EARNINGS / Blue Range Resources Third Quarter Results
BLUE RANGE RESOURCE CORPORATION ANNOUNCES ITS THIRD QUARTER RESULTS
CALGARY, Feb. 26 /CNW/ - Mr. J. Gordon Ironside, President and CEO, Blue
Range Resource Corporation today announced the Company's third quarter
results.
Comparative information for the last three years is as follows:
Nine months ended December 31
1997 1996 1995
FINANCIAL ($ Thousands)
Oil and gas revenues 62,703 54,055 39,437
Funds flow from operations 29,471 29,255 22,109
Net earnings 3,304 6,260 5,049
Working capital (deficiency) (13,877) 7,526 8,536
Capital expenditures (net) 88,482 80,518 102,709
Long-term debt 110,212 84,306 75,910
Shareholders' equity 228,337 204,408 146,648
Common shares issued 32,791 30,132 24,116
Avg. shares outstanding 31,339 28,207 22,043
OPERATIONS
Gas production (mmcf/d) 105.4 91.6 76.0
Average gas price ($/mcf) 1.62 1.46 1.35
NGL production (bbls/d) 1,614 1,481 1,338
Average NGL price ($/bbl) 20.80 21.83 15.94
Oil production (bbls/d) 952 1,176 852
Average oil price ($/bbl) 24.73 26.10 22.58
PER SHARE ($ Basic)
Funds flow per share 0.94 1.04 1.01
Earnings per share 0.11 0.22 0.23
DRILLING RESULTS (Gross)
Gas wells 30 27 40
Oil wells 9 16 20
Dry & abandoned 16 10 8
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Total 55 53 68
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The unaudited Consolidated Statements of Earnings for the Nine Month
Period ended December 31, 1997 are as follows:
Nine months Three months
(unaudited), $Thousands 1997 1996 1997 1996
Revenue:
Petroleum and gas sales 62,703 54,055 26,125 21,223
Royalties (7,712) (5,854) (3,219) (3,321)
Alberta Royalty Tax Credit 1,204 1,639 404 175
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56,195 49,840 23,310 18,077
Other 1,571 1,946 770 1,270
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57,766 51,786 24,080 19,347
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Expenses:
Production 20,406 15,447 7,264 4,813
General and administrative 2,522 2,434 823 725
Interest on long-term debt 4,741 3,965 1,634 1,488
Depletion and depreciation 23,868 20,218 7,875 6,808
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51,537 42,064 17,596 13,834
-------- -------- -------- --------
Net Earnings Before
Income Taxes 6,229 9,722 6,484 5,513
Income Taxes:
Current 589 610 47 175
Deferred 2,336 2,852 2,235 2,852
-------- -------- -------- --------
2,925 3,462 2,282 3,027
Net Earnings for the period 3,304 6,260 4,202 2,486
-------- -------- -------- --------
-------- -------- -------- --------
Average Shares Outstanding
(000) 31,339 28,207 32,715 29,008
Earnings per Share - Basic 0.11 0.22 0.13 0.09
Funds Flow per Share - Basic 0.94 1.04 0.44 0.42
>>
1. For the nine months, Blue Range's natural gas production averaged
105.4 mmcf/d, a 15% increase over 1996, natural gas liquids production
averaged 1,614 bbl/d, up 9% over 1996, and oil production averaged 952 bbl/d,
down 19% from 1996. Third quarter natural gas production averaged 100 mmcf/d,
a 5% increase over 1996, natural gas liquids production averaged 1,492 bbl/d,
up 1% from 1996, and oil production averaged 1,224 bbl/d, down 8% from 1996.
Property dispositions reduced natural gas production by approximately 4 mmcf/d
as did later than expected tie-ins at Beg, BC. The drop in oil production was
caused by reductions, beginning in July, necessitated by the company's
Waterflood project at the Hillsdown Viking field. This situation has been
reversed as production from the field is currently 1,200 BOPD and is expected
to increase to approximately 1,600 BOPD by May 1998.
2. In the latter part of December, the Company tied-in 30 mmcf/d of
production, 13 mmcf/d from Louise, 10 mmcf/d from Chinchaga, 5 mmcf/d from Beg
and 2 mmcf/d from other areas. An additional 10-20 mmcf/d is expected to be
tied-in by March 31, 1998.
3. Since April 1, 1997, Blue Range has participated in 55 wells (42.5
net) which resulted in 30 gas wells, 9 oil wells and 16 dry holes. A total of
3 wells are currently drilling and a further 7 wells are planned before spring
break-up. Blue Range has focused 80% of its drilling activity on gas targets
this fiscal year.
4. In BC the Company has drilled 7 vertical and 4 horizontal wells at
Highway/Beg at an average working interest of 92%. A second compressor has
been installed and total production is presently at 22 mmcf/d. At Conroy
Creek an additional 2 mmcf/d is being tied-in from a new well, while at Silver
2 out of 4 wells are being completed for additional gas from the
Bluesky/Halfway zones. At Boundary Lake, 3 successful Doig/Halfway oil wells
have been completed and are on production, with expectations of 750 BOPD of
sustained oil production. A further 4 development locations have been
identified from new seismic data. Drilling continues at Clear Hills, Bulrush
and Rigel with 8 wells to be completed before year end.
5. In Alberta, a new well has been tied-in at Chinchaga and is
presently producing 10 mmcf/d. Three wells have been drilled and completed at
Louise and net production of 13 mmcf/d has been placed on-stream. Immediately
to the south at Virginia Hills, 4 wells have been drilled and completed. One
well is currently producing 3 mmcf/d (1 mmcf/d net), while 2 additional wells
are planned to be tied-in. A fourth oil well is flowing 250 BOPD. At
Thunder, Blue Range has drilled and completed 2 Cretaceous gas wells and 1 oil
well. At Pine Creek, 1 well (50% W.I.) has been drilled to the Wabamun, and
completions are underway in the Wabamun, Pekisko and Gething zones. Two
follow-up wells are planned immediately following spring break-up.
6. Blue Range's portfolio of natural gas contracts has a large exposure
to the U.S. market which resulted in average netback prices of $2.21/mcf in
the third quarter. The AECO index average for the same period was $1.84/mcf
at the plant gate and the spot price at the McMahon Plant in BC was $1.70/mcf.
Based on current market indices, and including the fixed portion of the
portfolio, the Company is forecasting a gas price of $1.77/mcf for the last
three months of its fiscal year, allowing us to exceed our target price of
$1.65/mcf for the year.
7. Petroleum and natural gas sales for the nine months increased by 16%
to $62.7 million from $54 million in 1996. The increase is attributable to
higher production volumes of natural gas and NGLs along with increased prices
for natural gas. Natural gas prices averaged $2.21/mcf for the quarter,
lifting the year-to-date average to $1.62, an 11% increase over last yearŠs
$1.46. Natural gas liquids prices decreased slightly to $20.80/bbl from
$21.83/bbl in 1996 while the average price for crude oil was $24.73/bbl
compared with $26.10/bbl last year.
8. Funds flow from operations was $29.5 million ($0.94/share) for the
nine months versus $29.3 million ($1.04/share) in 1996. The third quarter
generated $14.3 million ($0.44/share) of funds flow compared to $15.2 million
($0.50/share) in the first half. Blue Range had record monthly cash flow of
$6.02 million in November when gas prices averaged $2.79/mcf. Net earnings
for the nine months were $3.3 million compared with $6.3 million in 1996.
Operating costs and general and administrative expense for the nine months
increased to $20.4 million and $2.5 million respectively from $15.4 million
and $2.4 million in 1996, while interest expense was $4.7 million compared to
$4.0 million last year.
9. During the quarter, the Company sold 383,000 flow-through shares at
an average price of $7.17. This brings the year-to-date sales of flow-through
shares to 1.99 million shares at an average price of $8.99. Recently the
CompanyŠs credit facilities were increased to $130 million. The Company has
disposed of P&NG properties at Penhold for $5.1 million and plans for up to
$15.0 million of further dispositions prior to March 31, 1998 are well
advanced.
10. Given Blue Range's leverage to natural gas (90% including NGLs), the
natural gas price increases expected this fall, coincident with the Northern
Border expansion, bode well for Blue Range. The previously mentioned asset
sales will strengthen our balance sheet while the organizational changes
undertaken in the last year have strengthened the Company overall. Blue Range
believes it is in an excellent position to capitalize on a future environment
which includes higher and sustainable natural gas prices.
Blue Range is a natural gas exploration, development, production,
processing and marketing company based in Calgary, Alberta. The Company
concentrates its activities on liquid-rich natural gas prospects in Central
Alberta, Northwest Alberta and Northeast British Columbia. Blue Range's
common shares are listed for trading on The Toronto Stock Exchange and The
Alberta Stock Exchange under the symbol BBR.A. |
