
Lexxor's first quarter production from this property averaged approximately 90
barrels of oil equivalent per day. The sale is slated to close in late May.
During the first three months of 1998 working interest production of oil
and natural gas liquids averaged 78 barrels per day versus 77 BPD last year
while gas production averaged 2,220 thousand cubic feet per day (mcf/d) versus
635 mcf/d in the corresponding 1997 quarter.
Early 1998 saw Lexxor's expanded exploration staff focusing on the
generation of new Alberta prospects and finalization of farm-in agreements as
potential locations were defined and moved toward the drilling stage. First
quarter, 1998 activity saw Lexxor drill four locations including three wells
in a new Company operated gas project at Haro in northern Alberta. All of the
wells were cased for gas potential. Lexxor has a 100 percent interest before
payout in two gas wells and a 65 percent interest before payout in a third
indicated discovery. Lexxor's first discovery flowed at a rate of 1.2 million
cubic feet per day on flow test and gas production from the area commenced
April 1 at a pipeline restricted rate of 500 mcf/d. Lexxor has acquired
drilling rights on 24 sections of acreage in this area (15,360 acres) and
plans a multiwell drilling program and expansion of the project area along the
productive trend next winter. The Company is pursuing prospects in another
northern gas project area and intends to acquire an acreage position through
seismic option agreements and drilling commitments entailing field activity
later this year.
In southern Alberta, Lexxor has defined two prospects in the prolific
Little Bow project area. The Company has acquired the drilling rights on both
prospects through successful bids at Crown Land Sales and through a farm-in
drilling commitment respectively. Drilling is scheduled for mid-summer with
Lexxor retaining a high working interest (50 to 85 percent) and operating the
project. New exploration activity (seismic review and land purchase) is
planned in the Bashaw, Ewing Lake and Wood River prospect areas of central
Alberta.
Lexxor Energy Inc. is a Calgary-based oil and gas exploration company
which trades on The Alberta Stock Exchange, symbol LXX.A.
This information has neither been approved nor disapproved by The Alberta
Stock Exchange.
-30-
For further information: Ronald R. Talbot, President, or J. Paul
Lawrence, Vice President, Finance, (403) 571-8111
|
