FOR: KENSINGTON ENERGY LTD.
CDNX SYMBOL: KNN.A
APRIL 8, 2002 - 18:47 EDT
Kensington Energy Ltd. Announces Results for the Three
Months and Year Ended December 31, 2001 and Announces
Changes to its Board of Directors
CALGARY, ALBERTA--Kensington Energy Ltd. is pleased to present
financial and operating results for the year ended December 31,
2001.
/T/
Three Months Ended Years Ended
December 31 December 31
Financial 2001 2000 2001 2000
------------------------------------------------------------------------
Petroleum and natural
gas sales $ 639,795 $ 606,033 $2,129,287 $2,203,200
Net income 198,229 129,042 258,866 189,719
Per basic share 0.01 0.01 0.02 0.02
Cash flow from operations 317,994 341,788 932,978 1,168,359
Per basic share 0.02 0.07 0.08 0.15
Prices
Oil and NGLs ($/bbl) 27.81 45.51 37.02 38.70
Natural gas ($/mcf) 3.62 7.78 4.49 4.90
Barrels of oil equivalent
($/BOE) (1) 24.01 37.35 33.31 37.26
Operating netbacks ($/BOE) (1) 16.19 25.31 22.81 25.20
Capital expenditures (net of
dispositions) 1,182,301 106,581 1,825,814 565,302
Long term bank indebtedness 0 810,000
Working capital (deficiency) 4,708,705 (696,851)
Shareholders' equity 10,752,323 3,428,151
Total assets 13,895,955 6,818,953
Class A common shares
Weighted average 11,491,157 7,898,847
Outstanding 29,400,426 10,142,776
Operating
------------------------------------------------------------------------
Production
Oil and NGL (bbl/d) 108 125 111 137
Natural gas (mcf/d) 1,088 114 386 139
Barrel of oil equivalent
(BOE/d) (1) 289 144 175 160
Proven reserves
Oil and NGLs (bbls) 284,000 311,000
Natural gas (mmcf) 3,014 1,042
Barrels of oil equivalent (BOE) 786,300 484,700
Finding and development costs
($/BOE proven) 5.00 7.25
Drilling activity
Gross wells 2.0 3.0 4.0 4.0
Net wells 1.1 0.5 2.4 0.9
--------------------------------------------
(1) The volume conversion of natural gas to barrel of oil equivalent
(BOE) is presented on the basis of six thousand cubic feet of natural
gas being equal to 1 barrel of oil.
/T/
Production
Kensington's production levels doubled to 289 BOE per day during
the fourth quarter of 2001 as compared to the third quarter of
2001 and to the fourth quarter of 2000. This enabled Kensington
to report an average production level of 175 BOE per day during
2001, a nine percent increase over 2000 and the first annual
production increase since 1997.
The product mix of the Corporation's petroleum and natural gas
revenues evolved towards a greater natural gas emphasis at year
end with 60 percent weighting to natural gas and 40 percent
weighting to oil and natural gas liquids. Approximately 60
percent of the Corporation's production is now operated by
Kensington.
Reserves
Increased capital investment levels of $1.8 million, versus $0.6
million in 2000, boosted the Corporation's proven year end
reserves by 62 percent compared to 2000 levels. New reserves were
primarily in natural gas, and were added at a net proven finding
and development cost of $5.00 per BOE.
Kensington took a cautious approach to reserves reporting to
ensure that economic conditions and reservoir performance were
realistically considered in all reserve categories. Consequently
probable reserve volumes were reduced by 64 percent of their
reported 2000 level and proven non-producing reserves were reduced
by 15 percent. The quality of Kensington's reported reserves
improved as proven developed producing now comprise 79 percent of
total proven reserves versus 59 percent at year end 2000.
Inclusive of these reserve revisions, total proven reserves at
year end 2001 increased by 62 percent compared to 2000, and
established reserves (equal to total proven plus half probable) at
year end 2001 increased by 1.8 percent over year end 2000 levels.
/T/
Reserves Before Royalties
2001 2000
---------------------------- ----------------------------
Oil and Natural Oil Oil and Natural Oil
NGL Gas Equivalent NGL Gas Equivalent
(mbbls) (mmcf) (mboe) (mbbls) (mmcf) (mboe)
---------------------------- ----------------------------
Proven producing 245 2,256 621 242 284 289
Proven
non-producing 39 758 165 69 758 195
------------------------------------------------------------------------
Total proven 284 3,014 786 311 1,042 485
Probable 91 1,363 318 544 2,058 887
Total proven
plus probable 375 4,377 1,105 855 3,100 1,372
------------------------------------------------------------------------
Total proven
plus 50%
probable 330 3,696 945 583 2,071 928
------------------------------------------------------------------------
Drilling
Kensington participated in four gross wells (2.4 net) in 2001. Two gross
wells (2.0 net) of the Corporation's drilling were operated by
Kensington. Kensington deferred its drilling activity during the first
half of the year while the Corporation undertook a thorough review of
its strategic alternatives. Drilling operations resumed in the third
quarter of 2001.
2001 2000
-------------- --------------
Gross Net Gross Net
------------------------------------------------------------------------
Natural gas 1 1.0 1 0.4
Oil 1 1.0 2 0.2
Standing 2 0.4 0 -
Dry 0 - 1 0.3
------------------------------------------------------------------------
Total 4 2.4 4 0.9
------------------------------------------------------------------------
------------------------------------------------------------------------
Success rate 100% 75%
Average working interest 60% 22%
Operating Margin Analysis
Three Months Ended December 31 Years Ended December 31
2001 2000 %Change 2001 2000 %Change
---------------------------------------------------------
PRODUCTION
Oil and NGL
(bbl/d) 108 125 (13.6) 111 137 (19.0)
Natural gas
(mcf/d) 1,088 114 854.4 386 139 177.7
Oil equivalent
(BOE/d) 289 144 100.7 175 160 9.4
AVERAGE PRICES
Oil and NGL
($/bbl) $ 27.81 $ 45.51 $ (38.9)$ 37.02 $ 38.70 $ (4.3)
Natural gas
($/mcf) $ 3.62 $ 7.78 $ (53.5)$ 4.49 $ 4.90 $ (8.4)
Per Barrel
of Oil
Equivalent $ 24.01 $ 37.35 $ (35.7)$ 33.31 $ 37.26 $(10.6)
$ PER BOE
Petroleum and
natural gas
revenue $ 24.01 $ 37.35 $ (35.7)$ 33.31 $ 37.26 $(10.6)
Royalties 5.21 8.37 (37.7) 6.89 8.77 (21.4)
Alberta
Royalty Tax
Credit 1.28 1.70 (24.9) 1.49 1.82 (18.1)
Operating costs 3.89 5.37 (27.5) 5.10 5.11 (0.2)
---------------------------------------------------------
Field netback 16.19 25.31 (36.1) 22.81 25.20 (9.5)
General and
administrative 3.58 2.62 36.8 7.06 3.56 98.3
Current taxes 0.26 - - 0.11 - -
---------------------------------------------------------
Operating netback 12.34 22.70 (45.6) 15.64 21.64 (27.2)
Cash interest 0.41 1.63 (74.7) 1.07 1.90 (43.7)
---------------------------------------------------------
Cash flow from
operations 11.93 21.06 (43.4) 14.57 19.74 (25.6)
Depletion and
depreciation 1.58 7.74 (79.6) 8.79 13.82 (36.4)
Future income
taxes 2.91 5.38 (45.8) 1.76 2.73 (15.8)
Non-cash interest - - - - - -
Net income $ 7.44 $ 7.94 $ (6.5)$ 4.03 $ 3.19 $ 12.5
---------------------------------------------------------
---------------------------------------------------------
DOLLARS
Petroleum and
natural gas
revenue $639,795 $606,033 $ 5.6 $2,129,287 $2,203,200 $ (3.4)
Royalties 138,950 135,884 2.3 440,707 518,640 (15.0)
Alberta Royalty
Tax Credit 34,121 27,653 23.4 94,969 107,378 (11.6)
Interest and
other income - - - 1,421 1,449 (1.9)
Operating costs 103,720 87,077 19.1 325,833 302,063 7.9
---------------------------------------------------------
Field netback 431,246 410,725 5.0 1,459,137 1,491,324 (2.2)
General and
administrative 95,448 42,476 124.7 450,936 210,738 114.0
Current taxes 6,820 - - 6,820 - -
---------------------------------------------------------
Operating
netback 335,798 368,249 (10.7) 1,001,381 1,280,586 (21.8)
Cash interest 10,983 26,461 (58.5) 68,403 112,227 (39.0)
---------------------------------------------------------
Cash flow from
operations 324,815 341,788 (7.0) 932,978 1,168,359 (20.1)
Depletion and
depreciation
and site
restoration 42,125 125,509 (66.4) 561,920 817,403 (31.3)
Future income
taxes 77,641 87,237 11.0 112,192 161,237 (30.4)
Non-cash interest - - - - - -
---------------------------------------------------------
Net income $198,229 $129,042 $ 53.6 $ 258,866 $ 189,719 $ 36.4
---------------------------------------------------------
---------------------------------------------------------
MARGINS (%)
Petroleum and
natural gas
revenue 100.0 100.0 100.0 100.0 100.0 100.0
Royalties 21.7 22.4 (3.1) 20.7 23.5 (12.1)
Alberta Royalty
Tax Credit 5.3 4.6 16.9 4.5 4.9 (8.5)
Operating costs 16.2 14.4 12.8 15.3 13.7 11.6
Field netback 67.4 67.8 (0.6) 68.5 67.7 1.2
General and
administrative 14.9 7.0 112.9 21.2 9.6 121.4
Current taxes 1.1 - - 0.3 - -
---------------------------------------------------------
Operating netback 51.4 60.8 (15.4) 47.0 58.1 (19.1)
Cash interest 1.7 4.4 (60.7) 3.2 5.1 (36.9)
---------------------------------------------------------
Cash flow from
operations 49.7 56.4 (11.9) 43.8 53.0 (17.4)
Depletion and
depreciation 6.6 20.7 (68.2) 26.4 37.1 (28.9)
Future income
taxes 12.1 14.4 (15.7) 5.3 7.3 (28.0)
Non-cash interest - - - 0 - -
---------------------------------------------------------
Net income 31.0 21.3 45.5 12.2 8.6 41.2
---------------------------------------------------------
---------------------------------------------------------
/T/
Revenues and Expenses
Higher production levels in 2001 helped offset declining prices to
maintain total sales revenues before royalties at comparable
levels to 2000. Overall the Corporation obtained 70 percent of
revenues from oil and NGL versus 88 percent in 2000, reflective of
Kensington's greater natural gas emphasis.
Operating costs on a BOE basis remained unchanged in 2001 versus
2000, although fourth quarter 2001 operating costs decreased 28
percent on a BOE basis versus the fourth quarter of 2000 due to
placing the relatively low lifting cost gas production from
Highvale on stream late in the third quarter of 2001.
General and administrative expenses more than doubled during 2001.
This increase occurred mainly as the result of extraordinary
reorganization costs of approximately $180,000 during the third
quarter of 2001 and incremental office lease expenses of $24,000
in the third and fourth quarters as the result of relocating
Kensington's office.
Cash Flow and Net Income
Cash flow from operations declined 19.6 percent in 2001 versus
2000 as the result of higher general and administration expenses
and lower product prices which more than offset higher production
volumes. Cash flow per diluted share decreased 43 percent to
$0.08 per share versus $0.14 per share in 2000. Cash flow per
share values declined greater than overall corporate cash flow
values as the result of share dilution from the conversion of the
Corporation's Class B shares in June 2000 and two private
placements of equity during the third and fourth quarters of 2001.
Net income increased 36 percent in 2001 versus 2000 despite lower
cash flow as the result of lower depletion expenses and lower
future income tax expenses.
Capital Resources
Equity financing eliminated Kensington's net bank indebtedness and
resulted in a positive working capital balance of $4.7 million at
year end 2001. The equity proceeds came by way of a private
placement of 2.4 million shares to the new management team in
August, and a second private placement financing consisting of 8.2
million flow-through shares and 8.6 million common shares in
December to various management, institutional, and retail
investors. These transactions increased the number of shares
outstanding to 29.4 million at December 31, 2001.
Corporate
Since year end, the Corporation has taken steps to strengthen its
management team by the addition of Ms. Beverley A. Scobie in the
position of Chief Financial Officer.
Kensington is also pleased to announce the addition of two new
members to the Board of Directors and an increase in the size of
the Board from four to five members. Leaving the Board is Mr. Ron
Quillian, of Kelowna, B.C., who has been a director of the
Corporation since its inception in 1995. Kensington wishes to
express its sincerest thanks to Mr. Quillian for his lasting
contributions and efforts on behalf of the Corporation and for his
guidance during the most recent reorganization of the Corporation.
Joining the Board as replacement for Mr. Quillian and to expand
the Board to five members are Mr. Richard R. Couillard, of
Calgary, Alberta and Mr. David H. Erickson, of Calgary, Alberta.
Mr. Couillard has 29 years of Canadian and international oil and
gas exploration, business, and technology experience. He is the
President of OilSphere.com and the Chief Operating Officer of
VerticalBuilder.com and the President and founder of CouilOil
Energy Inc., a private company specializing in property
acquisition and re-capitalization of junior oil and gas companies.
From 1994 to 1998 Mr. Couillard served as Senior Vice President
of Exploration and Production for Numac, prior to which he spent
more than twenty years with Chevron USA, Chevron Overseas and
Chevron Canada Resources in roles including Manager of Plains
(Western Canada) Exploration and Manager of Chevron's Western
Business Unit.
Mr. Erickson has 30 years of Canadian and international oil and
gas industry experience and is credited with involvement with
several successful public and private oil and gas ventures. He is
a co-founder, Director, and the Vice President of Operations of
Raven Energy Ltd. From 1988 to 1999, Mr. Erickson was Senior Vice
President and a Director of Petromet Resources Limited and oversaw
Petromet's growth from start up to 8,500 BOE per day. Prior to
Petromet, Mr. Erickson spent more than ten years as Vice
President of Exploration with Canadian Pioneer Oils Ltd. He was a
co-founder and Director of that company in 1978.
Outlook
Kensington's management team has complementary experience in
exploration, operations, and business development which bolsters
the Corporation's ability to evaluate and execute new business
opportunities. With new financing, a strengthened balance sheet,
and changed leadership, the groundwork has now been laid to
implement a revitalized Kensington business plan.
During the first quarter of 2002, steps were taken to advance two
projects on the Corporation's existing lands at Nipisi and
Highvale and to establish beginning exploration positions for
Kensington in areas where management has had prior success with
former companies. Kensington participated in the drilling of two
gross (1.4 net) wells and the completion of one (1.0 net) re-entry
well during the first quarter of 2002. These activities resulted
in one potential natural gas well at Nipisi, one potential natural
gas well at Fir and one producing oil well at Highvale.
Forward Looking Statements
This disclosure contains certain forward looking statements that
involve substantial known and unknown risks and uncertainties,
certain of which are beyond Kensington's control, including: the
impact of general economic conditions in Canada and in the United
States, industry conditions, changes in laws and regulations
including the adoption of new environmental laws and regulations
and changes in how they are interpreted and enforced, increased
competition, the lack of availability of qualified personnel or
management, fluctuations in foreign exchange or interest rates,
stock market volatility and market valuations of companies with
respect to announced transactions and the final valuations
thereof, and obtaining required approvals of regulatory
authorities. Kensington's actual results, performance or
achievement could differ materially from those expressed in, or
implied by, these forward looking statements and, accordingly, no
assurances can be given that any of the events anticipated by the
forward looking statements will transpire or occur, or if any of
them do so, what benefits, including the amount of proceeds, that
Kensington will derive therefrom.
-30-
FOR FURTHER INFORMATION PLEASE CONTACT:
Kensington Energy Ltd.
Donald S. Wood
President and Chief Executive Officer
(403) 517-8620
(403) 517-8625 (FAX)
Email: corp@kensingtonenergy.com |
