For anyone interested in a Canadian NG Play. Check out Compton. Here's today's NR. The cashflow is unreal...This baby is a steal.
Compton Petroleum Corporation -
First Quarter Report to Shareholders
CALGARY, May 29 /CNW/ -
Highlights
<<
Three Months Ended
March 31
2000 1999 % Change
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Financial (000's except per share amounts)
Gross revenue $ 35,246 $ 15,434 + 128%
Cash flow $ 18,549 $ 7,959 + 133%
Cash flow per share
Basic $ 0.17 $ 0.08 + 113%
Fully diluted $ 0.16 $ 0.08 + 100%
Net earnings $ 5,265 $ 2,021 + 161%
Earnings per share
Basic $ 0.05 $ 0.02 + 150%
Fully diluted $ 0.05 $ 0.02 + 150%
Capital expenditures $ 25,353 $ 12,044 + 111%
Weighted average shares
outstanding 107,906 99,494 + 9%
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Operational
Average production
Gas, mmcf/d 77.2 54.8 + 41%
Oil, bbls/d 4,188 2,386 + 76%
NGL, bbls/d 1,721 1,681 + 2%
Total, boe/d (10:1) 13,630 9,547 + 43%
Pricing
Gas, per mmcf $ 2.84 $ 2.06 + 38%
Oil, per bbl $ 31.88 $ 17.58 + 81%
NGL, per bbl $ 19.89 $ 9.37 + 112%
Total, boe (10:1) $ 28.42 $ 17.96 + 58%
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>>
Strong Results for the First Quarter
Compton's first quarter continued to demonstrate very strong financial and operational results.
The Company's revenue, cash flow and net earnings have again more than doubled over the
comparable previous period. Average production of 13,630 boe's per day for the first quarter is
41% higher than the 9,547 boe's per day in 1999. First quarter results combined with a successful
drilling program, a large inventory of drilling prospects, gas production coming on stream throughout
the year, and strong commodity prices indicate a very robust year.
Operational Review
Compton drilled 31 (net 26.5) of its budgeted 80 well year 2000 drilling program in the first
quarter. A 68% success rate was achieved on 19 exploratory wells and 12 development wells.
Compton's year 2000 capital expenditure program is approximately $85 million. First quarter
capital expenditures were $25.3 million. The Company, as in the previous years, will incur higher
capital expenditures in the first and second quarters. Resulting increases in production will occur
during the third and fourth quarters as new natural gas wells are brought on-stream.
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Drilling Summary
To March 31, 2000 Gas Oil D&A Gross Net
-------------------------------------------------------------
South Alberta 4 1 1 6 5.0
Central Alberta 2 4 1 7 6.5
Northern Alberta 10 0 8 18 15.0
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Totals 16 5 10 31 26.5
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In Southern Alberta, a 65 square mile 3D seismic survey was initiated to follow-up on the highly
successful exploratory deep gas program of 1999. At least 25 additional wells are budgeted for the
remainder of the year, with a majority targeting long life, high productivity gas reservoirs below
2000 metres. To date, an important portion of the company's lands south of Calgary have been
lacking in infrastructure. Compton has been very active with pipeline planning and construction to
allow its late 1999 gas discoveries to be brought on production in the 2nd and 3rd quarters of
2000. This infrastructure development will provide for timely tie-ins in the future.
Ongoing development and exploitation of the Company's light oil prospects at Bigoray in Central
Alberta continues to produce good results. Three to four development wells are planned over the
summer and additional 3D seismic will be acquired to follow-up on several new development and
exploratory prospects.
In Northern Alberta, fifteen exploratory wells were drilled resulting in 3 new pool discoveries; two
in the Peace River Arch and one in West Rainbow. Compton is moving aggressively to exploit the
Peace River Arch properties acquired from Coparex in December of 1999. At Clayhurst, two gas
wells were drilled and additional land has been acquired on prospective trends. Following further
seismic evaluation, at least 5 more wells are planned for the remainder of the year. A minimum of
seven wells are budgeted for other Arch lands as Compton continues to expand this core area.
Financial Review
Production revenue, before royalties, increased by 128% to $35.2 million in the first quarter
compared to revenue of $15.4 million in the same period last year. This increase was due to a 43%
increase in production and much stronger commodity prices. Compton realized an average price of
$28.42 per boe of production during the quarter, a 58% increase over the average price of $17.96
per boe realized in the first quarter of 1999. The first quarter average price is net of a hedging
opportunity cost of $2.65 per barrel of oil of production.
Currently, the Company has hedged approximately 25% of its light oil production and 15% of its
natural gas production. 1,000 barrels of oil are hedged through to December 31, 2000 at a price of
$21.75 US ($32.00 CDN) and 13.5 mmcf/d of gas are hedged to October 31, 2000 at a weighted
average price of $3.41 per GJ. No hedges were in place during 1999.
The average royalty rate during the first quarter increased to 17.5% of revenue, net of credits, from
a rate of 13.1% during the previous year as a result of increased commodity prices. The majority of
royalties paid by the Company are calculated on sliding scale rates that increase with commodity
prices and production volumes.
In December 1999, to reduce overall debt levels and focus on core areas, the Company
commenced an $18.9 million property disposition program related to minor and non-operated
properties. To date the Company has realized proceeds of $6.5 million on such sales and expects
to realize additional proceeds of approximately $14 million during the second quarter.
As a result of high commodity prices, the Company has appointed Waterous & Co. as agent for the
sale of a number of additional non-core minor properties. Bids under this program are due in mid
June 2000 and the Company expects to realize proceeds between $20 and $30 million. As a result
of the disposition program, the Company expects corporate debt, at June 30, 2000, to be less than
1.6 times projected 2000 cash flow.
Effective January 1, 2000, the Company adopted the new recommendations of the Canadian
Institute of Chartered Accountants relating to future income taxes as outlined in Note 1 to the
financial statements. This change in accounting policy resulted in a one-time non-cash increase in the
carrying value of property and equipment of $68.1 million. As a result, the provision for depletion in
the quarter increased from that which would otherwise have been recorded by $1.50 per boe of
production to $7.52 per boe.
Outlook
The remainder of this year will continue to be an interesting and volatile period as a result of higher
than expected commodity prices. Compton is a natural gas levered company with an experienced
exploration team, internally generated plays, and a large undeveloped land base with an extensive
inventory of prospects. The Company can easily expand its capital expenditure program.
Management however, in the short term, will concentrate on its current capital program, and work
hard to accelerate and bring on stream newly discovered reserves. Excess cash flow resulting from
higher than anticipated commodity prices will be applied to reduce debt and to continue to acquire
common shares under the Company's normal course issuer bid. With a strengthening balance sheet
and improving cash flow, Compton is well positioned to realize upon existing and new opportunities.
On behalf of the Board of Directors,
(Signed)
E.G. Sapieha, CA
President and C.E.O.
May 26, 2000
<<
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Financial Statements
Balance Sheets
(Unaudited) March 31, December 31,
2000 1999
-------------------------------------------------------------------------
($000's)
Assets
Current
Accounts receivable $ 30,239 $ 32,787
Assets held for sale 15,576 18,870
----------- -----------
45,815 51,657
Notes receivable 150 150
Property and equipment (net) 381,839 297,560
----------- -----------
$ 427,804 $ 349,367
----------- -----------
----------- -----------
Liabilities
Current
Current bank debt $ 11,821 $ 15,060
Accounts payable and accruals 38,735 35,524
----------- -----------
50,556 50,584
Long-term debt 161,891 159,714
Future income taxes (Note 1) 93,608 21,145
Site restoration and abandonments 1,365 1,222
----------- -----------
307,420 232,665
----------- -----------
----------- -----------
Shareholders' Equity
Capital stock (Note 2) 88,837 89,505
Retained earnings 31,547 27,197
----------- -----------
120,384 116,702
----------- -----------
$ 427,804 $ 349,367
----------- -----------
----------- -----------
-------------------------------------------------------------------------
Financial Statements
Statements of Operations and Retained Earnings
(Unaudited)
Three Months Ended March 31 2000 1999
-------------------------------------------------------------------------
($000's)
Revenue
Oil and gas revenues $ 35,246 $ 15,434
Royalties, net (6,017) (2,021)
----------- -----------
29,229 13,413
----------- -----------
Expenses
Operating 6,580 3,169
General and administrative 1,029 743
Interest and finance costs 2,969 1,445
Depletion and depreciation 9,326 4,404
----------- -----------
19,904 9,761
----------- -----------
Earnings before taxes 9,325 3,652
----------- -----------
Taxes
Future income taxes 3,958 1,534
Capital taxes 102 97
----------- -----------
4,060 1,631
----------- -----------
Net earnings $ 5,265 $ 2,021
Retained earnings, beginning of period $ 27,197 $ 10,735
----------- -----------
$ 32,462 $ 12,756
Change in accounting policy, future tax (379) -
Premium on redemption of common shares (536) (238)
----------- -----------
Retained earnings, end of period $ 31,547 $ 12,518
----------- -----------
----------- -----------
Earnings per share
Basic $ 0.05 $ 0.02
----------- -----------
----------- -----------
Fully diluted $ 0.05 $ 0.02
----------- -----------
----------- -----------
-------------------------------------------------------------------------
Financial Statements
Statements of Cash Flow
(Unaudited)
Three Months Ended March 31 2000 1999
-------------------------------------------------------------------------
($000's)
Cash derived from (applied to)
Operating activities
Net earnings $ 5,265 $ 2,021
Add changes not affecting cash
Depletion and depreciation 9,326 4,404
Deferred income taxes 3,958 1,534
----------- -----------
Cash flow from operations 18,549 7,959
Change in non-cash operating working
capital 5,198 475
----------- -----------
23,747 8,434
----------- -----------
Financing activities
Increase in long-term debt, net 2,177 2,695
Redemption of common shares (1,187) (511)
----------- -----------
990 2,184
----------- -----------
Investing activities
Additions to property and equipment (25,353) (12,044)
Change in non-cash investing working
capital 3,855 1,426
----------- -----------
(21,498) (10,618)
----------- -----------
Increase in cash $ 3,239 $ -
Current bank debt, beginning of period (15,060) -
----------- -----------
Current bank debt, end of period $ (11,821) $ -
----------- -----------
----------- -----------
Cash flow from operations, per share
Basic $ 0.17 $ 0.08
----------- -----------
----------- -----------
Fully diluted $ 0.16 $ 0.08
----------- -----------
----------- -----------
>>
-------------------------------------------------------------------------
Financial Statements
Notes to the Financial Statements
(Unaudited)
March 31, 2000
-------------------------------------------------------------------------
1. Future Income Taxes
Effective January 1, 2000, the Company adopted the new recommendations of
the Canadian Institute of Chartered Accountants with respect to
accounting for future income taxes. Under the new recommendations the
liability method of tax allocation is used, which is based upon the
difference between financial and tax bases of assets and liabilities.
Previously, the deferred method was used which was based upon differences
between the timing of reporting income and expenses for financial and
income tax purposes.
The Company has adopted this change in accounting policy retroactively,
without restating the financial statements of prior periods. As a result,
the Company recorded a reduction in retained earnings of $0.4 million, an
increase in property and equipment of $68.1 million and an increase in
the future tax liability, previously the deferred tax liability of $68.5
million, as at January 1, 2000.
The adjustments were mainly the result of future tax costs relating to
acquisitions where the tax basis acquired was less than the purchase
price, and the tax consequence of flow-through share issues.
The increase in the carrying value of property and equipment has resulted
in a first quarter increase in the provision for depletion and
depreciation of $1.9 million ($1.50 per boe) over the amount that would
otherwise have been reported.
2. Capital Stock
During the period, the Company repurchased 741,000 common shares for
cancellation, pursuant to a normal course issuer bid. The excess of the
purchase price over book value has been charged to retained earnings.
-------------------------------------------------------------------------
Corporate Information
Head Office Directors
----------- ---------
Compton Petroleum Corporation E.G. Sapieha, C.A.
Suite 3100, 150 - 6th Avenue SW President & C.E.O.
Petro-Canada Centre, West Tower Compton Petroleum Corporation
Calgary, AB T2P 3Y7
Telephone: (403) 237-9400 M.F. Belich, Q.C.
Fax: (403) 237-9410 Chairman
Enbridge International Inc.
Officers:
--------- I.J. Koop, P.Eng
E.G. Sapieha, C.A. Executive V.P. & President & C.E.O.
President & C.E.O. Pipelines & Midstream
Westcoast Energy Inc.
M.J. Stodalka, P.Eng
V.P. Engineering & Operations J. Preston
Sun MicroSystems
N.G. Knecht, C.A.
V.P. Finance & C.F.O. J.T. Smith, P.Geol.
Oil and Gas Businessman
K.N. Davies, P. Geoph
V.P. Exploration
Stock Exchange
The Toronto Stock Exchange
TSE 300
Trading Symbol: CMT
For further information
Head Office, Compton Petroleum Corporation, Suite 3100, 150 - 6th Avenue SW,
Petro-Canada Centre, West Tower, Calgary, AB T2P 3Y7, Telephone: (403)
237-9400, Fax: (403) 237-9410
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