RESERVES REPORT / Petromet Energy Announces Preliminary Reserves
Indication
CALGARY, ALBERTA--Petromet Resources Limited ("Petromet" or the
"Corporation") announces today that it has received a preliminary
report from its independent reserve engineers. The report
indicates that a revision to previously booked proven reserves is
likely. The exact magnitude of the reserves revision will not be
known definitively until the Corporation and its independent
engineers have completed their due diligence, however, the present
value attributed to the Corporation's proven reserves, after
taking the preliminary indication into account, is expected to
show an increase on a year over year basis compared to December
31, 1997. Based on the preliminary report, Petromet's formerly
lengthy proven reserve life is expected to be more closely aligned
to industry averages. Petromet is taking a proactive approach to
ensure that reservoir performance, current economic conditions,
and existing technology are conservatively taken into account in
its reported reserves.
As previously disclosed for the third quarter ended on September
30, 1998, Petromet reported an increase in production of 35
percent compared to the same period in 1997. Cash flow per share
increased by 24 percent in the third quarter compared to the
second quarter of 1998. The Corporation had positive working
capital of $4.4 million and an unused line of credit of $7.8
million at September 30, 1998. Petromet's revised estimate for
production in 1999 is 55 mmcf per day of natural gas and 1,300
bbls per day of liquids, corresponding to 6,800 BOE per day of oil
equivalent production. Current production exceeds 7,000 BOE per
day, which is 48 percent higher than the average production rate
for the fourth quarter of 1997. Petromet has revised its 1999
capital expenditure budget to $33 million, which is a reduction of
6 percent to the Corporation's estimate at September 30, 1998.
Petromet is currently drilling its fourth 4,200 metre Leduc
exploration well at Wild River, where the Corporation has
experienced a 100 percent success rate during the past year on
three exploration wells for this target. Petromet holds a working
interest of 100 percent in this well. Petromet is also
participating in a 4,100 metre exploration well for the Wabamun
zone at Kakwa where significant reserve discoveries in this
horizon have been reported by industry competitors. Petromet
holds a working interest of 16 percent in this well before payout
and 30 percent after payout.
In addition, Petromet announces that David H. Erickson, Senior
Vice President, Exploration has decided to leave the Corporation
to pursue other business opportunities. Mr. Erickson has agreed
to assist Petromet until a suitable replacement is identified.
Petromet is grateful to Mr. Erickson for his contribution towards
the Corporation's growth and wishes him well in his future
endeavors.
Petromet remains confident that the Corporation's focus on natural
gas, low cost operations, and investment opportunities will
contribute to sustainable growth for shareholders.
Petromet is an active natural gas exploration, development, and
production corporation focused on west central Alberta. The
Corporation's common shares trade on the TSE and the NASDAQ (PNT
and PNTGF respectively), and its convertible debentures trade on
the TSE (PNT.DB).
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