EARNINGS / Bow Valley Resources reports 1997 Results
CALGARY, April 9 /CNW/ - Bow Valley Energy Ltd is pleased to announce its
financial and operating results for 1997. Bow Valley's annual general meeting
of shareholders will be held in the Turner Valley Room at the Palliser Hotel
in Calgary on May 29, 1998 commencing at 2:00 p.m.
Bow Valley commenced operations effective April 1997 as a result of its
50% acquisition of Croft Oil and Gas plc, an exploration and development
company with the majority of its assets in the United Kingdom. During the nine
month period ended December 31, 1997, Bow Valley recorded average oil
production of 217 barrels of oil per day from Croft's interest in three fields
in the North Sea. Average price realized was $23.56 per barrel and the
Corporation recorded operating revenues of $1.5 million. As well, the
Corporation earned interest on its cash resources of $0.4 million, for total
revenues of $1.9 million. At December 31, 1997, the Company remained in a
strong financial position with cash and short term investments in excess of
$23 million or 91 cents per share and no long term debt.
Expenses amounted to $7.3 million and include costs totaling $4.7 million
with respect to three wells drilled in Romania and Oman which were expensed as
a result of lack of success. Remaining costs include operating costs and
depletion attributable to the three producing fields of Croft and overhead
relating to ongoing costs of the Calgary and Guildford offices as well as
Croft. As a result, the Corporation recorded a net loss of $5.4 million and
used cash of $0.2 million in operations in 1997.
Bow Valley acquired its 50% interest in Croft Oil and Gas plc, for a cash
consideration of $5.3 million. In addition, Bow Valley incurred capital
expenditures totaling $14,068,128 which can be summarized as follows:
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Oil and Gas
United Kingdom $ 9,181,730
Romania 2,214,996
Oman 2,506,865
Other 164,537
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$14,068,128
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In May 1997, Bow Valley acquired an 11.25% interest in Licence P748 which
includes the Kyle Field in the North Sea. In addition, Croft has an interest
of 2.5% in the Licence. In December 1997, the Corporation acquired a 13.75%
working interest in Block 22/2a in the UK sector of the North Sea, which
contains the Chestnut Field which was initially discovered in 1986. Other
expenditures in the United Kingdom represent ongoing expenditures on the Croft
properties, costs incurred with respect to a successful application for three
onshore Blocks in southern England as part of the Eighth Landward Licencing
Round, evaluation costs as part of the alliance with Challenge Asset
Management Limited and capitalized overhead.
Independent engineers have assigned proved and probable reserves of 6.5
million barrels of oil and 6.85 bcf of natural gas at December 31, 1997 to Bow
Valley's North Sea fields. In addition, in December 1997, the Corporation
entered into agreements to acquire working interests in five blocks in the UK
sector of the North Sea. Closing of this transaction is expected in the
second quarter of 1998. Independent engineers have assigned proved and
probable reserves of 5.7 million barrels of oil and 8.88 bcf of natural gas to
these properties.
In July 1997, Bow Valley signed a service contract to develop the Balal
oilfield offshore Iran. The terms of the service contract contemplate that the
Corporation, together with a partner, provide the necessary technical
expertise and capital to build the offshore facilities and to drill the wells
necessary to initiate production from the field. During 1997, the Corporation
incurred expenditures totaling $0.8 million to secure the service contract, to
conduct feasibility studies, geological assessments, and to undertake front
end engineering work with respect to the project. The Corporation is currently
actively seeking new partners to provide financing for the project. Securing
of this financing is required in order for the Corporation to proceed with the
project.
During 1997, the Company raised proceeds, net of issue costs, of $37.2
million from the issue of Series A Exchange Warrants and Class A Common Shares
from treasury. All of the outstanding warrants were converted into Class A
Common Shares, for no additional consideration, in September 1997 when the
Corporation became a publicly traded company on completion of its initial
public offering. Bow Valley currently has 25,120,066 Class A Common Shares
that are issued and outstanding.
Bow Valley was formed in 1996 to operate as an international oil and gas
acquisition, development, exploration and production company headquartered in
Calgary, Alberta. Bow Valley trades on The Toronto Stock Exchange under the
symbol BVX.
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BOW VALLEY ENERGY LTD
HIGHLIGHTS
Period from
Year Ended June 27 to
December 31, December 31,
1997(1) 1996
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FINANCIAL
Total Revenue $1,884,419
Loss 5,415,251
Cash Flow From Operations (155,844)
Cash Used in Investing Activities
Acquisition of 50% of Croft, net
of cash acquired 4,943,136
Acquisition of Capital Assets 14,068,128 $ 27,251
Investment in Balal Project 794,248
Cash Provided by Financing Activities
Issuance of Common Shares 16,550,000 1,229,101
Issue of Exchange Warrants 5,000,000
Issue of Series A Exchange
Warrants 22,885,720
Share and Warrant Issue Costs (2,242,237) (35,983)
Cash and Short Term Investments at
End of Period 23,031,753 6,036,402
Shareholders' Equity At
End of Period 37,971,350 6,193,118
OPERATING
Crude Oil Price
(barrels of oil per day) 217
Crude Oil Price
(Canadian dollars per barrel) $23.56
December 31, Subsequent
1997 Acquisition(2)
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RESERVES AND PRESENT VALUES
(pretax; US $17.50 unescalated Brent)
Proved
Crude Oil (mbbls) 2,390
Natural Gas (bcf) 1.47
Proved plus Probable
Crude Oil (mbbls) 6,543 5,747
Natural Gas (bcf) 6.85 8.88
Future Net Cash Flow ($000)
Proved Reserves
Undiscounted 10,140
Discounted at 10% 6,380
Discounted at 15% 4,980
Proved plus Probable Reserves
Undiscounted 69,900 56,870
Discounted at 10% 44,700 34,350
Discounted at 15% 36,260 27,530
Notes:
1 The Corporation commenced operations effective April 1997.
2 Represents reserves and related present values (net of purchase price)
subject to a purchase agreement dated December 29, 1997. Closing is
expected during the second quarter of 1998.
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