FIELD ACTIVITIES / Founders Energy Reports Continued Production
Growth and Ordovician Drilling Success at Hartaven
TSE, ASE SYMBOL: FDE
MAY 21, 1998
CALGARY, ALBERTA--Founders Energy Ltd. today reported financial
and operating results for the three months ended March 31, 1998.
Comparative results for the three months ended March 31 are as
follows:
/T/
Three Months ended March 31
Percent
Financial 1998 1997 Change
----------- ---------- -------
(000's except per share data)
Gross revenue $ 3,638 $ 3,017 21
Cash flow $ 1,844 $ 1,707 8
Per share $ 0.06 $ 0.08 (25)
Net income (loss) $ 434 $ 682 (36)
Per share $ 0.01 $ 0.03 (67)
Capital expenditures $ 5,285 $ 2,643 100
Shareholders' equity $ 17,630 $ 8,224 114
Weighted average shares
Outstanding(000's) 32,866 22,549 46
Operating
Production
Crude oil and Ngl's (Bpd) 2,035 1,135 79
Natural gas (Mcfd) 2,030 2,098 (3)
Oil Equivalent (Boed) 2,238 1,345 66
Average selling price
Crude oil and ngl's ($/Bbl) $ 18.10 $ 25.79 (30)
Natural gas ($/Mcf) $ 1.77 $ 2.02 (12)
Average selling price ($/Boe) $ 18.06 $ 24.92 (28)
Netback ($/Boe) $ 11.64 $ 15.92 (27)
/T/
During the first quarter of 1998 Founders participated in drilling
six (1.81 net) wells, resulting in two (0.61 net) oil wells, two
(0.35 net) gas wells and two (0.85 net) exploratory dry holes for
an overall success rate of 67 percent. The two successful oil
wells were horizontal wells drilled in the Weir Hill area of
southeast Saskatchewan. These wells were placed on production at
a combined rate of 410 (113 net) bpd. At Gilby, in central
Alberta, Founders participated in drilling one (0.3 net)
successful gas well which was tied-in in late April at a rate of
1.5 (0.45 net) Mmcfd.
Capital expenditures totaled $5.3 million for the three months
ended March 31, 1998. During the first quarter of 1998 Founders
added 8,213 net acres of undeveloped land, increasing the
Company's undeveloped land position by nine percent to more than
69,000 net acres. Seismic expenditures resulted in shooting or
acquiring 44 square kilometres of three dimensional seismic and
150 kilometres of two dimensional seismic.
Daily production volumes averaged 2,238 boed for the first quarter
of 1998, an increase of 66 percent over the first quarter of 1997
and a 16 percent increase over fourth quarter 1997 daily average
volumes of 1,930 boed. Average production volumes for the first
quarter were slightly lower than our December 31, 1997 exit rate
of 2,400 boed, primarily as a result of normal production declines
and shutting-in the 12-1T-10-9 W2M Ordovician discovery well at
Hartaven in order to complete and test the deeper Winnipeg
Sandstone formation. The completion of this zone resulted in a
flowing oil well producing at a rate of 415 (228 net) bpd of 53
degree API light sweet crude oil.
The increase in daily production volumes for the first quarter of
1998 was offset by a significant decrease in crude oil price. As
a result, gross revenue for the three months ended March 31, 1998
was $3,638,136 compared to $3,016,839 for the same period in 1997.
Cash flow from operations was $1,844,153 ($0.06 per share)
compared to $1,706,903 ($0.08 per share) in 1997. Net income for
the three months ended March 31, 1998 was $433,748 ($0.01 per
share) compared to $682,137 ($0.03 per share) for the same period
in 1997.
The average selling price of crude oil and natural gas liquids for
the first quarter of 1998 decreased by 30 percent to $18.10 from
the $25.79 received in the first quarter of 1997. This decrease
reflects an average WTI oil price of $15.95 U.S. in the first
quarter of 1998 compared to $22.77 U.S. in the first quarter of
1997. The corresponding Edmonton par price in Canadian dollars
decreased by 28 percent to $21.78 in the first quarter of 1998
from $30.23 in the first quarter of 1997. Despite the significant
drop in oil price during the first quarter of 1998, the Company
still achieved an average netback of $11.64 per boe.
On March 26, 1998, a third party filed a Statement of Claim
against Founders alleging that it had the right to participate in
certain acquisition's that were made by the Corporation in the
Hartaven and Weir Hill areas. Founders' has filed a Statement of
Defense and a Counterclaim. Based on advice from its' legal
council, it is management's view that the third party claim will
be unsuccessful.
In April 1998, Founders drilled and completed a second Winnipeg
Sandstone well in the Hartaven area of southeast Saskatchewan,
offsetting our discovery well at 12-1T-10-9 W2M. The 7C-2 well was
completed and placed on production in early May at a rate of 750
(422 net) bpd of 53 degree API light crude oil. As a result of the
three successful Ordovician wells drilled to date in this area,
Founders will drill at least two or three additional development
wells targeting the Winnipeg Sandstone and Red River formations
commencing in June 1998.
On June 1, 1998, Founders will also commence an aggressive
drilling program on several new high-impact prospects in Alberta
and Saskatchewan. In the Pouce Coupe area of northwest Alberta,
Founders has tied-up 11,520 (7,563 net) acres of land and will
drill two wells targeting natural gas. At Gilby in central
Alberta, Founders plans to drill several follow-up wells
offsetting two successful gas wells that were drilled in 1997 and
early 1998 and in the third quarter of 1998 will drill a high
impact Leduc test targeting light oil reserves. In southeast
Saskatchewan, Founders will drill two new prospects targeting
Mississippian oil reserves. With success, these new areas could
provide considerable follow-up development drilling potential.
Founders daily average production is currently in excess of 2,600
boed.
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