EARNINGS / Cabre Exploration Ltd. Wishes to Announce Its First
Quarter 1998 Results
TSE SYMBOL: CBE
MAY 7, 1998
CALGARY, ALBERTA--Revenue net of royalties fell 32 percent to
$18.9 million compared to $27.7 million for the period one year
earlier. Reduced revenue was due to an oil price decline of 33
percent from $27.64 per barrel to $18.51 and a 25 percent decline
in the gas price received from $2.14 per thousand cubic feet to
$1.60. As a result the company had a net loss of $0.8 million
($0.04 per share; $0.04 fully diluted) compared to net income of
$5.0 million ($0.29 per share; $0.28fd) in the first quarter of
1997. Cash flow fell 50 percent to $9.8 million ($0.56 per share;
$0.55 fully diluted) from $18.1 million ($1.15 per share;
$1.09fd). The Company's debt, net of working capital, was $96
million at March 31 and there were 17,341,508 shares outstanding
compared to 17,399,908 outstanding at the year end reflecting
purchases made pursuant to the Company's issuer bid, net of stock
option exercises.
During the quarter the Company produced a daily average of 55.1
million cubic feet of natural gas, up 17 percent from 47.0 million
cubic feet in 1997 and 9,894 barrels of oil and liquids, down 10
percent from 11,055 barrels. This compares to fourth quarter 1997
averages of 61.4 million cubic feet of gas and 9,852 barrels of
oil and liquids per day respectively. Gas volumes were expected to
be higher, however, approximately 15 million cubic feet per day of
deliverability is shut in in the Marten Hills area due to
unavailable gas plant capacity. The Company estimates it is
currently producing 59 million cubic feet of gas and 10,250
barrels of liquids per day. Internal forecasts suggest strong
production increases are achievable through its drilling program
over the balance of 1998 but not at earlier forecasted levels
unless acquisitions can be made.
The Company drilled and participated in 59 wells (47.5 net),
including 11 oil wells (9.7 net), 32 gas wells (24.7 net), 15 dry
holes (12.09 net) and one net service well. The Company was most
active in the Pelican/Marten Hills (18 wells). Provost/Halkirk (16
wells) and Birch/Tar areas (12 wells), while important new
discoveries were also made in Northern Alberta and the new West 5
project area. The Company invested $42.8 million in the quarter
including $1.4 million in international operations and $9.5
million in marketable securities. A sale of securities in the
second quarter resulted in a net profit of $3.0 million. The
Company added 4.6 million barrels of energy equivalent ("BOE") of
proven and probable reserves during the quarter, converting gas to
barrels of energy equivalent at a 10:1 ratio, of which 3.9 million
BOE are proven. The Company replaced its production of 1.386
million BOE by 3 times in the quarter compared to the additions of
the proven and one-half of the probable reserves. There was
approximately $31.5 million invested in Canada, excluding
capitalized overhead, resulting in a Canadian finding and on
stream cost of $8.02 and $7.36 per BOE on a proven and proven and
one-half probable basis respectively, compared to $9.52 and $7.99
for these measures in 1997.
Internationally, seismic operations have commenced at West Esh El
Mallaha ("WEEM") in Egypt involving a 200 square kilometer 3-D
program and a 400 kilometer 2-D program. The first of three firm
wells is scheduled to commence drilling in June using a Sante Fe
rig. As announced April 16, an agreement has been entered into
whereby a Cabre subsidiary will assign its 50 percent of WEEM and
match working capital after all costs and liabilities, resulting
in Cabre owning 50 percent of the issued shares of Naftex Energy
Corporation, which in turn will own 100 percent of the WEEM
concession. Cabre shall appoint a majority of the members of the
Naftex Board who in turn will appoint the new officers of Naftex.
In addition Cabre will receive 10 million warrants as well as
additional warrants equal to the number of stock options which
survive closing. Subject to due diligence, closing is scheduled to
occur no later than June 30. The transition will resolve
operatorship issues, provide funding for most of the 1998 program,
reduce overhead and align shareholder interest. The Naftex Board
shall also appoint 4 of 8 directors to ESHPETCO, which is a joint
company formed to operate WEEM, pursuant to Egyptian laws, with
the Egyptian General Petroleum Corporation ("EGPC"). The
discovery well Rabeh-1 continues to produce with a high water cut
of approximately 48 percent at a stabilized rate of approximately
400 barrels per day of oil. ESHPETCO plan to tie in Rabeh-East
No. 1 in the next 30-60 days and workover Rabeh-1 in an attempt to
shut off the water, which is believed to be coming from the
lowermost set of perforations in the Nukhul zone, prior to the
onset of new drilling operations. The lowermost Matulla
formation, which tested 1,570 bopd, has yet to be produced at
Rabeh-1.
Cabre Maroc Limited, a Cabre subsidiary, has retained IMC
Geophysics Limited of England to shoot approximately 450 km of
vibroseis 2D data over Cabre's 6,000 square kilometers of permits
in Morocco. It is expected that IMC will be mobilizing in June
and complete the program by October. There are several drillable
anomalies in the permit lands delineated on the existing data and
subject to timely and cost effective consumables procurement, two
wells may be drilled in 1998 and additional wells in 1999.
The Company is on target towards investing $80 million in Canada
and $15 million internationally in 1998. This should result in
approximately 140 gross wells in Canada and 4-8 internationally.
The Company's Annual General Meeting will be held at 15:30,
Thursday, May 21, 1998.
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