Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : KERM'S KORNER -- Ignore unavailable to you. Want to Upgrade?

To: SofaSpud who wrote (11664)	7/9/1998 5:18:00 AM
From: Kerm Yerman	Respond to of 15196

PROPERTY DISPOSITION / Bellator Exploration Enters Into Heavy Oil Sales Contract And Sells Interest In Property For $5 Million BELLATOR EXPLORATION INC. ENTERS INTO A FIVE YEAR CONTRACT Date: 7/8/98 10:28:08 AM Stock Symbol: BEX BELLATOR EXPLORATION INC. (TSE - BEX) has entered into a five year contract commencing July 01, 1998 to sell 400 cubic metres (approximately 2500 barrels) per day of Lloyd Blend heavy oil (13-15 degree API) to an end user for a fixed wellhead price of $12.25 CDN per barrel. The contracted volumes, which represent less than 8% of corporate reserves, will provide a stable cash flow for the Company while still leaving significant upside for the shareholders through the development of its remaining reserve base when pricing is more favourable. Given the current royalty structure and Bellator's operating costs of $5.50 per barrel, the Company will realize a netback of approximately $5.25 per barrel or approximately $4,700,000 cash flow per year for the contracted volumes. Bellator has also contracted 7.0 million cubic feet (mmcf) of gas per day for the period from November 01, 1998 to October 31, 1999 at an average price of $2.35 per thousand cubic feet (mcf) from its Oyen and Tangleflags properties. Bellator is currently producing 5.0 mmcf of gas per day (after giving effect to the disposition noted below) and has another 5.0 mmcf per day awaiting tie in to its facilities. Because Bellator owns and operates primarily all of the gas processing facilities it uses, the Company estimates netbacks of approximately $1.50 per mcf during the contract period. Based on Bellator's current depletion rate of approximately $3.50 per boe and the contract prices noted above, the Company will have a recycle ratio over 2.0 and have positive earnings throughout the contract period. Bellator has also entered into a letter agreement to sell a portion of its properties in the Sounding - Hoosier area for $5.0 million which is scheduled to close in late July or early August, 1998. After the sale, Bellator will have reduced its bank debt and working capital deficiency to approximately $13.0 million. Given the cash flow from the contracted oil and gas noted above, Bellator will have a strong balance sheet with a debt to cash flow ratio of less than 1.5, and sufficient cash flow to fund ongoing capital operations. In addition, Bellator has signed a new credit facility with the National Bank of Canada for $20.0 million. Bellator has plans to drill two development gas wells this summer which will be tied into its existing infrastructure and is continuing to evaluate opportunities within its core areas.