EARNINGS /Renata Resources reports 1997 Results
Renata Resources Inc. ("Renata") is pleased to announce its year end results.
The past year has seen Renata transform from a start-up company, producing 30
barrels of oil equivalent per day (boepd) in April of 1997, to a solid full
cycle oil and gas company with a December 31, 1997 exit production rate of
8,400 boepd.
Financial and operational results for the period ended December 31, 1997
include the operations of Renata from January 1, 1997 and of Intensity
Resources Ltd. ("Intensity") from the acquisition date of April 24, 1997.
Financial Review
Petroleum and natural gas sales for 1997 were $34,644,000 and $12,968,000 for
the three months ended December 31, 1997. Fourth quarter production of crude
oil and natural gas liquids was 6,536 barrels per day (bopd) and natural gas
production averaged 11.0 million cubic feet per day (mmcf/d), totalling 7,628
boepd. The average selling price for the year for crude oil and natural gas
liquids was $20.37 per barrel while natural gas prices averaged $1.52 per
thousand cubic feet (mcf). Royalties, before Alberta Royalty Tax Credit
(ARTC), were $4,771,000 or 13.8% of sales. The ARTC for the year was $825,000
and other revenues were $283,000 for interest received on short-term
deposits.
Operating expenses for year were $9,454,000 or $5.33 per barrel of oil
equivalent (boe) while for the quarter ended December 31, 1997, were $5.02
per boe. General and administrative expenses for 1997 were $1,731,000 or
$0.98 per boe. Renata does not capitalize any general and administrative
expenses. Interest expense for the year was $2,068,000 and preferred share
dividends on Intensity preferred shares that were fully redeemed on May 30,
1997, were $83,000. Depletion, depreciation and amortization expenses were
$17,291,000.
Net income before taxes for 1997 was $354,000 while the net loss after
deferred taxes of $2,835,000 and capital taxes of $260,000 was $2,741,000 or
$0.04 per share.
Funds from operations were $17,385,000 for the year ended December 31, 1997
or $0.29 per basic share ($0.23 per fully diluted share). Funds from
operations for the fourth quarter were $7,422,000.
Capital expenditures for 1997, excluding the Intensity acquisition, were
$48,093,000 with $32,419,000 spent during the fourth quarter.
At December 31, 1997, the Company's debt balance was $31,400,000 and the
working capital deficiency was $16,575,000.
The weighted average common shares outstanding for the year ended December
31, 1997 were 61.0 million shares. The Company currently has 119.1 million
shares outstanding (124.1 million shares fully diluted).
Operational Review
During 1997, Renata drilled 72 gross (62.2 net) wells, resulting in 61 oil
wells, two gas wells, five service wells and four dry holes with an overall
success rate of 94 percent. Development drilling represented 89 percent of
total drilling activity in 1997, while exploration activity represented 11
percent.
Renata met its targeted 1997 year end exit rate during the last two weeks of
December of 8,400 boepd, with December production averaging 8,131 boepd. With
the addition of Intensity's pre-acquisition production for 1997, the average
production for the year was 6,882 boepd. Current production is approximately
7,200 boepd, with approximately 1,000 bopd shut in at the Alderson area due
to the current heavy oil pricing environment.
Capital expenditures for the year totaled $178 million, with $130 million
allocated towards the Intensity acquisition and $48 million spent on
operations between April 24, 1997 and the end of' the year. A total of $12.5
million relates to work currently in progress during 1998, such as the
significant capital investment made in land, seismic, and drilling in the
Smoky area.
Renata's proved and probable oil and natural gas liquids reserves were 14.4
million barrels (mmbbls) at year end 1997, a 19% increase over the 1996 year
end Intensity reserves of 12.1 mmbbls. The proved and probable natural gas
reserves at year end 1997 were 56.3 billion cubic feet (bcf), a 52% increase
over the Intensity 1996 year end reserves of 37.0 bcf. On a boe basis, the
proved and probable reserves increased 27% to 20.0 million barrels of oil
equivalent (mmboe) at year end 1997 from 15.8 mmboe at the end of 1996. The
success in finding new reserves not only increased Renata's reserves by 27%,
but the strategic shift from medium gravity (20 degrees API) oil has begun
with the large reserve replacement in natural gas.
During 1997, 9.1 mmboe of proved and probable reserves were added, comprised
of 5.9 mmbbls of oil and natural gas liquids and 31.9 bcf of natural gas. On
a proved basis, 6.3 mmboe were added in 1997, comprised of 4.4 mmbbls of oil
and natural gas liquids and. 19.1 bcf of natural gas. Net of revisions to the
reserves acquired through the Intensity acquisition, the reserve replacement
ratio on a proved and probable basis was 2.7.
Finding and development costs, excluding 1998 work in progress, for 1997
proved and probable reserve additions were $3.92 per boe and $5.63 per boe on
a proved basis. Net of revisions, 1997 finding and development costs increase
to $5.25 per boe on a proved and probable basis, and $8.14 per boe on a
proved basis.
The reserve life index, on a proved and probable basis, is 8.0 years, up from
6.4 years at the end of 1996 This reflects the success Renata has experienced
in its goal to find and develop longer life natural gas and light oil
reserves.
Outlook
Having achieved our targets for 1997 with respect to the exploitation
opportunities within the acquired assets, as well as delivering outstanding
exploration results, Renata is poised to enter Phase Two of its Business
Plan.
The Plan, consistent with the growth strategy laid out a year ago, is to move
aggressively to diversify Renata's product mix by the addition of more
natural gas and light oil reserves through the drill bit.
During 1997, exciting new areas were established west of the fifth and sixth
meridians of Alberta for deep gas, as well in southeast Saskatchewan for
light oil. Significant land positions have been established and seismic has
been shot and interpreted, resulting in many high impact drilling prospects
currently within Renata's inventory.
In the Smoky area of northwest Alberta, Renata owns a 100% working interest
in approximately 100 sections of land which has recently been highlighted by
a competitor's outstanding dual Wabamun successes, both of which have tested
in excess of 110 mmcf/d. Additional gas reserves are prospective in a number
of zones from the Cardium through to the Leduc formation. Renata currently
has a deep test drilling at a 35% working interest. This $6 million well is
targeting the Leduc formation with reserve and productivity potential of 200
bcf and 30 mmcf/d respectively.
In the Edson area of west central Alberta, Renata holds a 30% working
interest in 1,920 acres of land, including a Leduc discovery at Lambert
announced during the second quarter of 1997. The well was completed and
production tested at rates up to 52.8 mmcf/d raw gas. The well is expected to
be on production at an initial rate of 25 to 30 mmcf/d raw gas by the end of
the second quarter 1998. A follow up well is planned for 1998, close to the
initial discovery, to test four uphole zones. Renata also holds a 30% working
interest in 3,520 acres of recently acquired lands in the Lambert area which
are currently being evaluated through the acquisition of a 3-D seismic
survey. Further activity is planned for this area during 1998.
Also in west central Alberta, in the Bergen area, Renata plans to drill a
Leduc reef prospect that has been defined on high fold 2-D seismic data. This
high impact exploration prospect has the potential to contain up to 500 bcf
of raw sour gas in place. Similar Leduc gas pools have individual wells with
initial production rates of 100 mmcf/d of raw gas. Secondary objectives
include the Elkton and Cardium formations. Drilling is expected to begin in
the second half of 1998.
In Southeast Saskatchewan, Renata has acquired approximately 9,000 acres
which are prospective for both the Mississippian and deeper Ordovician
objectives. Current drilling plans include further horizontal development
wells at Ingoldsby and three to five multi-zone exploration wells on
prospects defined by 3-D seismic.
The 1998 Capital Budget was approved by the Board of Directors on February
17, 1998 and has been initially set at $27 million. Approximately 55% of
currently planned expenditures will be allocated towards exploration
drilling, land, and seismic, with the balance spent upon lower risk
waterflood and infill drilling projects. This is a reduction of $15 million
from the previously approved $75 million Capital Budget to $60 million over
the five fiscal quarters from October 1, 1997 until December 31, 1998. This
change is in response to lower oil prices and higher differentials which are
forecast to persist during 1998. Renata is currently opportunity rich and any
improvement in product prices will result in increased levels of activity.
In addition to corporate and property acquisitions which may become more
affordable during 1998, Renata's focus will be on the execution of our
drilling program which will be weighted towards high impact exploration
opportunities currently within our portfolio of natural gas and light oil
prospects.
Renata is well positioned to create sustainable increases in per share value
through 1998 and beyond.
For further information, please contact:
John M. Gunn, Chairman and Chief Executive Officer, or
David J. Reid, President and Chief Operating Officer
RENATA RESOURCES INC.
SUITE 2600,250 - 6TH AVENUE S.W., CALGARY, ALBERTA, CANADA T2P 3H7
TELEPHONE (403) 231-3300 . FAX (403) 262-8508 . TOLL FREE (800) 558-8919
Renata Resources Inc. - 1997 Highlights
Year ended Three months ended
($000s, except per share amounts) December 3l, 1997 (1) December 31,1997
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Financial Gross revenue $ 34,927 $ 13,177
Funds generated from operations 17,385 7,422
Net income (loss) (2,741) (721)
Capital expenditures (2) $ 48,093 $ 32,419
Shares outstanding
Weighted average shares outstanding (000s) 60,976
Common shares outstanding - basic (000s) 119,112
Debt $ 31,400
Working capital deficiency 16,575
------
$ 47,975
Per share
Funds generated from operations
Basic $ 0.29
Fully diluted $ 0.23
Net income (loss)
Basic $ (0.04)
Fully diluted $ (0.04)
Operational
Average Daily Production(3)
Oil and NGLs (bbls/d) 4,075 6,536
Natural gas (mcf/d) 7,853 10,925
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Total (boe/d) 4,860 7,628
Exit production rate (boe/d) 8,400
Average Sales Price
Oil and NGLs ($/bbl) $ 20.37 $ 18.89
Natural Gas ($/mcf) 1.52 1.60
Operating Expenses ($/boe) 5.33 5.02
Operating Netbacks ($/boe) 12.13 12.41
General and administrative expenses ($/boe) $ 0.98 $ 0.65
Reserves
Crude Oil and NGLs (mbbls)
Proved 10,292
Probable 4,100
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Total 14,392
Natural Gas (mmcf)
Proved 39,639
Probable 16,628
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Total 56,267
Wells Drilled
Gross 72 44
Net 62 40
Success rate (percent) 94% 95%
Land Holdings (acres)
Gross 557,009
Net 364,227
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(1) The financial and operational results include the operations of Renata
Resources Inc. from January 1, 1997 and of Intensity Resources Ltd. from the
date of acquisition, April 24,1997.
(2) 1997 capital expenditures exclude the acquisition of Intensity of
$129,987,000.
(3) Average daily production combined for Renata and Intensity for the entire
year 1997 resulted hi 5,783 bbls of oil and natural gas liquids and 11.0
mmcf of natural gas for a total of 6,882 boe. |
