EARNINGS / CrownJoule Announces Record First Quarter Financials and
Key Acquisitions
TSE SYMBOL: CJE CJE.WT
JUNE 23, 1998
CALGARY, ALBERTA--CrownJoule is pleased to report record
production, sales revenues and cash flows for the first quarter of
1998. Gas production for the period averaged 11,217 Mcf/day
compared to 4,474 Mcf/day last year. Average gas prices were
$2.00/Mcf versus $2.04/Mcf in 1997. Oil and natural gas liquids
production averaged 87 Bbls/day at an average price of $19.07/Bbl,
compared to 38 Bbls/day at $20.58/Bbl last year. The average gas
equivalents production for the period was 12,090 Mcfe/d or 1,209
BOE/d (4,857 Mcf/d, 486 BOE/d - 1997).
Total oil and gas sales revenues increased 143 percent to
$2,143,025 for the quarter compared to $880,902 in the first
quarter last year. Total Crown Royalties were $401,675 ($139,432
net after Alberta Royalty Tax Credit) compared to $163,543
($64,784 net after ARTC) in 1997. Revenue from oil and gas sales,
net of royalties, was $2,002,000 compared to $805,517 in 1997.
Operating expenses for the first quarter of 1998 were $603,857
compared to $260,666 in the first quarter last year. On a per
unit basis, operating costs were $0.56/Mcfe compared to $0.60/Mcfe
in the first quarter last year.
General administrative expenses (G&A) were $127,934, a decrease of
$11,265 from the same quarter last year. On a Mcfe basis, this
year's first quarter G&A was $0.12/Mcfe compared to $0.32/Mcfe
last year. Last year's G&A included certain costs and expenses
which were incurred on a one-time basis in connection with the
start-up of the company. Management feels that the present modest
G&A levels will continue to be reported throughout the year.
Depletion and depreciation charges in the first quarter were
$915,450 compared to $415,593. The increase in this provision
reflects the higher production in the period compared to last
year. On a Mcfe basis, the charge was $0.86/Mcfe compared to
$0.96/Mcfe in the first quarter of 1997.
CrownJoule had cash flow of $1,203,077 ($0.094/share) for the
first quarter this year compared to $289,308 in the first quarter
last year, an increase of 316 percent from last year's first
quarter. The cash flow netback was $1.12/Mcfe compared to
$0.67/Mcfe in the first quarter last year. Net income for the
three months ended April 30, 1998 was $57,526 compared to a loss
of $125,285 for the comparable period last year.
The corporation spent $1,260,788 on capital expenditures in the
first quarter this year compared to $526,384 for the same period
last year. During the first quarter of this year, CrownJoule
spent $444,280 on 150 kilometers of high resolution seismic data
and $597,642 on intangible drilling and completion. These capital
programs were funded essentially from the cash flow generated by
the company in the first quarter.
CrownJoule anticipates continuing financial strength as the
pricing of our major produced product, natural gas, remains
strong. Further, in order to ensure that the corporation meets or
exceeds our performance targets, we have forward contracted four
million cubic feet of gas per day for the following winter at a
fixed price averaging $2.75/Mcf. This will significantly improve
our projected fourth quarter revenues and cash flow estimates.
During the first quarter of 1998, CrownJoule experienced its first
full-capacity production quarter averaging over 12 Mmcfe/d from
its recently expanded Doris gas processing facilities. Start-up
for the new 18 Mmcf/d facility occurred during the fourth quarter
of 1997 and was fully functional by the beginning of the first
quarter of 1998 bringing total processing capacity to 36 Mmcf/d.
CrownJoule drilled four gross (1.67 net) wells in this short
winter-drilling quarter. Two exploration wells were drilled and
abandoned. At Doris, a stepout well at the north end of the pool
encountered four metres of gas pay, adding significant reserves
and extending the pool further northward. This well is currently
producing 1.8 Mmcfe/d into the Doris I plant. To the south, a
second stepout well was drilled and abandoned after missing the
play fairway on the updip edge. This does not rule out further
potential to the south in the park as evidenced by two successful
stepouts drilled further south late last year.
As exploration operator for the Doris area joint venture,
CrownJoule shot and processed 150 kilometers of high resolution
seismic data over the Doris West, Foley Lake, Sarah, Jane, Newton
and Manola areas this past winter. This data has helped us better
delineate drilling locations for the upcoming winter drilling
season on these prospects.
At Foley Lake, CrownJoule entered into a seismic option
arrangement with Pinnacle Resources, and has recently elected to
drill a farmin well on this two section block this winter.
Similarly, an additional four sections of land north of the Sarah
area have been secured under a farmin drilling commitment with
Richland Petroleums. Portions of the new proprietary seismic data
were shot on the farm-in lands and have delineated drilling
locations for the coming winter.
In addition to its farmin commitments, CrownJoule was successful
in acquiring 34 percent of Texaco's interest in the Foley Lake
Area. This acquisition included three shut-in gas wells, 32
kilometers of proprietary seismic data, as well as 52 sections of
undeveloped land north along the Doris trend. This acquisition
has added a further 5,685 net acres of undeveloped land as well as
proven reserves in the area immediately north of the Doris I gas
plant. This undeveloped land was acquired for $31.40/acre, while
the proved reserves were valued at $0.54/Mcfe. With this Foley
Lake acquisition completed, CrownJoule will tie-in the existing
wells and drill three to four of the potential eight locations on
this block this winter.
CrownJoule is well positioned, with a strong balance sheet and a
focus on producing and exploring for natural gas and liquids, to
take advantage of acquisition opportunities caused by reduced oil
prices, lower cash flows and increased balance sheet leverage
within industry. CrownJoule will also continue to initiate new
exploration opportunities for growth to build shareholder value.
These new opportunities are initiated by the creativity and
imagination of quality people. In this light, CrownJoule is
pleased to welcome Mr. Bill Goods to the team as Senior Geologist
effective June 1, 1998.
CrownJoule is an oil and gas exploration company whose Common
Shares and Purchase Warrants are traded on The Toronto Stock
Exchange under the trading symbols "CJE" and "CJE.WT"
respectively.
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