EARNINGS / Seventh Energy Financial and Operating Results
TSE SYMBOL: SEV.A
ASE SYMBOL: SEV.B
MAY 29, 1998
CALGARY, ALBERTA--Seventh Energy Ltd. announces its financial and
operating results for the first three months of 1998. As Seventh
Energy was on a pre-production accounting basis during the first
three months of the previous year, comparative figures are not
presented.
/T/
FINANCIAL HIGHLIGHTS
Financial Operating
Petroleum and natural Oil production
gas sales $ 1,125,740
Funds from operations $ 415,922 Barrels 71,690
per Class A share
(basic) $ 0.04 Barrels per day 797
per Class A share
(fully diluted) $ 0.04 Average selling
price $ 14.53
Net loss $ 73,638 Gas production
per Class A share
(basic) $ 0.00 Mcf 34,429
per Class A share
(fully diluted) $ 0.00 Mcf per day 383
Working capital
deficiency $ 5,416,698 Average selling
Price $ 2.50
Long term debt $ 5,111,101 Barrels of oil
Equivalent
Capital expenditures $ 2,233,961 Production 75,133
Class A shares outstanding
Daily production 835
basic, end of period 10,859,737 Average netback $ 7.56
fully diluted 11,823,737
/T/
OPERATIONS
During the first quarter of 1998 Seventh drilled three wells at
Gift in Northern Alberta. All were completed as Gilwood oil wells.
Two wells from our year end 1997 drilling program in Southern
Alberta were also completed during the first quarter, and the
final components of our Turin oil field pressure maintenance
scheme were installed. Total capital expenditures for the quarter
were $2,233,961.
Production for the quarter averaged 835 barrels of oil equivalent
per day, 95 percent of which was crude oil. The production rate
represented a 30 percent increase over the 643 barrels of oil
equivalent produced during the fourth quarter of 1997. Subsequent
to the end of the first quarter, working interests were sold in
our properties at Turin, Grand Forks and Gift. After closing the
transactions, production will be reduced to approximately 600
barrels of oil equivalent per day, continuing to be 95 percent
crude oil. Seventh estimates that our corporate average for the
year will be 700 barrels of oil equivalent per day.
Reserves sold amounted to 667,000 barrels of oil equivalent of
proven reserves and 304,200 barrels of oil equivalent of probable
reserves, resulting in remaining reserves of 1,850,200 barrels of
oil equivalent proven reserves and 878,600 barrels of oil
equivalent probable reserves. The reserves are concentrated in our
core exploration and development area of Enchant-Hays in Southern
Alberta.
FINANCIAL REVIEW
First quarter financial performance was heavily impacted by low
oil sales prices. Petroleum and natural gas sales revenue dropped
four percent from the fourth quarter of 1997, to $1,125,740, in
spite of the 30 percent increase in production. The average sales
price for crude oil fell from $19.18 to $14.53 per barrel.
Netbacks for the first quarter on a barrel of oil equivalent basis
were lower by 37 percent from the fourth quarter 1997 amount of
$11.97, and are detailed as follows:
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Sales price $ 14.74
Royalties (2.97)
Operating costs (5.37)
ARTC 1.15
-----
Netback $ 7.56
/T/
Long term debt at March 31, 1998 was $5,111,101, and the working
capital deficit was $5,416,698, for a total debt load of
$10,527,799. Our corporate goal of reducing overall debt levels
through asset sales has reduced this amount to a current level,
after asset sales, of $6,300,000.
Funds from operations amounted to $415,922, or $0.04 per share on
a fully diluted basis. This was a 39 percent drop from the
$679,240 recorded in the fourth quarter of 1997, and was mainly
due to decreased oil prices. The Company recorded a small loss in
the first quarter of $73,638.
/T/
BALANCE SHEET
As at As at
March 31, 1998 December 31,1997
-------------- ----------------
ASSETS
Current
Cash $ 21,062 $ 27,864
Accounts receivable 2,333,976 2,380,148
Prepaid expenses and deposits 69,605 33,680
--------------------------------
2,424,643 2,441,692
Investment, at cost 416,823 416,823
Capital 24,534,905 23,613,893
--------------------------------
$ 27,376,371 $ 26,472,408
--------------------------------
--------------------------------
LIABILITIES
Current
Accounts payable and
accrued liabilities $ 7,841,341 $ 6,771,658
Long term debt 5,111,101 4,368,793
Site restoration and
abandonment provision 82,581 45,720
Deferred income taxes 601,057 660,388
--------------------------------
13,636,080 11,846,559
--------------------------------
SHAREHOLDERS' EQUITY
Share capital 13,547,583 14,359,503
Retained earnings 192,708 266,346
--------------------------------
13,740,291 14,625,849
--------------------------------
$ 27,376,371 $ 26,472,408
--------------------------------
--------------------------------
STATEMENTS OF INCOME AND RETAINED EARNINGS
For the Three Months Ended March 31, 1998
Revenues
Petroleum and natural gas sales $ 1,125,740
Royalties (147,434)
-------------
978,306
-------------
Expenses
Production 354,272
General and administration 139,135
Interest 68,977
Depletion, depreciation and amortization 548,891
-------------
1,111,275
-------------
Net loss for the period, before income taxes (132,969)
Deferred tax recovery 59,331
-------------
Net loss for the period (73,638)
Retained earnings, beginning of year 266,346
-------------
Retained earnings, end of period $ 192,708
-------------
-------------
Earnings (loss) per Class A share
Basic $ 0.00
------
------
Fully diluted $ 0.00
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------
/T/
(x) As the Corporation did not commence commercial production
until August 1, 1997 comparative highlights are not presented.
/T/
STATEMENT OF CHANGES IN FINANCIAL POSITION
For the Three Months Ended March 31
Operating activities 1998 1997
---- ----
Net income $ (73,638) $ -
Add charges not affecting cash
Depletion, depreciation
and amortization 548,891 -
Deferred income taxes (59,331) -
---------- ---------
Funds from operations 415,922 -
Change in non-cash working capital
related to operating activities 727,042 -
---------- ---------
1,142,964 -
---------- ---------
Financing activities
Issue of Class A shares,
net of issue costs - 507,692
Tax benefits rendered to shareholders (11,000) -
Increase in production loan 742,308 -
--------- ---------
731,308 507,692
--------- ---------
Cash available for
investing activities 1,874,272 507,692
Investing activities
Expenditures on property
and equipment (2,233,961) (376,647)
Change in non-cash working capital
related to investing activities 352,887 (163,989)
--------- --------
(1,881,074) (540,636)
--------- --------
Decrease in cash (6,802) (32,944)
Cash, beginning of year 27,864 7,549,923
----------------------
Cash, end of period $ 21,062 $7,516,979
----------------------
----------------------
Funds from operations per Class A share
Basic $ 0.04 $ nil
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Fully diluted $ 0.04 $ nil
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/T/
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be available at www.sedar.com. |
