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Gold/Mining/Energy : KERM'S KORNER -- Ignore unavailable to you. Want to Upgrade?

To: Arnie who wrote (10180)	4/20/1998 10:02:00 AM
From: Kerm Yerman	Respond to of 15196

EARNINGS / Southward Energy 1977 Results SOUTHWARD ENERGY ANNOUNCES 1997 RESULTS CALGARY, April 17 /CNW/ - Southward Energy Ltd. (SWN - TSE) Southward Energy Ltd. today announced its operating and financial results for the fiscal period ending December 31, 1997. Major highlights for 1997 include: 1) Election of a new Board of Directors and a change in Management of the Company. 2) Infusion of new equity to strengthen the Company's balance sheet. 3) A refocus of the Company's growth area. 4) Exit production rate of 280 barrels of oil per day and 5.25 million cubic feet per day of gas. Revenues for 1997 increased 21% from 1996 to $4.5 million. Revenues increased primarily due to gas production from the Bonnyville and Cold Lake properties acquired in late 1996 and early 1997. Cash flow from operations for 1997 amounted to $1.5 million ($0.18 per share). This cash flow was negatively impacted by one time reorganization costs and a reversal of the Company's practice to capitalize interest expense. Average production for the year was 645 barrels of oil equivalent per day (BOEPD) and increased in the fourth quarter of 1997 to achieve an exit rate of 805 BOEPD of which 65% was natural gas production. Capital expenditures for 1997 totalled $8.8 million. Southward Energy maintains an operating line of credit with a Canadian bank in the amount of $8.6 million. At December 31, 1997 drawings amounted to $2.8 million. Current shares outstanding are 8,751,366 and will increase to 11,966,366 with the conversion of the Special Warrants from the October 15, 1997 financing with Longbow Capital. Proved reserves as at January 1, 1998, as evaluated by McDaniel and Associates, were 1,815 thousand barrels of oil equivalent of which 64% is natural gas. Total proved and probable reserves were 2,459 thousand barrels of oil equivalent. 1997 was a year of tremendous change for Southward Energy. The Company elected a new Board of Directors and changed Management in connection with its previously announced private placement of $5.3 million. The new Board and Management have moved to refocus the Company. As part of this reorganization, Southward Energy took a write down of its recorded asset base to meet the required ceiling test provisions. This, coupled with a number of one-time costs associated with the change of management, resulted in the $1.3 million loss for 1997. Mark Janisch, President and CEO of the company, stated that although these were difficult decisions the end result will be a company in a strong position to move forward on its aggressive growth plans. This loss for 1997 does not impact Southward's investment plans for 1998. Southward Energy continues to move forward on a number of opportunities and anticipates the spudding of three wells following break up that, if successful, would have a significant impact on the Company's cash flow. In Central Alberta, the Company will be drilling two 100% interest wells to target what could each result in production of 2 - 4 million cubic feet per day and reserves of 3-4 billion cubic feet with additional follow up opportunities. In southeast Saskatchewan Southward Energy will test a seismic anomaly that could lead to several follow up horizontal locations. Each well could produce up to 125 barrels of oil per day with reserves of 150 thousand barrels. In addition, Southward Energy will actively pursue opportunities in its new focus area of Central Alberta through drilling and acquisitions. Southward Energy Ltd. is a junior oil and gas exploration company currently producing 6.5 million cubic feet of gas per day and 250 barrels of oil per day.