EARNINGS / Anderson Exploration Q2 Results
Anderson Exploration Ltd. Announces Its Financial and Operating Results for the First Half of Fiscal 1998 Ending March 3
CALGARY, ALBERTA--Today in Calgary, Anderson Exploration Ltd.
announced its financial and operating results for the first half
of its fiscal year which ended on March 31, 1998. The Company
continued to meet its production targets in the second quarter of
fiscal 1998, recording an eight percent increase in barrel of oil
equivalent production over the same period last year. Cash flow
from operations for the first half of the year was $155.9 million
or $1.27 per share and earnings were $8.7 million or $0.07 per
share.
During the first half of fiscal 1998, oil and NGL sales increased
15 percent to 38,497 barrels per day. Natural gas sales for the
first half of the year averaged 557 million cubic feet per day
compared to 542 million cubic feet per day last year. Liquids
prices for the first half of fiscal 1998 were down 30 percent from
last year while natural gas prices were down seven percent. Lower
prices more than offset increases in production, resulting in a
decrease in revenues. This decrease, combined with higher costs,
resulted in a decrease in cash flow from operations and earnings
from the same period in the previous year. Operating expenses
increased over last year due to increased heavy oil production,
the continuation of some significant workover programs and higher
overall costs in the industry. The Company expects to see a
reduction in operating expenses in the last half of the year.
Net capital expenditures for the first half of the year were
$374.2 million representing 74 percent of the 1998 fiscal budget.
These expenditures include the Swan Hills acquisition in the first
quarter of the year for $98 million and $32 million in
construction costs for Federated Pipe Lines' expansion, now
scheduled for start up on July 1, 1998.
In the first half of the year, the Company drilled 312 gross wells
(213 net) compared to 398 gross wells (240 net) for the same
period last year. The average well depth increased by about 1,150
feet, as activity shifted to deeper parts of the basin. A busy
winter drilling program was completed in northeastern British
Columbia and northern Alberta. In British Columbia, extensive gas
gathering systems were built to fill available capacity at
existing plants.
Notwithstanding the lower commodity prices experienced in the
first half of the year and expectations for prices in the second
half of the year, the Company expects to spend its original budget
of $505 million. However, as a result of low crude oil prices and
high heavy/light oil differentials, the Company has postponed
certain capital expenditures related to heavy oil projects and has
now shut in approximately 1,300 barrels per day of heavy oil
production. Serious forest fires in north central Alberta have
resulted in the temporary shut in of substantial light oil
production at Swan Hills, Virginia Hills and Mitsue. The exact
effect that the fires will have on the Company's projected annual
sales is still unknown.
While the Company expects cash flow from operations and earnings
for the year to be less than last year, production growth will
continue. Higher natural gas prices are expected for fiscal 1999
once increases in export pipeline capacity are brought on stream
in November 1998, putting the Company back on track for improved
financial results next year. Anderson Exploration Ltd. is one of
the senior Canadian producers most leveraged to natural gas with
67 percent of its sales volumes derived from natural gas and
natural gas liquids. Considering this, the Company is well
positioned to take advantage of future natural gas price
increases.
/T/
Three months ended Six months ended
March 31 March 31
1998 1997 1998 1997
-------------- -----------------
FINANCIAL
(millions of dollars, except per share amounts)
Total Revenue Before
Deducting Royalties $163.5 $199.6 $358.7 $406.6
-------------- ---------------
Cash Flow From Operations
Oil & Gas $ 61.9 $100.2 $150.4 $216.9
Pipeline $ 3.2 $ 2.3 $ 5.5 $ 4.9
-------------- ---------------
Total $ 65.1 $102.5 $155.9 $221.8
-------------- ---------------
Per Share $ 0.53 $ 0.84 $ 1.27 $ 1.82
-------------- ---------------
Earnings
Oil & Gas $(4.9) $ 21.6 $ 4.8 $ 57.0
Pipeline $ 2.3 $ 1.6 $ 3.9 $ 3.4
-------------- ---------------
Total $(2.6) $ 23.2 $ 8.7 $ 60.4
-------------- ---------------
Per Share $(0.02) $ 0.19 $ 0.07 $ 0.50
-------------- ---------------
Net Capital Expenditures 159.6 174.8 $374.2 $247.1
Long Term Debt $704.7 $483.9
Long Term Debt/Cash
Flow (Annualized) 2.3 1.1
Working Capital (Deficiency) $(71.6) $(61.1)
Shareholders' Equity $998.7 $951.6
Shares Outstanding (millions)
At End of Period 122.7 121.9
Weighted Average During
Period 122.5 121.8 122.4 121.6
Three months ended Six months ended
March 31 March 31
1998 1997 1998 1997
------------------ ----------------
OPERATIONS
PRODUCTION/SALES
Natural Gas (Mmcf/d) 554 543 557 542
--------------- ----------------
Oil (Bbls/d) 31,062 27,834 30,879 27,143
NGL (Bbls/d) 8,731 5,752 7,618 6,232
---------------- ----------------
Total Liquids (Bbls/d) 39,793 33,586 38,497 33,375
---------------- ----------------
PRODUCT PRICES
Natural Gas ($/Mcf) $ 1.87 $ 2.23 $ 1.99 $ 2.15
---------------- ----------------
Oil ($/Bbl) $17.04 $26.44 $19.79 $27.88
NGL ($/Bbl) $16.78 $26.19 $18.98 $27.99
---------------- ----------------
Total Liquids ($/Bbl) $16.98 $26.40 $19.63 $27.90
---------------- ----------------
CANADIAN OPERATING NETBACKS ($/BOE (x))
Oil & Gas Revenue $18.00 $23.91 $19.83 $23.96
Royalties $(3.40) $(4.79) $(3.85) $(4.38)
Operating Expenses $(5.29) $(4.53) $(5.22) $(4.18)
G&A Expenses $(0.91) $(0.84) $(0.85) $(0.81)
-------------- ----------------
Netback $ 8.40 $13.75 $ 9.91 $14.59
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(x) Gas converted to Oil @ 10 Mcf/Bbl
GROSS NUMBER OF WELLS DRILLED IN CANADA
Oil Wells 26 54 90 175
Gas Wells 119 113 165 153
Dry Holes 35 44 57 70
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180 211 312 398
Service Wells 6 3 6 30
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Total 186 214 318 428
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/T/
Anderson Exploration Ltd. is a Calgary based oil and gas company
operating exclusively in western Canada. Its common shares trade
under the symbol "AXL" on The Toronto Stock Exchange.
-30-
FOR FURTHER INFORMATION PLEASE CONTACT:
Anderson Exploration Ltd.
J. C. Anderson
Chairman & Chief Executive Officer
(403) 232-7100
or
Anderson Exploration Ltd.
Larry J. Macdonald
President & Chief Operating Officer
(403) 232-7100
or
Anderson Exploration Ltd.
David G. Scobie
Senior Vice President & Chief Financial Officer
(403) 232-7100
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