How about a post, for old times' sake:
Kookaburra Resources Ltd. - 3rd quarter update
VANCOUVER, Nov. 25 /CNW/ - In accordance with National Instrument 54-102,
the Company provides the interim financial results of the Company for the
quarter ended September 30, 2002.
<<
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- ------------------------
2002 2001 2002 2001
$ $ $ $
REVENUE
Oil and gas sales 19,461 53,425 63,080 689,507
----------- ---------- ----------- -----------
EXPENSES
Production 788 9,727 9,564 85,471
General and
administrative 37,717 76,441 188,908 294,241
General exploration
costs (10) 5,085 4,474 19,607
Depreciation,
depletion and
impairment 2,027,347 4,449 6,714,122 64,363
----------- ---------- ----------- -----------
2,065,842 95,702 6,917,068 463,682
----------- ---------- ----------- -----------
(LOSS) FROM
OPERATIONS (2,046,381) (42,277) (6,853,988) 225,825
GAIN ON SALE OF
MARKETABLE
SECURITIES - - 5,421 -
GAIN (LOSS) ON
FOREIGN CURRENCY
TRANSLATION (48,373) (6,499) 47,548 (55,983)
----------- ---------- ----------- -----------
NET EARNINGS (LOSS)
FOR THE PERIOD (2,094,754) (48,776) (6,801,019) 169,842
DEFICIT -
BEGINNING
OF PERIOD (15,111,812) (9,893,528) (10,405,547) (10,112,146)
----------- ---------- ----------- -----------
DEFICIT - END
OF PERIOD (17,706,566) (9,942,304) (17,206,566) (9,942,304)
----------- ---------- ----------- -----------
----------- ---------- ----------- -----------
>>
Results of Operations
During the nine months ended September 30, 2002, the Company reported a
net loss of $6,801,019 ($0.26 per share) compared to net earnings of $169,842
for the comparable 2001 period. The principal cause of such loss was the
directors' prudent decision to record an impairment of $6,297,713 against the
carrying value of the East Lost Hills (ELH) project.
Production at ELH No. 1 continues to be limited by the amount of
production water that can be accepted at the available water disposal
facilities. Weaker gas prices, compared to 2001, and a drop in production due
to inadequate water disposal facilities are reflected in the $63,080 petroleum
revenue for 2002 compared to $689,507 in 2001. Management does not envisage
sustained production beyond the 2 mmcf/d level unless adequate water disposal
facilities are installed. Such facilities are unlikely to materialize in the
near term.
Direct production costs decreased from $85,471 in 2001 to $9,564 in 2002.
Depreciation and depletion recorded in 2002 was $74,072 compared to $64,363 in
2001, a result of increased costs allocated to the depletion base in 2002.
General and administrative costs of $188,908 in 2002 saw a decrease of
$105,333 compared to the previous year and this reflected decrease in
corporate activity and travel during the year. Effective from July 1, 2002,
professional fees charged by the President and directors fees payable to the
Company's other directors for the ensuing periods, will cease until further
notice.
Property Update
The ELH No. 4 sidetrack well has been completed and some testing of the
Kreyenhagen shale and Phacoides sands have been undertaken with disappointing
results. However, there is a variance of opinion as to what zones should have
been tested, the appropriateness of the method employed for testing together
with the adequacy of the testing carried out by the operator. The well is
currently shut-in and is unlikely to be revisited until agreement is reached
on the way forward.
The ELH No. 9 well commenced drilling in August 2001 and was drilled to
21,100 feet. The well was completed and testing was undertaken in the
Kryenhagen shale and Phacoides sands. Results were again disappointing with
results generally less than 1 mmcf/d. The Kryenhagen shale was stimulated with
acid but the targeted increase in production failed to materialize. The well
is now shut in, however, there remains a strong difference of opinion as to
whether the procedures employed by the operator were the most appropriate. The
ELH No. 9 well is also unlikely to be revisited until agreement can be reached
on the way forward.
Two of the participants in the ELH project, both with multi-billion
market capitalization, are locked in legal battle over conflicting claims to
their respective interests in the project. Unfortunately, the operator's
parent company is one of the litigants and, with the ELH No. 4 sidetrack and
the ELH No. 9 well both shut in, management does not envisage progress at the
ELH site until the legal battles are resolved, in or out of the Courts.
Liquidity and Capital Resources
As at September 30, 2002, the Company had a working capital deficiency of
$1,257,132 and a deficit of $17,206,566. The Company's funding commitment for
the East Lost Hills joint venture has been significant and the mistakes,
delays, operational difficulties and cost overruns associated with the ELH
project have magnified the funding requirements.
At current production levels the ELH No. 1 well will not provide
sufficient working capital to fund the Company's contribution to ongoing
exploration and development costs at East Lost Hills. During May 2002, the
Company reached agreement whereby a majority of the ELH participants assumed
responsibility for the outstanding balances and ongoing costs incurred in
testing, completing, equipping and operating the ELH No. $ side track and ELH
No. 9 wells. The parties providing the funds will be entitled to recover same,
plus an additional 300%, but such an amount can only be recovered from income
derived from the ELH No. 4 sidetrack and ELH No. 9 wells. There are no
agreements in place relevant to other ELH wells.
The Company is currently reviewing its options and, in the interim, all
costs are being minimized. The future viability of the Company is dependent
upon its ability to generate additional income and/or financing to satisfy
future working capital requirements and debt obligations.
On behalf of the Board
"Graeme D. Robinson"
Graeme D. Robinson, Chairman |
