EARNINGS, FINANCING / Petrolex 1997 Results, Rights Issue
PETROLEX MAINTAINS INTEREST IN MARACAS; SHAREHOLDER RIGHTS ISSUE TO
PROVIDE IMMEDIATE CASH; 1997 FINANCIAL RESULTS
VANCOUVER, May 20 /CNW/ - Petrolex Energy Corporation
Trading Symbol: PXV - TV
Petrolex Energy Corporation (the ''Company'') wishes to announce that
following a review of the recent seismic study undertaken on the Maracas
Association Contract area (''Maracas'') the Company has exercised its right
not to proceed with the proposed sale of its non-core Colombian oil and gas
assets.
The Company holds a 15% interest in Maracas carried through to
commerciality. Initial testing resulted in cumulative flow rates of 9.0
million cubic feet of gas per day. Analysis of the test data indicated
excellent permeability and an absolute openflow potential of over 35 million
cubic feet of gas per day for the intervals tested. The most recent seismic
study completed in the first quarter of 1998 suggests that the structure from
which these tests were drawn may be significantly larger than first estimated.
Detailed interpretation of this study is expected to be complete by the end of
June 1998, at which time drilling locations will be chosen to appraise the La
Luna gas reservoir.
In order to satisfy the Company's immediate cash needs the Company is
planning to offer to existing shareholders the right to participate in a
Shareholder Rights Issue on the basis of one new share for each four shares
held at a price of $0.16 per share. The Company's principal shareholder
Coplex Resources N.L. that holds 56.13% of the Company's shares have agreed to
subscribe for its full allotment under the Rights Issue. The Company is
currently negotiating an underwriting for the Rights Issue thereby ensuring
the Company gross proceeds from the offering of $2,138,933.20. The
Shareholder Rights Issue is expected to complete by the end of July 1998.
Further announcements will be made providing details of the Maracas seismic
study and the proposed Shareholder Rights Issue in the near future.
As a result of continuing security concerns in the region of the Los
Toches Contract area the Company at the request of Ecopetrol has made a formal
request for an extension of time in which to complete drilling of the Santi 1
well. The Company is still waiting on a response from Ecopetrol.
<<
1997 Financial Results
(expressed in US dollars)
Year Ended December 31
1997 1996
-----------------------------
Revenue
Crude oil sales $ 1,513,907 $ -
Interest 217,688 44,077
-----------------------------
1,731,595 44,077
-----------------------------
Expenses
Royalties 100,296 -
Operating expenses 3,297,271 -
General and administrative 1,195,496 48,013
Depletion and depreciation 288,976 -
Foreign exchange loss (gain) (280,569) 228,752
4,601,470 276,765
-----------------------------
Net loss $2,869,875 $ 232,688
-----------------------------
Loss per share $ 0.06 $ 0.04
-----------------------------
>>
1997 was the first year of operations for the Company with commercial
production on the Rubiales Oilfield beginning effective April 1, 1997. Prior
to that date, all of the Company's activities had been in the exploration and
pre-production development stage, including long-term production testing at
Rubiales. All costs, net of revenues, were capitalized into petroleum and
natural gas properties.
Revenues in 1997 represent oil sales from April 1 to August 21, 1997, the
date that production was suspended at Rubiales as storage capacity was reached
during Refinare's maintenance shutdown. All operations were shut down
September 3, 1997 as a result of the two kidnapping incidences. Total
production and sales for the period of production were as follows:
<<
Production Sales
-----------------------------
Total (barrels) 165,597 156,974
Average (bopd) 1,164 1,055
>>
Total revenue for 1997 represents an average price of $9.65 a barrel. The
majority of the sales were priced at $10.14 per barrel at Refinare, with the
remainder sold at the well head at $4.30 per barrel. Transportation costs on
oil sold to Refinare are included in operating costs and totaled $1,045,000,
for a net well head price after royalties of $2.22 per barrel.
Operating expenses include all field operating costs and related
administration costs in Colombia. Expenses for 1997 also included a charge of
$140,000 for employee severance costs related to the suspension of activities
in Colombia and a charge of $618,000 related to a write-off of inventory items
that remained in the field at the time of shutdown. After adjusting for the
effects of the transportation costs and non-recurring items, operating
expenses amounted to $1,494,000 and were comprised of field expenses of
$817,000 and administration expenses of $677,000.
These represent costs of $5.20 per barrel and $4.31 per barrel
respectively, which are higher than anticipated due to the low production
levels and the necessity to shut in operations while maintaining full
staffing. Based on the report prepared by Ryder Scott in October 1996, field
costs are anticipated to be $1.50 at a 5,000 bopd production level.
The Company's consolidated cash balance at December 31, 1997 was $1.3
million, a reduction of $11.0 million from the balance at December 31, 1996.
The primary components of this reduction are cash used for operations and
working capital of $2,415,000 and deferred exploration and development
expenses of $7,550,000. Deferred exploration and development costs relate to
the following projects:
<<
Los Toches $ 1,635,000
Rubiales 5,915,000
>>
The costs associated with the Los Toches project represent the Company's
60% share of all costs incurred on the licence. The Rubiales costs represent
the development costs on the field prior to commercial production and are
comprised of:
<<
Well costs (including workovers) $ 1,702,000
Production facilities 1,711,000
Road upgrade 1,466,000
Production testing and capitalized
administration costs 1,036,000
>>
On behalf of the Board of Directors
PETROLEX ENERGY CORPORATION
-----------------------------------
Stephen S. James,
Vice President Corporate Counsel
The Vancouver Stock Exchange has neither approved nor disapproved the
information contained herein.
%SEDAR: 00004814E
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For further information: Stephen S. James, Vice-President Corporate
Counsel, Petrolex Energy Corporation, PO Box 49194, Suite 2614 - 1055 Dunsmuir
Street Vancouver, B.C., V7X 1L3, (604) 689-4498, fax (604) 684-4473, E-mail
pxv@petrolex.com; Keith R. Fellowes, President & C.E.O., Petrolex Energy
Corporation, Suite 1125 - 10777 Westheimer, Houston, Texas, 77042-3462, (713)
782-7799, fax (713) 782-2626 |
