April 6, 1999
NEWS RELEASE
TUSK - Profitable 1998 Fiscal Year
Drilling success propelled TUSK Energy Inc. (TKE:TSE) to a profitable fiscal year despite low oil prices which averaged $18.22 per barrel, $8.03 per barrel lower than in 1997. For the year ended December 31, 1998:
* major discovery at Meekwap (17% net) averaged more than 1,400 boepd;
* participated (10% BPO, 30% APO) in Swan Hills gas discovery at Strachan;
* finding costs $2.48/boe (proven + 1/2 probable), $5.58/boe proven;
* positive earnings of $402,077 ($0.04 per share) / return on equity 6.4%;
* oil reserves increased 12% to 1.37 MMbbls / gas reserves up 763% to 11.1 Bcf;
* debt/cash flow ratio 2.2x;
* production increased 8% to average 653 boepd;
* increased undeveloped land holdings 21% to 45,250 net acres;
* operate over 80% of net production;
* long term debt $4.3 million;
* revenue, net of royalties, decreased 11% to $4,103,157;
* cash flow per share of $0.20 compared to $0.32 in the prior year;
* cash flow decreased 22% to $1,983,174.
Year Profit(1) Profit/Share(2) CashFlow(1) CF/Share(2) Revenue(1)(3)
1998 $0.40 $0.04 $1.98 $0.20 $4.10
1997 $(3.27) $0.41 $2.55 $0.32 $4.63
(1) millions of dollars
(2) weighted average 10,109,675 common shares
(3) net of royalties
During the month of March, net production is approximately 850 boepd. Corporate cash flow is approximately $10.00/boe at US$15 WTI. TUSK has 10,771,334 common shares issued and outstanding. A 6.5 square mile 3-D seismic survey, shot at Meekwap during the first quarter, will be processed and interpreted prior to the end of April.
During the second quarter, the Strachan Swan Hills gas discovery of 1998 will be tied and a shallow well, to twin the discovery and develop shallower gas reserves, will be drilled and placed on production. A gas discovery near Edmonton (news release: March 15, 1999) (TUSK 33.3% working interest) drillstem tested two zones at an aggregate 15 MMcfd and production tested the zones at an aggregate 4.7 MMcfd. This well will be on production early in second quarter. Gas production from the three wells is expected to add more than 3 MMcfd (300 boepd) to TUSK's net production. The commodity mix will then be more balanced at approximately 30% gas and 70% light oil.
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