Attention Business/Financial Editors:
Upton Gears up to Add Production and Cash Flow
CALGARY, May 19 /CNW/ - Upton Resources Inc. today released results for
the first quarter ended March 31, 1999. Upton's strategy to manage the longest
low oil price slump in recent history was modified for the first quarter. In
previous quarters Upton concentrated on drilling and property acquisitions
that would add reserves and development drilling locations positioning the
company for a strong comeback with the return of healthier oil prices. In the
first quarter Upton did not conduct a drilling program. Cash flow was used for
minor property acquisitions and to improve the company's balance sheet. The
combination of a low oil price and reduced production levels of 3,428 barrels
per day resulted in Upton generating cash flow of $1.25 million and $0.07
basic cash flow per share. West Texas Intermediate averaged US $13.06 per
barrel translating to a wellhead realization of Cdn $16.91 per barrel. Also
negatively impacting results for the quarter was the one-time cost of
purchasing in the money value of stock options. This transaction avoided the
dilution of 401,000 shares at $1.20 per share. The cost of $366,000 increased
general and administrative expenses and reduced cash flow for the quarter.
Outlook
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With no drilling to date, 1999 for Upton Resources begins June 1st. Our
1998 drilling success set the stage to move to an active drilling program with
the return to higher crude oil prices. With WTI prices now above US $17.00,
we can begin adding production volumes by mid June. The summer drilling
program will have two benefits. First, drilling costs are cheaper in the
summer months allowing for a maximization of capital expenditures and second,
the added volumes will attract higher realized crude prices than existed in
the first quarter.
Upton has plans to drill 15 development wells in 1999, elevating
production to an exit rate above 4,000 barrels per day. Eleven horizontal
wells with an average working interest of 91% are forecast to net Upton 1,350
BOPD by year end. Four vertical development wells all at 100% working
interest should account for another 225 barrels a day. Exploration drilling
will see four or five wells targeting new reserves and production not included
in the forecast.
The future looks very promising for Upton.
Increased cash flow due to improving oil prices in the second quarter
will be welcomed. Production additions in the third and fourth quarters,
combined with U.S. $17.00 WTI, dramatically increase cash flow. The new
volumes should help fourth quarter annualized cash flow exceed $13 million
($0.74 a share). This should set the stage for further production and cash
flow growth in year 2000.
HIGHLIGHTS
Three months ended March 31 1999 1998 % Change
Production
- barrels per day 3,428 5,289 -35
- total barrels 308,500 475,966 -35
Drilling activity
- gross wells 0 14 -100
- net wells 0 8.7 -100
Petroleum revenues (000's) $ 5,218 $ 9,302 -44
Cash flow (000's) $ 1,250 $ 4,886 -74
Basic cash flow per share $ 0.07 $ 0.29 -76
Fully diluted cash flow per share $ 0.07 $ 0.28 -75
Net earnings (loss) (000's) $ (412) $ 445 -193
Basic net earnings (loss) per share $ (0.02) $ 0.03 -167
Fully diluted net earnings (loss)
per share $ (0.02) $ 0.03 -167
Capital expenditures (000's) $ 617 $ 7,506 -92
Average shares outstanding (000's) 17,631 16,634 +6
Fully diluted shares outstanding (000's) 18,883 17,452 +8
Average oil price per barrel $ 16.91 $ 19.54 -13
Operating costs per barrel $ 3.61 $ 3.24 +11
Operating netback per barrel $ 9.42 $ 12.49 -25
Cash netback per barrel $ 4.05 $ 10.27 -61
The common shares of Upton are listed on the Toronto Stock Exchange under
the symbol ''URC''.
This information has been neither approved nor disapproved by the Toronto
Stock Exchange
Website: www.uptonres.ca
E-Mail Address: upton(at)uptonres.ca
-0- 05/19/1999
For further information: Scott Dutton, President & C.E.O., Upton Resources Inc., (403) 218-6080; Phil Grubbe, V.P. Finance & C.F.O., Upton Resources Inc., (403) 218-8978; Andre St. Onge, Vice President, Exploration, Upton Resources Inc., (403) 218-6092
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