EARNINGS / Place Resources Corporation Third Quarter Report - Nine Months
Ended September 30, 1998
CALGARY, Nov. 10 /CNW/ -
3rd Quarter % Increase Nine Months % Increase
Highlights 1998 1997 (decrease) 1998 1997 (decrease)
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Oil & Liquids
Production
(bbl/day) 1,130 1,043 8 1,170 1,009 16
Gas Production
(mmcf/day) 5.9 3.4 74 6.4 4.0 60
Total Production
(BOE/day) 1,718 1,380 24 1,811 1,412 28
Average Oil &
Liquids Price
($/bbl) 18.54 23.48 (21) 18.04 23.42 (23)
Average Gas Price
($/mcf) 1.91 1.82 5 2.01 1.87 7
Revenues ($000's) 2,998 2,903 3 9,420 8,747 8
Cash Flow from
Operations
(000's) 1,217 1,359 (10) 3,770 3,781 0
Per Share (cents) 10 11 (9) 30 30 0
Net Earnings ($000's) 63 351 (82) 378 678 (44)
Per Share (cents) 0.1 2.8 (96) 3.0 5.4 (44)
TO THE SHAREHOLDERS
We are pleased to report the successful completion of our summer drilling
program at Minehead, located 30 km south of Edson in the Alberta foothills.
Place has drilled and completed 3 Cardium gas wells at Minehead (Place 1.26
net wells). All three wells should be tied-in and producing by the end of
November.
As a result of the drilling, proven gas reserves assigned by Paddock
Lindstrom & Associates Ltd. to the Minehead area have increased to 20.5 BCF up
from 6.2 BCF assigned as at December 31, 1997. The estimated net present
value of these proven reserves has increased to $17.2 million up from $5.2
million estimated as at December 31, 1997.
FINANCIAL RESULTS
Revenue for the third quarter of 1998 increased by 3 percent over the
same period last year as the result of increased natural gas production. Nine
months revenue was $9.4 million, up 8 percent from the first nine months of
1997.
Natural gas revenue for the third quarter increased by 54 percent to
$1.033 million from $0.672 million in 1997, due to increased gas production.
Production averaged 5.9 million cubic feet per day in the third quarter of
1998, up by 74 percent from 1997 levels. Natural gas prices for the quarter
averaged $1.91 per thousand cubic feet, up 5 percent from $1.82 per thousand
cubic feet for the same period last year.
For the nine-month period, natural gas revenues were up by 70 percent due
to a 60 percent increase in natural gas production to average 6.4 million
cubic feet per day and a 7 percent increase in natural gas prices to $2.01 per
thousand cubic feet.
Increased oil production partially offset reduced oil and natural gas
liquids prices resulting in a 14 percent decrease in oil and natural gas
liquids revenues to $1.9 million. For the nine-month period, oil and liquids
revenues were $5.8 million, down 11 percent from $6.5 million in 1997.
Oil and liquids production averaged 1,130 barrels per day, an 8 percent
increase from 1,043 barrels per day in the third quarter of 1997. Improved
oil and liquids production was offset by decreased oil and liquids prices
which averaged $18.54 per barrel, down by 21 percent from $23.48 per barrel in
the third quarter of 1997.
Nine months oil and liquids production averaged 1,170 barrels per day, a
16 percent increase over 1997 while prices were down by 23 percent to average
$18.04 per barrel.
Cash Flow in the third quarter decreased by 10 percent to $1.2 million
(10 cents per share) from $1.4 million (11 cents per share) in 1997. Nine
months cash flow held steady at $3.8 million (30 cents per share).
Production expenses of $868,000 were $5.49 per barrel of oil equivalent
for the third quarter, up from $4.36 per barrel in the same period of 1997.
Royalties of $528,000 or $3.34 per barrel of oil equivalent for the
quarter were dramatically decreased from 1997 unit costs of $4.86 per barrel
of oil equivalent. The decrease in per unit cost can be attributed to lower
oil prices plus higher Alberta Royalty Tax credits associated with wells
drilled by Place in 1997.
Net Earnings were $63,000 (0.1 cents per share) for the third quarter of
1998 versus $351,000 (2.8 cents per share) in the same period of 1997. For the
nine months ended September 1998, net earnings were $378,000 (3.0 cents per
share) off by 44 percent from $678,000 (5.4 cents per share) in 1997.
OUTLOOK
Place has entered into agreements to purchase an additional 2,400 highly
prospective net acres at Minehead with identified drilling opportunities. This
increases our position to 5,880 net acres (9.2 net sections) of contiguous
acreage along the faulted Cardium gas trend.
In November, we will continue our drilling program with a vertical well
located at 5-16-47-17 W5M (Place 100%), a vertical well located at
14-19-47-17 W5M (Place 12.5%) and a horizontal well at 12-7-48-17 W5M (Place
33.25%). Over the course of the next 18 months, Place intends to participate
in 19 gas wells (11 net) which would complete development on 320 acre spacing
at Minehead and which is estimated to cost approximately $25 million.
Based on the results of its summer drilling program, Place has increased
its bank line of credit, which will be used to assist with the aforementioned
acquisitions and additional drilling.
On behalf of the Board,
Keith W. Hern
President and Chief Executive Officer
November 9, 199
Place Resources Corporation
Consolidated Balance Sheet
(in thousands of dollars)
1998.09.30 1997.12.31
(Unaudited) (Audited)
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Assets
Current Assets $ 1,814 $ 3,644
Property & Equipment 36,304 35,483
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38,118 39,127
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Liabilities & Shareholders' Equity
Current Liabilities 3,297 4,882
Long-term Debt 11,603 12,003
Site Reclamation Provision 708 660
Deferred Taxes 7,244 6,691
Shareholders Equity 15,266 14,891
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$ 38,118 $ 39,127
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Consolidated Statement of Earnings
For the Period Ended September 30
Three Months Nine Months
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(in thousands of dollars) (Unaudited) 1998 1997 1998 1997
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Revenue
Crude Oil & Liquids $ 1,929 $ 2,251 $ 5,764 $ 6,450
Natural Gas 1,033 565 3,509 2,063
Royalty Income and Other 36 87 147 234
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2,998 2,903 9,420 8,747
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Expenses
Production 868 554 2,464 1,703
Royalties 528 617 1,723 1,917
General & Administrative 201 199 805 757
Interest 175 116 548 393
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1,772 1,486 5,540 4,770
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Funds from Operations 1,226 1,417 3,880 3,977
Depletion and Depreciation 1,017 641 2,840 2,183
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Earnings before Income Taxes 209 776 1,040 1,794
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Income Taxes 146 425 662 1,116
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Net Earnings $ 63 $ 351 $ 378 $ 678
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Net Earnings per Share (cents) 0.1 2.8 3.0 5.4
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Place Resources Corporation
Statements of Changes in Financial Position
Three Months Nine Months
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(in thousands of dollars) 1998 1997 1998 1997
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Cash Provided by (used in) Operating
Activities
Net Earnings $ 63 $ 351 $ 378 $ 678
Depletion and Depreciation 1,017 641 2,840 2,183
Deferred Income Taxes 137 367 552 920
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Cash Flow from Operations 1,217 1,359 3,770 3,781
Change in non-cash balances
relating to operations 1,862 (769) 481 673
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3,079 590 4,251 4,454
Cash Provided by (used in)
Financing Activities
Issue of Common Shares 0 139 40 275
Redemption of Common Shares 0 0 (44) (469)
Increase (decrease) in Bank Loan (622) (334) (400) (1,426)
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(622) (195) (404) (1,620)
Cash (used in) Provided by Investing
Activities
Additions to property plant
& equipment (1,778) (4,189) (3,548) (6,990)
Disposal of property plant
& equipment (755) 3,950 0 4,290
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(2,533) (239) (3,548) (2,700)
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Increase (Decrease) In Cash (76) 156 299 134
Cash - Beginning of Period 76 (226) (299) (204)
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Cash - End of Period $ 0 $ (70) $ 0 $ (70)
Cash Flow per Share 10 11 30 30
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Trading Summary
(TSE - PLG) High Low Close Volume
--------------------------------------------------------------
1997 $ 2.42 $ 1.75 $ 2.12 3,640,751
1998 - 1st Quarter $ 2.20 $ 2.00 $ 2.15 356,812
1998 - 2nd Quarter $ 2.90 $ 2.10 $ 2.46 360,636
1998 - 3rd Quarter $ 3.00 $ 2 |
