EARNINGS / Startech Q1 Results
STARTECH ENERGY INC. - FINANCIAL RESULTS
CALGARY , May 28 /CNW/ - STARTECH ENERGY INC. (''Startech'' or the
''Company'') announced today the Company's financial and operating results for
the first quarter of 1998 wherein Startech again posted record quarterly
production.
<<
($ thousands except
per share amounts) 3 Months to
March 31, 1998 Year Ago % Change
Revenue $11,170 $9,351 20
Cash flow $ 4,879 $5,047 (3)
Cash flow per share fully diluted $ 0.26 $ 0.40 (35)
Earnings ($ 1,173) $ 430 -
Weighted average shares
fully diluted 19,654,811 13,440,993 46
>>
Comparative quarterly cash flow and earnings for the first quarter of
1998 were impacted by the significant drop in world crude oil prices and the
widening of Canadian crude oil price differentials. First quarter results for
1998 include the operations of Laurasia Resources Limited (''Laurasia'') for a
portion of the quarter only.
During the first quarter of 1998 Startech's daily production averaged a
record 8,354 BOED compared to 5,845 BOED in the first quarter of 1997. This
represents an increase in daily production of more than 42 percent over the
first quarter of 1997.
Natural gas production in the first quarter of 1998 increased by more
than 500 percent over the first quarter of 1997 from 2.3 mmcf per day to 14.8
mmcf per day.
With current production already in excess of 9,000 BOED, Startech remains
well positioned to meet the Company's 1998 average daily production estimate
of 9,600 BOED.
During the first quarter of 1998 Startech drilled 20 wells of which 17
were cased for production and 3 were dry and abandoned. This represents an 85
percent success rate for the Company's 1998 first quarter drilling program.
In the second and third quarters of 1998 Startech will continue with the
Company's light oil development program in southeast Saskatchewan at Lougheed,
Alida, and Browning. Further gas development will occur at Hatton and
Dunvegan. In addition to ongoing development and step-out activity, Startech
will also participate in the drilling of a minimum of 4 new field wildcat
locations for oil and 2 high impact gas locations later this year.
The significant drop in world crude oil prices, and the widening of
Canadian crude oil differentials, muted the impact of the large increase in
year over year production on net oil and gas revenues. Net oil and gas
revenues increased by 20 percent to $11.2 million for the first quarter of
1998, compared to $9.3 million for the same period a year ago. Startech's
proactive hedging program added $999,000 to net oil and gas revenues
mitigating to some degree the drop in crude oil prices.
First quarter corporate average prices for 1998 were $17.79 per barrel of
crude oil and $1.69 per mcf for natural gas, for an average of C$17.64 per
BOE. The average prices for the first quarter of 1997 were $22.88 per barrel
for crude oil, $2.41 per mcf for natural gas, and C$22.93 per BOE.
Funds generated from operations for the first quarter of 1998 were $4.9
million compared to $5.0 million for the same period a year ago, reflecting
the drop in crude oil prices on significantly higher production volumes. Funds
generated from operations per fully diluted share were $0.26 in the first
quarter of 1998 compared to $0.40 for the same period in 1997.
Operating expenses per BOE were down to $5.36 in the first quarter of
1998 compared to $5.43 for the corresponding period a year ago. As a result
of the higher production volumes in the first quarter of 1998, operating
expenses increased by 43 percent over the first quarter of 1997 from $2.8
million to $4 million.
General and administrative expenses per BOE dropped to $0.80 for the
first quarter of 1998 from $0.86 for the same quarter last year. General and
administrative expenses in the first quarter of 1998 were $603,000 compared to
$451,000 in the first quarter of 1997.
Capital expenditures during the first quarter of 1998 were $8.4 million
compared to $8.6 million in the first quarter of 1997.
Startech's acquisition of Laurasia in the first quarter of 1998 enhances
the Company's asset portfolio as a strategic investment in shallow, long life
natural gas reserves that overlap with Startech's existing project areas.
These quality natural gas assets, which were added at a cost of $4.60 per BOE,
provide more than 10 mmcf per day of natural gas production and over 30 net
natural gas development drilling locations to Startech's inventory of
prospects.
In April, 1998 Startech locked in approximately 50 percent of the
Company's net daily gas production at $2.45 per mcf at AECO for a period of 18
months.
In an effort to further position Startech in the current much lower
pricing environment for crude oil, on April 8, 1998 Startech raised $30.9
million of new equity providing the Company with more than $45 million of
unutilized credit for strategic investments. Management believes that the
cash flow per share dilution effect of this equity issue is overshadowed by
the longer term financial flexibility this capital provides in an environment
which should produce significant opportunities for value creation.
Startech has a quality asset base consisting of 80 percent long life,
light and medium gravity crude oil reserves, and 20 percent long life, high
netback natural gas reserves. The Company now has a proven reserve life of
more than 8 years, and a proven plus probable reserve life of more than 11
years.
The Company has a solid inventory of more than 325 development drilling
locations which provides for low risk growth from development drilling into
the year 2000.
In addition, the Company's strong balance sheet provides considerable
financial flexibility with more than $45 million of unutilized credit
available for strategic investments.
While Startech is feeling the effect of the current low world crude oil
prices, the full impact of this price drop has been mitigated by management's
proactive hedging program. Approximately 50 percent of the Company's 1998 net
daily crude oil production is locked in at US$19.60 WTI per barrel pricing,
and approximately 50 percent of the Company's net daily gas production is
locked in at a price of approximately C$2.45 per mcf at AECO for 18 months.
Based upon the solid fundamentals discussed above, Startech is well
positioned to continue delivering sustainable per share growth in reserves,
production and cash flow when crude oil prices return to their long term
historical levels.
-30-
For further information: Mr. Paul Colborne, President and CEO, (403)
231-2300
|
