EARNINGS / Black Sea Energy Q1 Results
BLACK SEA ENERGY ANNOUNCES FIRST QUARTER 1998 RESULTS
CALGARY, May 28 /CNW/ - Black Sea Energy Ltd. (BSX on the TSE) today
reported results for the first quarter of 1998. These results were impacted
by the continuing depressed demand for oil and the resulting decline in world
oil prices. Sales during the first three months of 1998 were into Russian
domestic markets only and as a consequence, resulted in Black Sea realizing a
decline of only five percent decline in average price per barrel of $10.16, as
compared $10.72 per barrel for the first quarter of 1997. During the quarter,
Black Sea's share of oil held in inventory increased significantly to 233,793
barrels as at March 31, 1998. Domestic sales opportunities were available
during the period but were rejected because of collection risks.
Black Sea's share of oil production for the first quarter of 1998 was
368,030 barrels (4,089 barrels per day) which represented a 71 percent
increase from 215,679 barrels (2,396 barrels per day) during the same period
in 1997. Approximately 70% or 255,865 barrels of this production was sold in
the first quarter of 1998 with the balance being added to inventory.
Petroleum revenues for the three months ended March 31, 1998 were
$2,600,655 ($2,311,266 for the three months ended March 31, 1997). Cash flow
provided by operations was $97,072 ($0.00 per share) as compared to a negative
cash flow of $168,393 ($0.00 per share) for the same period in 1997. The net
loss for the first three months of 1998 amounted to $461,157 ($0.01 per share)
as compared to a net loss of $459,989 ($0.01 per share) for the first quarter
of 1997.
Operating expenses of $1,249,545 or $4.88 per barrel for the quarter were
down from $4.97 per barrel incurred during the first quarter of 1997,
reflecting cost savings and higher production volumes. Operating costs per
barrel are expected to decrease as production volumes continue to grow and
Black Sea continues to implement cost reduction measures. Production taxes
averaged $2.73 per barrel as compared to $1.92 per barrel in 1997 when an oil
excise tax exemption was in effect. The Russian government is currently
considering proposals to reduce excise taxes and transportation costs however
the exact date of implementing these changes is unknown. Depletion and
depreciation costs provided for the first three months of 1998 were $1.90 per
barrel as compared to $1.35 per barrel provided for the same period in 1997.
During the first quarter of 1998, Black Sea invested $8,857,115 in
exploration and development activities, and $5,963,089 in drilling equipment.
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HIGHLIGHTS
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Three Months Ended Three Months Ended
March 31, 1998 March 31, 1997
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FINANCIAL
Petroleum revenue $ 2,600,655 $ 2,311,366
Cash flow from operations $ 97,072 $ (168,393)
(Per share) $ 0.00 $ 0.00
Net loss $ (461,157) $ (459,989)
(Per share) $ (0.01) $ (0.01)
Capital expenditures
Oil properties $ 8,857,115 $ (6,558,487)
Equipment $ 5,935,052 $ 1,855,597
OIL PRODUCTION
(Black Sea's share)
Total barrels 368,030 215,679
Average per day 4,089 2,396
Exit rate
(barrels per day) 4,250 2,300
NETBACK PER BARREL
Sales price $ 10.16 $ 10.72
Production costs
(including capital
taxes) $ 5.25 $ 4.97
Production taxes $ 2.73 $ 1.92
---- ----
Netback before Russian
income taxes $ 2.18 $ 3.83
Russian income tax
recovery $ 0.12 $ 0.00
---- ----
Cash flow netback per
barrel $ 2.30 $ 3.83
---- ----
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Black Sea Energy is a Canadian company focused exclusively on the
initiation, rehabilitation, exploration and development of major oil
properties in Russia. With Russian partners, the Company is actively involved
in two exploration and development projects, Tura Petroleum and Radonezh
Petroleum in Western Siberia and one production rehabilitation project, Kuban
Technologies in the Krasnodar region of Southern Russia.
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For further information: Barry Harrison, President and CEO, Gerry
Burrows, Vice-President and CFO, (403) 269-2871, Fax: (403) 237-6865, Email:
headoffice@blacksea.ca
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