CORP REPORT / Probe Exploration Inc. Outlines Current Status Of Company
PROBE PROVIDES INVESTOR RELATIONS UPDATE
CALGARY, AB--
Probe Exploration Inc. (PRX-TSE) is a growth oriented oil and gas
exploration and development company. Since 1993, Probe has
exhibited a consistent growth pattern by making timely
acquisitions of underexploited properties and aggressively
developing them. In 1997, the Company acquired 2 MMBOE of
reserves in the Leduc field and in one year, increased reserves
to over 30 MMBOE. Total Probe reserves at June 30, 1998 were
estimated at 51.5 MMBOE. The Company has recently completed
several strategic transactions to increase the quality and
quantity of its land base. These moves are designed to position
Probe as a dominant area player in central Alberta. Probe has
71,283,469 (basic), 77,474,968 (fully diluted) shares
outstanding and trades on the Toronto Stock Exchange under the
symbol PRX.
HIGHLIGHTS
----------
* Probe continues to post production gains quarter over quarter
and year over year
* Completed $16.63 MM flow through financing: 6,650,381 shares
were issued at $2.50 (lowered from previously announced $3.25
per share due to market volatility), of which $1.9 MM was
invested by management, employees and directors
* Stock currently trading below Proven and 1/2 Probable NAV of
$3.38 (15% NPV based on June 30, 1998 report, using current
debt, current shares outstanding)
* Probe has executed an agreement to divest a portion of Leduc
facilities to a mid-stream operator, proceeds to reduce debt
* Majestic and Leduc West provide Probe with new diversification
and excellent growth potential which builds upon existing
production base at Leduc
* Probe maintains trading liquidity with a 52 week volume of 73.1
MM shares
* Management and employees have invested heavily in the company
and new staff has recently been added to improve operational
performance and financial controls
* Management is committed to maintaining Probe's growth track
record and providing value for its shareholders
OPERATIONS UPDATE
-----------------
Overview
* A 224% increase from 1997 average production of 4,009 BOE/d to
1998 exit production of over 13,000 BOE/d
* Exit production was comprised of approximately 52.0 MMcf/d of
natural gas, 4,400 bbls/d of oil and 3,400 bbls/d of NGL's
* Exit numbers were lower than anticipated due to reduction in
December drilling activity based on commodity prices, delays in
well tie-ins through logistical and regulatory problems, and
higher than budgeted declines for Leduc
* Probe is currently operating two active drilling rigs in Leduc
West and Majestic and has three service rigs employed at Leduc
working on recompletions and optimization
* New additions to technical team to manage operations and
optimize production from new wells
* Effective November 1st Probe's gas pricing improved from an
average of $1.47 to $2.55 per Mcf based on new hedging
programs. Additional improvement in NGL pricing will also have
a positive effect on cash flow
Leduc
* Achieved record gas production levels at Leduc in December 1998
and January 1999
* Based on current commodity prices, operational focus is
shifting to gas targets, recompletions and optimization of new
wells and facilities
* 15 recompletions identified for the Ellerslie zone in Q1/99
* Wabamun gas development north of the North Saskatchewan River
will be pursued in Q1/Q2/99
* Agreement in place to process sour gas from north of the North
Saskatchewan River at ATCO's Golden Spike plant
* Wabamun wells are currently averaging 80 BOE/d, per well,
although this is less than the original budget of 125 BOE/d,
per well, with a 20% annual decline, optimization of these
wells and facilities is ongoing
* Sparky waterflood has been in operation since October 1998.
Production response should be seen by mid 1999
* Investment in infrastructure and area expertise will allow
Probe to rapidly expand oil development program when pricing
recovers
Leduc West
* The Leduc West project area now comprises over 300 sections of
high working interest, gas prone acreage, which extends north
and west from Probe's main Leduc area
* Probe's technical team is well advanced in the initial
evaluation of lands with active seismic and drilling currently
under way
* Probe expects to drill at least 30 wells over the next 12
months and has already identified 17 prospective drilling
locations
* Planned exploration expenditures for the area are $8 to $10 MM
in 1999
* Negotiations for gas processing midstream operator are
advancing
* Probe has now drilled four out of five successful exploratory
gas wells, with tie-in planned through Q1/Q2/99
Majestic
* Majestic has evolved into a major core area comprising 60
sections of high working interest land equally prospective for
gas and oil
* Production profile is now approaching 50/50 split between gas
and oil
* Existing infrastructure plus balanced production base provides
platform for future growth
* Q4 drilling program has resulted in five horizontal oil wells
and three vertical gas wells, (100% success, 90% W.I.)
* Interpretation of new 2D seismic program has identified seven
new vertical targets
1999 PROSPECTS
--------------
* 1999 capital expenditure budget and targets will be set by
early February
* 1999 budget will be confined to cash flow as dictated by
commodity prices in order to minimize stress on balance sheet
* Rapidly declining cost of services will stretch capital dollars
further
* Shift in drilling activity towards gas prone plays such as
Leduc West and Leduc Ellerslie recompletions, along with new
Majestic gas
* Recovery in oil prices to $14/$15 range will quickly trigger a
return to aggressive oil development program
The Toronto Stock Exchange has neither approved nor disapproved
the information contained herein.
For further information contact:
Probe Exploration Inc.
Stephen P. Gibson, President & CEO or Warren Shimmerlik
Penny Antoniuk, US Investor Relations
Investor Relations Co-ordinator Tel: (212) 247-5200
Tel: (403) 233-2464 Fax: (212) 541-7289
Fax: (403) 233-2486
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