EARNINGS - SPEC 15 LISTED / Richland Petroleum 1997 Results
RICHLAND PETROLEUM CORPORATION
TSE, ASE SYMBOL: RLP.A
MARCH 20, 1998
Richland Announces Exploration Success, 1997 Results
CALGARY, ALBERTA--Richland Petroleum Corporation today announced
recent exploration success and 1997 financial results.
1997 RESULTS
Crude oil sales for the year ended December 31, 1997 averaged
3,239 barrels per day, while natural gas sales averaged 2.8
million cubic feet per day. This compares to 3,180 barrels per
day and 4.0 million cubic feet per day in 1996. Production
averaged 3,645 barrels of oil equivalent (BOE) per day in the
fourth quarter of 1997 and exit rates were in excess of 4,000
barrels equivalent per day. The 1997 financial and operating
results reflect the sale of approximately 600 BOE per day of
production during 1997.
Oil and gas revenues, net of royalties, for the year ended
December 31, 1997 were $ 22.7 million, up slightly from $ 22.3
million in 1996. Net revenues in the fourth quarter of 1997 were
$ 7.3 million, down from $7.5 million in 1996. The average
selling price of crude oil was $23.81 in 1997, while natural gas
price averaged $1.82 per thousand cubic feet. Royalty rates
averaged 18.7 percent of sales revenues.
Operating expenses for the year were $5.6 million, or $4.28 per
BOE. General and administrative expenses were $2.5 million, while
interest expense totaled $1.0 million. Capital taxes were $1.1
million.
Cash flow from operations was $12.6 million, or $1.02 per share
fully diluted, compared to $12.7 million or $1.13 per share in
1997. Cash flow for the fourth quarter was $3.1 million.
Depletion and amortization expense for 1997 was $37.6 million. As
a result of the fall in oil prices in late 1997, a ceiling test
write down of capitalized costs was required, resulting in a write
down, net of deferred taxes, of $21.4 million. This write down
does not affect reserves or asset values. Had oil prices remained
at 1996 levels, no ceiling test write down would have been
required. This resulted in a net loss for 1997 of $22.7 million,
or $1.99 per share, compared to a loss of $0.4 million, or $0.04
per share, in 1996.
Net capital expenditures in 1997 were $19.5 million, compared to
$30.3 million in 1996. At December 31, 1997, long term debt stood
at $23.1 million, compared to $19.9 million in 1996.
The weighted average shares outstanding for the year ended
December 31, 1997 were 11.4 million basic and 12.6 million fully
diluted. At December 31, 1997, there were 11.9 million shares
outstanding.
1997 OPERATIONAL HIGHLIGHTS
A net capital program of $19.5 million saw Richland drill 73 gross
(35.0 net) wells, resulting in 5 gas wells and 48 oil wells,
representing a 73 percent success rate. A total of $17.8 million
was spent on drilling, with $7.0 being spent on land, seismic,
facilities and corporate. Properties producing approximately 600
BOE per day were sold in 1997, for net proceeds of $10.9 million.
Crude oil and natural gas liquids reserves at December 31, 1997
were 7.6 million barrels proved and probable (5.7 million barrels
proved), while natural gas reserves were 10.5 billion cubic feet
(BCF) proved and probable (9.4 BCF proved).
At Kingsford, Saskatchewan, two wells were put on stream in the
fourth quarter, as a result of the discovery announced earlier.
The wells exited 1997 producing in excess of 700 barrels per day
net to Richland. A third well is planned in 1998, to exploit a
shallower zone.
At Crossfield, a third quarter Elkton discovery well was producing
2 million cubic feet per day net to Richland and a vertical and a
horizontal well were both drilled and are awaiting tie-in.
FIRST QUARTER 1998 ACTIVITY - EXPLORATION SUCCESS STARTS NEW YEAR
Strong levels of capital activity in the first quarter resulted in
a property acquisition and four new exploratory successes in
Saskatchewan at Huntoon and in Alberta at Wildwood, Paddle River
and Sakwatamau.
Alberta
In Alberta, two successful multi-zone wells (20 to 33 percent
W.I.) have been drilled at Paddle River and a third is nearing
completion. With the potential for both oil and gas, the
successful drilling will lead to at least six follow-up locations.
The first three wells are expected to be completed and on
production within a month.
At Wildwood, Richland is in the process of completing a successful
exploratory gas well and is currently drilling its second earning
well with multi-zone potential on the 42 section farm-in (33 to 50
percent W.I.). Follow - up drilling will continue after break-up,
based on production testing.
At Sakwatamau, two successful gas wells (25 percent W.I.) have
been drilled by and are currently being completed. These
successful wells lead to three more potential locations. Gas
production is expected to commence in mid - 1998.
S.E. Saskatchewan
In early January 1998, Richland acquired 16.5 net sections of 100
percent working interest land and 120 barrels per day of oil
production in the Bienfait area of southeastern Saskatchewan for
$3.9 million. The drilling of a second leg in an existing
horizontal well is expected to add 75 barrels per day and a five
square mile 3D seismic program has recently been completed. Up to
four horizontal wells could result in production additions of 400
to 500 barrels per day of incremental production.
At Huntoon, also in southeastern Saskatchewan, Richland has a 50
percent working interest in a new Red River discovery. Drill stem
test results indicated productive capacity similar to Richland's
1997 discovery at Kingsford, which is currently producing in
excess of 600 barrels per day. The well is tied in and is
expected to be on production early next week.
A successful development drilling program is in progress at
Wapella, with 12 of 16 wells drilled, 9 successfully. Upon
completion of the program, we expect to add 250 to 300 net barrels
per day to Richland's production base.
High Impact Exploration
In the first quarter, the company entered into a large area joint
venture with an intermediate oil and gas producer in northwestern
Alberta. The joint venture covers 30 sections of land over three
different prospect areas. Richland is participating for a 50
percent working interest in the drilling of two multi-zone
exploratory tests in the first quarter of 1998, the first of which
was abandoned and the second is currently drilling at McLean
Creek, Alberta. At Firebird, a 3D seismic program has recently
been completed, and a Slave Point test is planned in the third
quarter of 1998. This play offsets producing wells which are
currently averaging in excess of 1,000 barrels equivalent per day
per well.
In southeastern Saskatchewan, five additional 3D seismic programs
have been shot, looking for additional Red River prospects.
Richland has budgeted for four additional Red River exploratory
wells in 1998.
At Lost Hills, California, Richland has a 5 percent working
interest in an 18,000 foot exploratory test well in the San
Joaquin Basin. This basin contains four fields which have
recovered greater than one billion barrels of oil. The pool has
the potential for recoverable reserves of greater than 500 million
barrels. This well is scheduled to spud in early April, 1998.
OUTLOOK
With an $18 million capital budget for 1998, Richland will have an
active year, drilling in excess of 40 wells. Approximately 30 per
cent of the capital program will target exploratory prospects.
Production levels for 1998 are forecast to increase by
approximately 20 per cent, to average 4,200 BOE per day. Current
corporate production is 4,000 barrels equivalent per day, without
the addition of production behind pipe from the exploratory
successes in Alberta and Saskatchewan referred to above. This new
production, combined with at least four high impact exploration
wells planned after break-up, gives management confidence that the
company will meet or exceed its production targets
Mr. Richard Todd, President and C.E.O., stated that "Based on
internal proved and probable reserve evaluations for the first
quarter of 1998, Richland has already replaced its 1998
production. With 250,000 net acres of land and an aggressive new
management team, Richland is well positioned to build on its
recent exploration successes to accelerate its growth momentum."
Richland Petroleum Corporation is a public company involved in the
exploration and development of crude oil and natural gas in
western Canada and the United States. Its shares trade on the
Alberta and Toronto Stock Exchanges under the symbol "RLP.A".
/T/
Comparative Highlights
Three Months ended Year ended
December 31, December 31,
1997 1996 1997 1996
------------------------------------
PRODUCTION
Oil & Liquids - Bbls./Day 3,645 3,351 3,239 3,180
Gas - MCF/Day 2,821 3,854 2,821 4,031
------------------------------------
BOE/Day 3,927 3,736 3,521 3,583
AVERAGE PRICES
Oil ($/Bbl.) 23.73 29.38 23.81 23.05
Gas ($/Mcf) 1.44 1.55 1.82 1.46
FINANCIAL ($ 000's)
Revenues, net of
royalties 6,410 5,692 22,827 22,434
Cash Flow 3,127 2,641 12,647 12,663
Cash Flow per Share
Basic 0.26 0.24 1.10 1.20
Fully diluted 0.24 0.23 1.02 1.13
Earnings (22,341) (786) (22,778) (431)
Earnings per Share (1.95) (0.07) (1.99) (0.04)
Net Capital Expenditures 8,144 3,594 19,554 30,333
Long Term Debt 23,073 19,886 23,073 19,886
Working Capital
Deficiency 6,906 3,624 6,906 3,624 |
