EARNINGS / Tri Link Ressources Three Months Report Ending June 30
Date: 7/29/98
Stock Symbol: TLR
The financial results for Tri Link's first fiscal quarter ended
June 30, 1998, obviously reflect the low crude price environment
and a 33 percent drop in price on the Company's blend of crude
over the same period last year. With the Company's production 80
percent weighted to light and high quality medium crude, the good
news is that field netbacks were $8.75 per barrel. These
relatively strong netbacks are reflective of the Company's long
standing policy, over many years, to stick to high quality crude
production and exploration. The Company can weather the current
low oil price cycle due to the netbacks and our long life
reserves.
Earnings showed negative for only the second time in Tri Link's
history since going public in 1990. The loss was almost
exclusively related to the price of oil. On a per barrel basis,
royalties declined, operating costs were comparable to the prior
year and general and administrative costs were 41 percent higher,
at $1.55. The increased general and administrative costs were
reflective of a 15 percent increase in staff since January, as
adequate staff levels are essential to our three year plan to
double production. These costs will decline by year end, on a per
barrel basis, as production builds.
During the first fiscal quarter, capital was directed to high
quality development drilling In the Hazelwood Tilston pools, as
well as deeper Red River drilling. Two more Red River oil
discoveries were made at Hazelwood for a total of four since
January.
BUSINESS PLAN
The three year objective for Tri Link is to double production and
the business plan for this fiscal year ended March 31, 1999, will
unfold in two stages:
Stage I The injection of $90 million in new capital as a result
of a $56 million equity issue in May and a $34 million
sale of production to be completed in the second
quarter.
Stage II The sale of 1,500 equivalent barrels per day of
production will be replaced, through drilling, during
the third quarter. Further, the Company's drilling
program this year will continue to generate light
gravity oil production growth and is expected to
generate good fourth quarter exit rates.
Tri Link has budgeted $85 million of capital expenditures for the
year to be funded by cash flow, sale of equity and production
sale proceeds. The primary focus of the budget will be on
drilling, approximately 25 deep Red River wells in the Hazelwood
area and infill development proximal to facilities on the
shallower Tilston formation in Hazelwood.
TRI LINK RESOURCES LTD.
FINANCIAL AND OPERATING SUMMARY
Three Months Ended
June 30 %
1998 1997 +/-
---- ---- ----
Financial
---------
Revenue, net of royalties ($000) 17,810 21,050 -15
Cash flow from operations ($000) 7,040 12,397 -43
Earnings (loss) ($000) (710) 2,937
Cash flow from operations per share
- basic 0.30 0.59 -49
Cash flow from operations per share
- fully diluted ($) 0.29 0.56 -48
Earnings (loss) per share - basic ($) (0.03) 0.14
Earnings (loss) per share
- fully diluted ($) (0.03) 0.13
Capital expenditures ($000) 24,437 19,997 +22
Long term debt ($000) 117,500 85,540 +37
Average common shares (000) 23,284 20,991 +11
Average production volumes
--------------------------
Oil (bbl/d) 11,575 10,317 +12
Gas (mcf/d) 31,213 33,944 -8
Total (boe/d) 14,696 13,711 +7
Average sales prices
--------------------
Oil ($/bbl) 15.61 23.33 -33
Gas ($/mcf) 1.77 1.38 +28
Per barrel oil equivalent
-------------------------
Selling price, including hedging 16.06 20.97 -23
Royalties 2.74 4.10 -33
Operating expense 4.57 4.53 +1
Field netback 8.75 12.34 -29
Administrative expense 1.55 1.10 +41
Interest expense 1.39 0.65 +114
Capital taxes 0.54 0.65 -17
Corporate netback 5.27 9.94 -47 |
