CORP. / Chauvco Resources International is Launched
CALGARY, Dec. 18 /CNW/ - Chauvco Resources International Ltd.
(''Chauvco''), a Bermuda company, is being launched as a result of the
strategic alternatives review process undertaken by Chauvco Resources Ltd.
(''CRL'') to increase shareholder value. Under the terms of a plan of
arrangement approved today, shareholders of CRL receive one share of Chauvco
for each CRL share held. Chauvco is an international natural resource company
formed for the purpose of acquiring oil and natural gas properties and
exploration, development, production and marketing of crude oil and natural
gas. Initially, the Company's principal properties, operations and oil
reserves are located in Gabon, central west Africa. Chauvco proposes to
actively evaluate and secure other international petroleum resource
opportunities, principally focusing on west and north Africa and the Middle
East.
The Company's strategy is to:
- enter countries with large, high quality reserves, available
infrastructure and market access
- focus on acquiring producing and/or proven reserves with upside
potential for further exploration and development
- retain high working interests and operatorship of projects
OPERATIONS REVIEW - GABON
Further to activities in Gabon reported earlier in the year, Chauvco has
begun its second development drilling program in the Remboue field. The
first horizontal well of this program was spudded on December 11th in the
undeveloped Remboue East Gamba pool. Remboue East is a separate oil
accumulation in the Gamba reservoir confirmed by three previously drilled
slim-hole vertical appraisal wells.
In addition to the development of the Remboue East Gamba pool, Chauvco
plans to appraise the deeper Fourou Plage reservoir which is below the
producing Remboue Gamba reservoir. The Fourou Plage will be drilled with a
vertical well to a depth of 5,000 feet during the first quarter of 1998.
Additional Fourou Plage and Remboue East Gamba development wells are planned,
contingent on the outcome of initial drilling results from this program.
Chauvco is also continuing with the shallow slim-hole drilling exploration
program to appraise the Gamba formation elsewhere within the Remboue Permit.
Seismic reprocessing and interpretation is underway to define the conventional
rig exploration drilling program for the second half of 1998 on the Company's
adjacent large land base which includes the Maga, Avomo and Ngalo permits in
Gabon. Capital expenditures for the initial seismic and drilling program in
1998 are estimated to range from US$10 to US$13 million. Based on success of
the initial program, additional development capital expenditures could amount
to US$ 20 million in 1998.
The current production rate from the Remboue field is approximately 3,200
(2,880 net) barrels of oil per day. In order to optimize production, an
individual well testing and analysis program is currently underway. This
reservoir analysis will be completed in the second quarter of 1998 to
determine the cost effectiveness of a secondary recovery scheme. Current
estimates of cash flow for 1998 range from US$4 to US$7 million (US$0.08 to
$0.14 per share). Favorable incremental economics exists for any new
production, with netbacks approximating US$14 per barrel.
The Company has successfully marketed its first cargo of Remboue crude
oil for delivery on or about December 28th when approximately 375,000 barrels
will be transferred from Chauvco's offshore storage tanker to a market tanker.
RESERVES
Based on a review by independent reservoir engineers, the Company's
current working interest in Gabon crude oil reserves is as follows:
Proved producing 3,827,000 barrels
Probable 1,005,000
---------
Total proved and probable
producing reserves 4,832,000 barrels
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While there has been no change in ''oil in place'' reserves estimates,
reductions from previously disclosed reserve estimates have been made to
reflect economic limits from lower current well production levels.
OTHER INTERNATIONAL INTERESTS
Chauvco has several international projects in various stages of
negotiation. With the input of an experienced Board of Directors and the
continuing involvement of key management, the Company plans to build on its
existing prospects and knowledge to secure other international opportunities
for the enhancement of shareholder value. It is expected that another
international venture will be announced in 1998.
FINANCIAL POSITION
The Company begins its existence without any long term bank debt. The
opening proforma unaudited condensed balance sheet of Chauvco is as follows:
ASSETS US$ Cdn$
---------- ----------
Working capital 5,249,000 7,454,000
Capital assets 18,474,000 26,233,000
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23,723,000 33,687,000
---------- ----------
EQUITY
Minority interests 378,000 537,000
Shareholders' equity 23,345,000 33,150,000
---------- ----------
23,723,000 33,687,000
---------- ----------
In order to finance its anticipated growth and development of existing
and future prospects, Chauvco will seek to raise additional capital. The
Board of Directors has approved the filing of a circular outlining the
opportunity for all shareholders to participate in a rights offering in the
amount of approximately Cdn$35 million (US$25 million). Record date and
pricing of the shares offered under the rights offering will be set after the
preliminary circular has been reviewed by Canadian security commissions.
SHARE EXCHANGE LISTING
On December 22, 1997, Chauvco will begin public trading of its common
shares on The Toronto Stock Exchange and The Montreal Exchange under the
symbol of CHV. The Company has 51,346,282 shares outstanding. Under the
Company's stock option plan, 2,400,000 shares have been approved for issuance
to directors, management and key employees, with vesting to occur over a four
year period and exercise price equal to the weighted average trading price for
the last ten trading days in January 1998. The Company has also agreed that no
options will be exercised in excess of approximately 1.7 million shares before
shareholders have met to approve an increased number of shares reserved for
issuance under the stock option plan.
A conference call for shareholders and analysts has been scheduled for
Friday, December 19, 1997 at 9:00 a.m. Mountain Standard Time (11:00 a.m.
EST). To access this call, please dial 1-888-209-3754. Rebroadcasts of the
conference call will be available until Tuesday, December 23rd by phoning
1-800-558-5253 and providing the reservation number 3577033. |
