CORP / Summit - Reserve and Production Update
TSE SYMBOL: SUI
JULY 2, 1998
CALGARY, ALBERTA--Summit Resources Limited announced today an
update in its petroleum and natural gas reserves as a result of a
successful first quarter drilling program. Independent
engineering evaluations, effective April 1, 1998, place the
Company's proved plus probable reserves at 215 Bcf of natural gas
and 20.6 MMbbls of liquids. Reserve additions of 1.0 MMbbls and
36 Bcf reflect the results of Summit's increased natural gas focus
and extends the Company's BOE reserve life index to 9.7 years.
First quarter activities replaced 424 per cent of production at a
finding and development cost of $5.28 per BOE ($7.14 proven plus
half probable).
Continuing low oil prices have resulted in adjustments to Summit's
1998 capital budget and drilling mix. Twenty-five (gross) wells
planned for development of crude oil reserves at Mirage, Rabbit
Hills, Knutson, Hayter and Kakwa have been deferred due to soft
oil prices. In addition, exploration drilling on new light oil
prospects at Vaux, McGregor, Pershing and Tyler have been
postponed until next year. As a result, 1998 average liquid
production is now forecast to average 6,250 barrels per day.
Natural gas drilling will increase with wells added at Alder,
Chain, Gage and Mirage. Minor adjustments in natural gas volumes
were made to account for delays in start-up of a non-operated gas
plant at Mirage, Alberta and curtailments in production from
Clarke Lake, British Columbia due to plant modifications and Two
Creek, Alberta due to forest fires in May. Natural gas production
for 1998 is now forecast to average 65.5 MMcf/d with exit rates of
73 MMcf/d.
The net effect of the above changes in Summit's drilling mix is a
5 per cent reduction in forecast production volumes to 12,800
BOE/d (10:1).
The Company has adjusted its capital budget to reflect the reduced
oil drilling program with the 1998 capital budget lowered to $34
million. Forecasted cash flow for 1998 has also been adjusted to
reflect the lower production volumes and changes in commodity
prices. Cash flow is now estimated at $48 million for 1998,
equating to $1.44 per share ($1.36 per share fully diluted).
Year-end 1998 long-term debt is projected to drop by $30 million
to $100 million as a result of the Company's reduced capital
expenditure program and the sale of its interest in the Fort
Chicago Energy Partnership (Alliance Pipeline).
Summit Resources Limited is a Canadian corporation engaged in oil
and gas exploration, development, acquisition, production and
marketing in western Canada and selected basins in the United
States. Summit's shares are listed on the Toronto Stock Exchange
(trading symbol "SUI").
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