Ed - thanks for taking time re: Benz.
Just glancing thru some SEDAR filings and see the operating expense part of the equation look interesting. Major dollars going out.....
Sniped and cut from Sept. 2 release. Makes for some head-scratching..... Also, you're right too about rollbacks in that there's often associated price slippage. Watching from a distance.
from BENZ ENERGY LTD.
FORM 61 - QUARTERLY REPORT
FOR THE SIX MONTHS ENDED JUNE 30, 1998
"Operating costs, including lease operating expense (LOE) and production taxes, increased 540% from $52,700 in the first half of 1997, to $337,600 for the same period in 1998. The increase in operating costs was due primarily to increased production from wells drilled or acquired since the prior year period. For the first six months of 1998, LOE, excluding severance taxes, totaled $297,100 compared to $37,500 for the comparable period in 1997. On an equivalent Mcf basis, LOE for the first half of 1998 declined from $0.41 per Mcfe in 1997 to $0.38 per Mcfe in 1998.
General and administrative expense in the first half of 1998 increased over $1.7 million, or 123 percent, compared to the same period in 1997. On an equivalent Mcf basis, general and administrative costs declined 74 percent to $3.99 per Mcfe for the first six months of 1998 compared to $15.39 per Mcfe for the same period in 1997. General and administrative costs increased over the prior year period due primarily to higher compensation expense. At June 30, 1998 the company had 36 employees compared to 19 employees at June 30, 1997. The high level of general and administrative costs is due to the lag between realization of revenues from the Company's extensive capital program underway and the initial costs of creating and managing such a program. In addition, approximately 20% of reported general and administrative expense is expected to be non-recurring.
Net financing costs for the six months ended June 30, 1998 totaled $2.4 million compared to $10,300 in the comparable prior year period. The increase is due primarily to the financing arrangements under the EnCap credit agreement entered into in December 1997 and interest on the $37.5 million principal amount Convertible Debentures and Special Notes issued in March and April of 1998. Average corporate debt was approximately $39.1 million for the first half of 1998 resulting in gross interest costs of $2.1 million. Other financing costs include the amortization of the original issue discount for the Encap nets profit interest of $920,300 and the amortization of deferred loan and issuance costs of $356,400. Partially offsetting these costs were capitalized interest of $705,100, which is based on the carrying value of unproved properties, and interest income of $307,800.
The Company had losses on the sales of marketable securities totaling $142,100 for the six months ended June 30, 1998 and gains on the sales of marketable securities of $107,100 for the comparable period in 1997.
For the first half of 1998, the Company reported a net loss of $5,258,400, or $0.17 per basic share, compared to a net loss of $1,251,400, or $0.06 per basic share, in the comparable 1997 period. Weighted average shares outstanding increased from approximately 22.4 million in the first half of 1997 to over 31.6 million in 1998 as a result of the conversion and exercise of special warrants in late 1997 and the issuance of common shares to acquire certain properties in 1998."
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