Loon cash flow increases 429% in first half of 2000
Loon Energy Inc LEY
Shares issued 14,470,708 2000-08-23 close $0.1
Wednesday Aug 23 2000 News Release
Mr. Tom Field reports
Loon Energy has released its results for the second quarter of 2000. The company recorded production additions from its late-1999 Silverdale and Epping heavy-oil discoveries midway through the quarter and realized much-improved netbacks due to higher commodity prices. As well, drilling in July and August at Silverdale yielded two more oil wells which commenced production in mid-August.
Cash flow for the first half of 2000 increased to $280,478 (two cents per share), a 429-per-cent increase from the $53,040 (nil per share) for the first half of 1999. Corresponding net operating income for the second quarter of 2000 was $340,581, compared with $122,717 for the same period in 1999. Loon recorded earnings of $141,479 in the first half of 2000, or one cent per share, compared with a small net loss of $1,960, or (nil) per share, in 1999. Loon's ratio of debt-to-annualized-cash-flow is 1.2 to 1, based on the first six months of the year.
Loon's average fieldgate prices were $30.90 per barrel for oil and natural gas liquids, and $3.71 per thousand cubic feet for gas in the first half. Operating costs averaged $6.10 per barrel of oil equivalent and royalties (net of Alberta royalty tax credit and processing income) were $2.92 per boe, yielding an overall operating netback of $23.22 per boe. Average production for the six-month period was 80 boe/d at a 10:1 ratio, comprising 60 bbl/d of oil/NGLs and 197 thousand cubic feet per day of gas.
Capital expenditures for the first half amounted to $253,253, compared with $80,449 in 1999.
Net Net income
income (loss) Cash
(loss) per share flow
Second
quarter
2000 $89,646 $0.01 $161,645
1999 ($ 912) $0.00 $ 35,688
First
half
2000 $141,479 $0.01 $280,478
1999 ($ 1,960) ($0.00) $ 53,040
Cash flow Net Capital
per share revenue expenditures
Second
quarter
2000 $0.01 $249,466 $95,020
1999 $0.00 $118,580 $37,838
First
half
2000 $0.02 $430,085 $253,253
1999 $0.00 $ 57,283 $ 80,449
During the second quarter, production from the Strachan gas property resumed. The operator of the Strachan 2-22 well has identified a solution to the downhole mechanical problem, and a workover to conduct the repair is planned for later in the year. The well is producing at 3.2 million cubic feet per day gross (220 thousand cubic feet per day net sales gas). In light of strong gas prices, the partners are reviewing the possibility of drilling a twin well targeting Mannville reserves identified in the discovery well.
Production at Loon's operated Silverdale heavy oil property in west-central Saskatchewan generated excellent netbacks averaging $27.07/bbl, with a $30.76/bbl oil price. Two development oil wells at Silverdale (Loon 50 per cent) were initiated late in the second quarter and, following a three-week delay due to wet ground conditions, were drilled in late July/early August. Both wells were successful and are expected to produce 100 bbl/d, or 50 bbl/d net to Loon. Loon is planning a 3-D seismic program for Silverdale to pinpoint further drilling locations.
Loon's Epping oil property (also 50-per-cent interest), in the same area, has presented some production challenges due to increased sand and gas, and was shut in for six weeks. A workover in early August has restored production to 40 bbl/d and Loon is monitoring the well with respect to further development on the Epping lands.
In July, Loon farmed out its Birch prospect in order to allocate its capital to better opportunities. The well drilled by the farmee in August was dry and abandoned.
Loon is looking forward to increasing production further in the third and fourth quarters with additions from the two new Silverdale wells. Production from Loon's other producing properties -- Strachan (gas), Carvel (gas), Grand Forks (oil) and Epping (oil) -- is expected to continue to be stable.
Upcoming projects include the seismic program at Silverdale, a possible well at Strachan and a farmout well at Dina targeting gas on a Loon prospect.
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