EARNINGS / Magin Energy reports 1st 9 months results
CALGARY, Nov. 24 /CNW/ - Magin's cashflow for the first nine months of
1997 rose in excess of seven-fold over 1996 and reached $9.6 million. On a
per share basis, cashflow increased to $0.27 for the first nine months of 1997
compared to $0.13 in 1996. Third quarter cashflow per share was $0.10 in
1997 compared to $0.05 in 1996. On a barrel of oil equivalent basis (boe),
the Company's 1997 average production increased to 4,192 from 332 boes per day
during the first nine months of 1996. As Magin acquired Discovery West
effective May 1, 1997, the results only include the combined operations for
five months.
Production in the third quarter averaged 6,277 boes per day, which was
five percent below budget. This variance was due to operational delays
related to turnarounds at several facilities along with long lead times for
the acquisition and rental of field equipment. Production is now averaging in
excess of 7,000 boes per day.
Year-end exit production of 8,000 boes per day remains fully achievable
with scheduled daily production increases of 5 million cubic feet of gas at
Gleichen, 300 barrels of oil at Eyehill, and 3 million cubic feet of gas at
Windfall, The Spirit River prospect has been tested and could add an
additional 2 million cubic feet of gas provided the pipeline tie-in can be
completed by year-end.
In November, Magin announced the issue of up to $10.7 million of
flow-through shares at an issue price of $3.50 per share. Closing is expected
in early December. This issue will allow the Company to accelerate both its
drilling and operational acquisition programs.
Operational Review
Magin's exploration and development capital expenditures were $26.1
million in the first nine months and included $14.4 million for drilling and
completions, $6.3 million for facilities, and $5.4 million for land,
geological and geophysical costs. Additionally, $117.9 million was spent on
acquisitions, of which $107.4 million related to the acquisition of Discovery
West.
During the first nine months of 1997, Magin participated in 60 wells (net
44.1) of which 40 (net 30.5) were completed for production, one was drilled as
an injector well, and 19 (net 13.47) were abandoned, for a 68% success rate.
Financial Review
Petroleum and natural gas revenues have increased to $24.2 million in the
first nine months of 1997 compared to $2.1 million during the corresponding
1996 period. This 1041% increase is due entirely to higher production volumes
as the price received on a boe basis is 6% less than in 1996.
Operating costs increased to $7.26 per boe in 1997 from $5.90 per boe in
1996. Operating costs for the fourth quarter of 1997 are currently expected to
average $6.50 per boe which includes a charge of $0.60 per boe related to the
sale of facilities in the third quarter. Operating costs on a per unit basis
are expected to decrease in 1998 with increased production volumes. General
and administrative expenses decreased from $1.84 per boa in 1996 to $0.84 per
boe in 1997.
Depletion and depreciation expense dropped for the nine months of 1997 to
$7.73 on a per boe basis from $7.99 per boe in 1996.
The Company showed a small loss of $103,159 for the third quarter.
Earnings after tax for the first nine months of 1997 were $786,444. The
Company currently has over $90 million in income tax pools.
Outlook
To the end of the second week of November, Magin has drilled 33 wells in
the fourth quarter, of which 28 have been cased for production. Currently
four wells are drilling with up to another 16 scheduled prior to year end.
Upon meeting the year end production projection of 8,000 barrels of oil
equivalent per day, and with the high level of drilling activity, it is
anticipated 9,000 barrels of oil equivalent per day will be reached in the
first quarter of 1998.
<<
MAGIN ENERGY INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
1997 1996 1997 1996
---- ---- ---- ----
Cash provided by (used in):
OPERATIONS
Earnings for
the period $ (103,159) $ 165,871 $ 786,444 $ 384,306
Depletion,
depreciation,
and site
restoration $ 4,683,790 375,081 8,843,340 724,570
-------------------------------------------------------------------------
Funds from
operations $ 4,580,631 $ 540,962 $ 9,629,784 $ 1,108,876
Change in
non-cash
working
capital 2,578,201 (287,267) 3,824,894 25,044
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$ 7,158,832 $ 253,695 $ 13,454,678 $ 1,133,920
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FINANCING
Long term
debt $ (7,916,104) $ 5,796,896 $43,764,973 $ 6,781,896
Increase in
share
capital 507,391 11,318,032 55,582,784 13,646,359
Short term
note - (54,980) - (54,980)
Site
restoration
provision
assumed - 126,571 2,462,629 126,571
Deferred tax
liability
assumed (39,105) - 14,902,582 -
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$(7,447,818) $17,186,519 $116,712,968 $ 20,499,846
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INVESTMENTS
Purchase of
petroleum
and natural
gas
interests $(2,105,344) $(15,469,501) $(117,900,784) $(19,443,186)
Exploration
and
development
expenditures (12,860,835) (2,036,774) (26,116,250) (2,686,196)
Proceeds on
disposition
of properties 16,055,165 66,061 16,055,165 206,311
Investments &
advances (425,000) - (1,830,777) -
Promissory note (375,000) - (375,000) -
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$ 288,986 $(17,440,214) $(130,167,646) $(21,923,071)
-------------------------------------------------------------------------
CHANGE IN CASH $ (0) $ - $ (0) $ (289,305)
CASH POSITION,
BEGINNING OF
PERIOD - - - 289,305
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CASH POSITION,
END OF PERIOD $ (0) $ - $ (0) $ -
-------------------------------------------------------------------------
Funds from
operations
per share
Basic 0.10 0.05 0.27 0.13
Fully Diluted 0.09 0.04 0.25 0.11
MAGIN ENERGY INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
As at September 30,
1997 1996
---- ----
ASSETS
Current assets $ 8,563,086 $ 2,528,554
Investments & advances 1,830,777 -
Property and
equipment 144,512,517 22,339,473
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$ 154,906,380 $ 24,868,027
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 10,731,685 $ 2,384,367
Provision for site restoration 2,758,302 176,571
Long term debt 54,348,234 7,176,896
Deferred income taxes 14,420,226 49,381
Shareholders' equity 72,648,033 15,080,812
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$ 154,906,380 $ 24,868,027
-------------------------------------------------------------------------
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MAGIN ENERGY INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
1997 1996 1997 1996
---- ---- ---- ----
REVENUE
Oil and gas
revenue $ 12,029,908 $ 1,077,638 $ 24,214,211 $ 2,122,933
Royalty
expense,
net of ARTC (1,803,785) (149,473) (3,302,859) (246,280)
-------------------------------------------------------------------------
$ 10,226,123 $ 928,165 $ 20,911,352 $ 1,876,653
-------------------------------------------------------------------------
EXPENSES
Operating $ 4,031,197 $ 248,302 $ 8,314,085 $ 528,628
General and
administrative 481,255 99,940 951,111 165,099
Interest
expense 942,890 38,961 1,720,407 74,050
Depletion,
depreciation,
and site
restoration 4,683,790 375,091 8,843,340 724,570
-------------------------------------------------------------------------
$ 10,139,132 $ 762,294 $ 19,828,943 $ 1,492,347
-------------------------------------------------------------------------
Earnings for
the period
before tax $ 86,991 $ 165,871 $ 1,082,409 $ 384,306
-------------------------------------------------------------------------
Capital taxes $ (190,150) $ - $ (295,965) $ -
Provisions
for
income tax $ (38,990) $ (74,320) $ (407,720) $ (172,200)
Utilization
of tax loss
carry
forward $ 38,990 $ 74,320 $ 407,720 $ 172,200
-------------------------------------------------------------------------
Net earnings
(loss)
for the
period after
tax $ (103,159) $ 165,871 $ 786,444 $ 384,306
-------------------------------------------------------------------------
Retained
earnings
(deficit),
beginning of
period $ 2,587,410 $ (96,361) $ 1,697,807 $ (314,796)
-------------------------------------------------------------------------
Retained
earnings
(deficit),
end of
period $ 2,484,251 $ 69,510 $ 2,484,251 $ 69,510
-------------------------------------------------------------------------
Earnings per
share
Basic 0.00 0.02 0.02 0.05
Fully Diluted 0.00 0.02 0.02 0.04
Price Risk Management - Updated Positions
Crude Oil Interest Rate
------------------------------------------------------------------------
1997 1,400 b/d - $20.05 U.S. WTI $42 million @ 6.5%
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------------------------------------------------------------------------
1998 2.000 b/d - $28.23 Cdn. $42 million @ 5.9%
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1999 - $36 million @ 6.0%
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>>
For further information: Glenn R. Carley, Chairman & CEO, Magin Energy
Inc., (403) 265-1899 or Shivon Crabtree, Chief Financial Officer,
Magin Energy Inc., (403) 265-1899 |
