EARNINGS / OCELOT ENERGY INC. INTERIM REPORT & NEWS RELEASE
CALGARY, May 19 /CNW/ -
''Significant progress was made in the first quarter in developing a high
quality portfolio of high impact international projects. Initial production
came onstream in Gabon, the Tanzanian gas to power project moved an important
step closer to commercial closure and prospecting efforts to acquire another
high impact project are particularly encouraging.''
W. David Lyons, Chief Executive Officer
<<
Highlights
FINANCIAL
(thousands of dollars except per share amounts)
Three Months Ended
March 31
1998 1997 % Change
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Revenue 24,459 54,226 (55)
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Funds generated from operations 7,718 14,558 (47)
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Funds generated per share 0.28 0.52 (46)
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Net earnings 858 3,639 (76)
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Net earnings per share 0.03 0.13 (77)
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Capital expenditures 25,148 8,177 208
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Long-term debt 65,504 - -
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OPERATIONS
Three Months Ended
March 31
1998 1997 % Change
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Oil equivalent production (BOE/D) 6,025 5,487 10
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Crude oil and NGL production (Bbls/d) 4,525 3,827 18
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Natural gas production (Mmcf/d) 15.0 16.6 (10)
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Crude oil and NGL price ($/Bbl) 17.29 28.07 (38)
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Natural gas price ($/Mcf) 1.82 2.35 (23)
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Operating netback, gas at 10:1 ($/BOE) 9.97 17.08 (42)
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>>
Message to Shareholders
-----------------------
Significant progress was made in the first quarter in developing a high
quality portfolio of high impact international projects. Initial production
came onstream in Gabon, the Tanzanian gas to power project moved an important
step closer to commercial closure and prospecting efforts to acquire another
high impact project are particularly encouraging.
Financial
In the three months ended March 31, 1998, revenue from operations
declined by 55 percent to $24.5 million in comparison to the first quarter of
1997.
Funds generated from operations totalled $7.7 million or $0.28 per share,
a decline of 47 percent in comparison to the first quarter of 1997. Net
earnings decreased to $0.9 million of $0.03 per share in the quarter from $3.6
million or $0.13 per share in the first quarter of 1997.
The significant decline in world crude oil prices decreased the company's
average liquids price to $17.29 per barrel in the quarter compared to an average
price of $28.07 per barrel in the first quarter of 1997. As a result oil and
gas revenue declined to $8.3 million in the quarter, a decrease of 38 percent
from $13.4 million a year earlier. Pipeline construction revenue in the first
quarter was $16.2 million, a decrease of 60 percent from $40.9 million
reported in the first quarter of 1997.
Oil and Gas Operations
Oil and gas production in the first quarter of 1998 increased by 10
percent from 5,487 BOE/D to 6,025 BOE/D over the first quarter of 1997.
Domestic
At Sylvan Lake, crude oil and NGL production averaged 3,631 barrels per
day in the first quarter, an increase of 9 percent over the 3,324 barrels per
day realized in the first quarter of 1997. Gas production averaged 12.6
million cubic feet per day, down 21 percent from 15.9 million cubic feet per
day during the corresponding period last year. During the quarter the Company
drilled one oil well (0.75 net) and completed 105 square kilometres of new 3-D
seismic. Subsequent to quarter end, a Company operated battery was damaged as
a result of a fire with production being interrupted for ten days. The
facility
returned to partial production in late April and full production is expected
to resume in May.
At Sturgeon Lake, crude oil and NGL production grew to 894 barrels per
day in the first quarter, an increase of 78 percent over the 503 barrels per
day achieved in the first quarter of 1997. Gas production increased to 2.4
million cubic feet per day, an increase from 0.7 million cubic feet per day
during the corresponding period last year. During the quarter the Company
completed a seventy five square kilometre 3-D seismic program to identify
future development and exploratory locations.
Gabon
First quarter activity in Gabon was primarily focused on the Obangue pool
within the Company's PanthŠre-Nze exploitation permit. Drilling to date has
confirmed an 11 metre oil column in the Obangue reservoir. The reservoir is
homogeneous, highly porous and permeable with a high energy drive from an
active acquifer and gas cap of up to 28 metres.
The Company drilled its first horizontal well into the Obangue pool
during the quarter. The well was completed with a horizontal leg of 510
metres and was flowed at staged rates of 500 to 1,500 barrels of oil per day.
The well is forecast to be capable of a stabilized production rate of 1,500 to
2,000 barrels of oil per day. Construction of production treating facilities,
a 16,000 barrel tank storage battery, three well tie-ins and a 6.5 kilometre
oil pipeline to a river barge loading facility were completed during the
quarter. Current combined production capability from the horizontal well and
two vertical wells is approximately 2,500 to 3,000 barrels of oil per day.
By quarter end, the Company had shipped its first barge of crude oil and
as of the end of April had shipped seven barges of crude to the Batanga oil
terminal at tidewater on the Atlantic coast representing a total of 11,400
barrels of sales. Streamlining of barging operations over the next two months
is expected to allow production to increase to 1,500 barrels of oil per day by
September. The Company is currently reviewing options to proceed with a
development drilling program in the third and fourth quarters of 1998. If
this program proceeds, the Company could exit the year with production from
Gabon of up to 5,000 BOPD. Pipeline connection alternatives are being
examined as development proceeds.
Tanzania
The construction of a Malaysian financed 100 Megawatt power plant along
the natural gas pipeline right of way in Tanzania, while another market for
the natural gas produced from the Songo Songo project, has delayed financial
closure. The Government of Tanzania is now renegotiating the terms of the
Malaysian power purchase agreement with such renegotiations expected to be
concluded shortly. Execution of the final Ocelot project and financial
documents will then follow. When completed the Songo Songo project will
provide large volumes of natural gas to energy starved markets in East Africa
for many years to come.
O.J. Pipelines.
The first quarter saw the Company's wholly owned pipeline construction
unit, O.J. Pipelines, complete a $15.3 million contract with TransCanada
PipeLines Limited in northwestern Ontario. The work involved the replacement
and lowering of 30-inch and 36-inch pipe and other maintenance activities. The
work was completed on time and on budget.
O.J. Pipelines has submitted bids on several contracts for construction
work in the latter half of the year.
Last December the Company announced that O.J. Pipelines had been awarded
a pipeline construction contract in excess of $200 million by Alliance
Pipeline. The Company is encouraged by the progress of the NEB regulatory
hearings on the Alliance project and, subject to NEB approval, expects
contract work to begin in the second quarter of 1999.
W. David Lyons
Chairman and Chief Executive Officer
May 19, 1998
Consolidated Statement of Earnings and Retained Earnings
--------------------------------------------------------
(Unaudited)
Three Months Ended March 31
(thousands of dollars) 1998 1997
------------------------------------------------------------------------
REVENUE
------------------------------------------------------------------------
Operating 24,459 54,226
EXPENSES
Operating and administrative 15,654 39,822
Depletion and depreciation 5,631 7,273
Financial (income) charges 1,013 (386)
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22,298 46,709
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EARNINGS BEFORE TAXES 2,161 7,517
Provision for taxes
Capital Taxes 74 166
Deferred income taxes 1,229 3,712
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1,303 3,878
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NET EARNINGS 858 3,639
RETAINED EARNINGS, BEGINNING OF PERIOD 54,523 47,886
Normal Course Issuer Bid Purchases - (125)
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RETAINED EARNINGS, END OF PERIOD 55,381 51,400
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Per Share Information
---------------------
Three Months Ended March 31
1998 1997
Weighted average number of Class A
and Class B shares outstanding
(thousands) 28,003 28,208
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Net earnings per Class A and Class B share $0.03 $0.13
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Funds generated from operations per
Class A and Class B shares $0.28 $0.52
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Consolidated Balance Sheets
---------------------------
As at March 31 As at December 31
(thousands of dollars) 1998 1997
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ASSETS (Unaudited) (Audited)
CURRENT ASSETS
Cash 5,060 4,457
Accounts receivable 15,225 13,033
Prepaid Expenses 2,353 1,392
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22,638 18,882
PROPERTY & EQUIPMENT, net 256,759 239,054
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279,397 257,936
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LIABILITIES
CURRENT LIABILITIES 41,748 44,721
LONG-TERM DEBT 65,504 43,238
DEFERRED LIABILITIES 44,857 43,553
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152,109 131,512
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SHAREHOLDERS' EQUITY
CAPITAL STOCK 71,907 71,901
RETAINED EARNINGS 55,381 54,523
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127,288 126,424
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279,397 257,936
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Consolidated Statement of Cash Flows
------------------------------------
(Unaudited)
Three Months Ended March 31
(thousands of dollars) 1998 1997
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OPERATING ACTIVITIES
Net earnings 858 3,639
Non-cash items
Depletion and depreciation 5,631 7,273
Deferred income taxes 1,229 3,712
Other - (66)
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Funds generated from operations 7,718 14,558
Changes in non-cash working capital (6,126) 29,544
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1,592 44,102
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FINANCING ACTIVITIES
Changes in long-term debt 22,266 (104,448)
Capital stock 6 (137)
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22,272 (104,585)
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Cash available for investing activities 23,864 (60,483)
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INVESTING ACTIVITIES
Property and equipment
Acquisitions (25,148) (8,177)
Disposals 1,887 86,389
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(23,261) 78,212
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INCREASE IN CASH 603 17,729
CASH, BEGINNING OF PERIOD 4,457 992
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CASH, END OF PERIOD 5,060 18,721
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Ocelot Energy Inc. is a publicly traded international energy company
engaged in the exploration, production and marketing of oil and natural gas.
Ocelot Energy's shares are listed for trading on the Toronto, Montreal and
Alberta stock exchanges. For more information on Ocelot, please visit our web
site at www.ocelot.ca.
-30-
For further information: George Crookshank, Vice President, Finance and
Chief Financial Officer, (403) 299-5799, Fax: (403) 299-5691, E-mail:
georgec@ocelot.ca |
