EARNINGS / Richland Announces First Quarter 1998 Results
TSE, ASE SYMBOL: RLP.A
MAY 20, 1998
CALGARY, ALBERTA--Richland Petroleum Corporation today announced
its operating and financial results for the first quarter of 1998.
The results were highlighted by successful exploratory drilling
in three areas of Alberta, as well as continued success in
drilling deeper exploratory targets in Saskatchewan. These first
quarter successes, together with several high impact wells to be
drilled later in the year, will fuel the growth in overall
production volumes for Richland.
FIRST QUARTER 1998 HIGHLIGHTS
- Exploration success - four new discoveries, three in Alberta
- Production increased 13 percent from first quarter 1997, despite
1997 property sales
- Operating costs of $3.61 per BOE
- Capital expenditures increased 260 percent from first quarter
1997
- Drilled 25 wells, with 72 percent success rate
FINANCIAL RESULTS
Crude oil sales for the three months ended March 31, 1997 averaged
3,709 barrels per day (BOPD), a 22 percent increase from 3,037
BOPD in the first quarter of 1997. This increase in production
reflects the exploratory drilling successes in the fourth quarter
of 1997. Natural gas sales averaged 2.2 million cubic feet per
day, down from 4.5 million cubic feet per day in 1997 as a result
of property sales in mid-1997.
Revenues for the three months ended March 31, 1998 were $6.4
million, down from $ 7.0 million in 1996, as a result of a 29
percent decrease in the wellhead price of oil. The average
selling price of crude oil was $18.35 in 1998, while natural gas
price averaged $1.96 per thousand cubic feet. Royalty rates
averaged 19.4 percent of sales revenues.
Operating expenses for the first quarter were $1.3 million, or
$3.61 per BOE, compared to $1.1 million, or $3.49 per BOE a year
earlier. General and administrative expenses were $0.6 million,
while interest expense totaled $0.4 million. Capital taxes were
$0.3 million.
Cash flow from operations was $2.5 million, or $0.19 per share
fully diluted, compared to $3.3 million or $0.29 per share in
1997.
Depletion and depreciation expense for the first quarter of 1998
was $2.5 million or $7.15 per barrel equivalent.
With the reduced revenues in the first quarter, Richland had a net
loss of $0.1 million, or $0.01 per share, compared to earnings of
$0.3 million, or $0.03 per share, in the first quarter of 1997.
Net capital expenditures in the first quarter of 1998 were $10.5
million, compared to $2.9 million in 1997. At March 31, 1998,
long term debt stood at $29.5 million, compared to $18.9 million
at March 31, 1997. The debt includes a small acquisition in the
first quarter at Bienfait, in southeastern Saskatchewan.
The weighted average shares outstanding for the quarter ended
March 31, 1998 were 12.2 million basic and 13.7 million fully
diluted. At March 31, 1998, there were 12.6 million shares
outstanding.
FIRST QUARTER 1998 OPERATIONAL HIGHLIGHTS
A net capital program of $10.5 million saw Richland drill 25 gross
(8.5 net) wells, resulting in 3 gas wells and 15 oil wells,
representing a 72 percent success rate. Exploratory success in
four areas, including three in Alberta, will boost production when
the wells are completed and brought on production in mid-1998.
The first quarter capital program saw $2.1 million spent on land &
seismic and $3.9 million spent on the acquisition of properties at
Bienfait, Saskatchewan. A 3D seismic program was shot at Bienfait
in the first quarter and the first development well is currently
drilling.
A successful Red River oil well was drilled at Huntoon (W.I. 50
percent) and the well was brought on production at the end of the
first quarter at gross production rates between 200 and 300
barrels per day. The well is being acidized and production rates
are expected to increase as a result.
In Alberta, Richland had exploratory drilling success in three
areas. At Wildwood (W.I. 33 percent), two dual zone oil and gas
wells were drilled and are awaiting completion. Several follow-up
locations have been identified. At Paddle River, three successful
dual zone oil wells (W.I. 20 percent) were drilled and will be
completed after break-up
As part of a large scale farm-in in the first quarter, a well at
McLean Creek (W.I. 50 percent) discovered a new light oil pool.
Subsequent to drilling the well, Richland acquired an additional
11,000 acres (W.I. 50 percent) of undeveloped land surrounding the
structure. While the well has not yet been tested, initial
production rates are expected to be in excess of 200 BOPD. At
present, it appears that there are three or four additional
locations to be drilled on this structure and two or three
potential additional structures on our lands.
Richland Petroleum Corporation is a public company involved in the
exploration and development of crude oil and natural gas in
western Canada and the United States. Its shares trade on the
Alberta and Toronto Stock Exchanges under the symbol "RLP.A".
/T/
Comparative Highlights
Quarter ended
March 31,
1998 1997
--------------------
Production
Oil & Liquids - Bbls./Day 3,709 3,037
Gas - MMCF/Day 2.2 4.5
--------------------
BOE/Day 3,934 3,482
Average Prices
Oil ($/Bbl.) 18.35 25.82
Gas ($/Mcf) 1.96 2.57
Financial ($ 000's)
Revenues, net of royalties 5,136 5,401
Cash Flow 2,505 3,329
Cash Flow per Share
Basic 0.21 0.31
Fully diluted 0.19 0.29
Earnings (Loss) (71) 333
Earnings (Loss) per Share (0.01) 0.03
Net Capital Expenditures 10,460 2364
Long Term Debt 29,511 18,889
Working Capital Deficiency 6,879 3,660
/T/
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