EARNINGS / Black Sea Energy reports 1997 Results
CALGARY, March 23 /CNW/ - Black Sea Energy Ltd. (BSX on the TSE) today
reported that in its first full year of operations, the Company's 50%-owned
Tura project in Western Siberia produced 1,112,000 barrels of oil net to Black
Sea. From this production, 975,000 barrels of oil were sold, 52% within
Russia and 48% exported. Oil sales in fiscal 1997 amounted to US $12,250,000
at a blended average price of US $12.56 per barrel. A record cold winter,
which continued through February 1998, caused development delays and increased
production costs which, when combined with higher than anticipated start-up
costs, resulted in lower than projected average volumes and revenue for the
year. The net loss for the year ended December 31, 1997 was US $1,256,000 (US
$0.02 per share), compared to the loss for fiscal 1996, while it was a private
company, of US $1,593,000 (US $0.22 per share). Cash flow from operations in
1997 was US $1,113,000 (US $0.02 per share), compared to a negative cash flow
the previous year of US $1,535,000 (US $0.21 per share).
The Company's Russian operations contributed pre-tax income of US
$2,108,000, or a net back of US $2.16 per barrel. Russian income after taxes
was US $1,264,000, or US $1.30 per barrel.
Black Sea finished 1997 in excellent financial condition with a cash
balance of US $50,456,000, after having invested US $52,208,000 on its Tura,
Radonezh and Kuban projects and US $14,339,000 procuring related equipment
(primarily of Western origin) during 1997.
RESERVES
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The Company's share of proved reserves of recoverable oil (net of
additions, production and revisions), as determined by the Company's
independent reservoir engineers, increased at Tura by 18% to 32.6 MMBbls,
while at Kuban proved reserves declined by 38% to 9.7 MMBbls. The decline at
Kuban is a consequence of re-evaluating the proved reserves for economic
recoverability. Probable reserves declined at Tura by 13% to 116.9 MMBbls and
at Kuban by 8% to 9.2 MMBbls, both reductions caused by increased costs and
the resulting impact on the economic recoverability of the reserves. The
risk-adjusted, after-tax value of future cash flows from proved and probable
reserves, discounted at 10%, is US $92.6 million. This value takes into
consideration current depressed oil prices and further reflects on increased
costs experienced this past year.
PROJECT OPERATIONS
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TURA PROJECT
At the Company's Tura Petroleum joint venture (50% interest to Black
Sea), a total of 17 development wells were drilled on the Kalchinskoye
Production Block, with 13 wells completed and in production prior to December
31, 1997. A further four exploratory wells were drilled on this Block, with a
100% success rate. Tura also conducted a significant well work-over program
in 1997, which included 14 hydraulic fracture treatments. These combined
activities at Tura have resulted in a daily production rate increase of 85%
between January 1, 1997 and December 31, 1997. The daily production exit rate
for the Tura project at December 31, 1997 was 8,850 barrels per day (4,425
barrels per day net to Black Sea).
On the adjoining Kalchinskoye Exploration Block, 1997 exploration
drilling activities resulted in one well cased as a discovery, two wells dry
and abandoned, and three wells which are currently drilling.
In addition, Tura is shooting 600 km of seismic as well as reprocessing
700 km of previously shot seismic data to supplement the existing seismic
information on the Kalchinskoye Block.
KUBAN PROJECT
At the Company's Kuban incremental production joint venture (50% interest
to Black Sea), a total of nine wells were rehabilitated using Western
technology. Six of the work-overs, while believed to be mechanically
successful, are currently being assessed to confirm economic viability.
RADONEZH PROJECT
To supplement its development and rehabilitation projects with a quality
exploration play, the Company was successful in securing an exploratory block
license of 1.2 million acres adjacent to its Tura project. This area,
designated as the Radonezh joint venture, was acquired in September of 1997.
The Company has a net 50% interest in this acreage and is currently shooting
750 km of seismic to supplement 1000 km of existing seismic data. Based on
initial seismic interpretations, the Company plans to spud its first
exploratory well by April 7, 1998, with the well programmed to reach total
measured depth by the end of the second quarter.
Black Sea Energy is a Canadian company focused exclusively on the
initiation, rehabilitation, exploration and development of major oil
properties in Russia. With Russian partners, the Company is actively involved
in two exploration and development projects, Tura Petroleum and Radonezh
Petroleum in Western Siberia and one production rehabilitation project, Kuban
Technologies in the Krasnodar region of Southern Russia. |
