EARNINGS / Ulster Announces Record Second Quarter and First Half
1998 Results
TSE SYMBOL: ULP
AUGUST 4, 1998
CALGARY, ALBERTA--Ulster Petroleums Ltd., reported record cash
flow and earnings for the first six months of 1998. Cash flow from
operations increased 6 percent to $40,803,000 (0.95 per fully
diluted share). Net earnings rose to a record $7,613,000 ($0.18
per fully diluted share) for the period.
Fred Woods, President and Chief Operating Officer said "The most
active and successful drilling program in Ulster's history fuelled
record operating and financial results. Our high impact Peace
River Arch exploration contributed increased natural gas and
related liquid volumes to push our production to record levels."
Ulster continues to accelerate its natural gas exploration
activities on the Peace River Arch and pursue strategic oil
opportunities in its light oil area of Central Alberta. Their
aggressive exploration program continued at a record pace during
the first six months with 44 gross (30.2 net) wells resulting in
22 gross (12.6 net) gas wells, 11 gross (9.0 net) oil wells and 2
gross (2.0 net) injector wells, for a 78 percent success rate.
In the first six months the high impact exploration success on the
Peace River Arch caused natural gas and related NGL production to
jump 23 percent to 100.7 MMcf per day and 4,200 barrels per day
from the same period in 1997. A two-week shut-in for plant
turnaround at Ulster's Wapiti Deep Cut facility reduced production
in the second quarter by approximately 5 MMcf per day and 300
barrels per day. On the crude oil side, slowed drilling activity
in Central Alberta led to production declining 12 percent to 5,900
barrels per day. On a combined basis boe production increased 10
percent to average 20,170 boe per day for the first half.
Mr Woods went on to say "Our top quartile netbacks continued
during the first half as Ulster generated excellent netbacks of
$13.28 per boe. A combination of strong natural gas prices and
reduced operating costs more than offset lower oil prices
generating record cash flow and earnings."
Gas prices were a highlight as Ulster realized a natural gas price
of $2.39 per Mcf for the first six months. This price includes
approximately $0.50 per Mcf from marketing enhancements,
attributable to a combination of price contracts, financial
transactions and contract restructuring that allows Ulster to
market its gas to the premium markets in North America. A portion
of these marketing enhancements has been deferred to offset future
obligations. The sales portfolio will be managed for the balance
of the year to continue to achieve a premium natural gas sales
price. The ongoing slide in world oil prices caused crude oil and
NGL prices to drop over 30 percent from the same period last year
to average $18.80 and $13.21 per barrel, respectively.
On a boe basis operating costs were lowered 12 percent to average
$3.98 during the first half of 1998, down from $4.53 per boe for
the same period in 1997. Operating costs should continue in this
range for the balance of 1998.
Woods said, "The prospect of continued low world oil prices is
both a challenge and an opportunity for the industry. With
Ulster's strong gas prices and our low debt level we are well
positioned to take advantage of these opportunities.
After our first half drilling we are on schedule to achieve our
production forecast of 22,500 boe per day and generate continued
record levels for cash flow, earnings and production. The success
of our high impact drilling program combined with our large
inventory of gas prospects has us very excited about our future."
/T/
ULSTER PETROLEUMS LTD.
SUMMARY Three Months Six Months
Ended June 30, Ended June 30,
1998 1997 Percent 1998 1997 Percent
Change Change
--------------------------------------------------------------
Operations
Production
Natural gas
(MMcf/d) 103.7 98.3 5 100.7 94.8 6
NGL (bbls/d) 4,400 2,300 91 4,200 2,100 100
Crude oil
(bbls/d) 5,600 6,200 (10) 5,900 6,700 (12)
Barrels of oil
equivalent
(boe/d) 20,370 18,330 11 20,170 18,280 10
Pricing
Natural gas
($/Mcf) $2.82 $1.60 76 $2.39 $1.85 29
NGL ($/bbl) 12.20 17.90 (32) 13.21 21.63 (39)
Crude oil
($/bbl) 17.97 24.49 (27) 18.80 26.80 (30)
Netback ($/boe) $14.86 $11.81 26 $13.28 $13.66 (3)
Financial (thousands,
except per share amounts)
Revenue $35,193 $26,914 31 $63,471 $60,841 4
Cash flow from
operations 23,330 16,025 46 40,803 38,483 6
per common share
- fully diluted 0.54 0.44 23 0.95 1.06 (10)
Net earnings 5,761 2,209 161 7,613 7,568 1
per common share
- fully diluted 0.14 0.06 133 0.18 0.22 (18)
Long-term debt,
net of working
capital 200,638 224,177 (11) 200,638 224,177 (11)
Shareholders'
equity $371,703 $262,262 42 $371,703 $262,262 42
Common shares
outstanding -
fully diluted 43,843 37,890 16 43,843 37,890 16
Wells Drilled
Gross 19 10 90 44 24 83
Net 14.2 7.1 100 30.3 18.0 68
Success rate
(Percent) 75 63 12 78 74 4
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/T/
Ulster Petroleums Ltd. is an intermediate-sized oil and natural
gas company, committed to the exploration for and production of
the highest quality liquids-rich natural gas and light gravity
crude oil. Adhering to its proven business strategy has allowed
Ulster to continue to produce solid growth and excellent potential
for its shareholders. For the past 30 years, Ulster's common
shares have been listed for trading on The Toronto Stock Exchange,
under the trading symbol "ULP".
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