EARNINGS / Ulster Continued Record Setting Pace In Third Quarter
TSE SYMBOL: ULP
NOVEMBER 2, 1998
CALGARY, ALBERTA--During the third quarter of 1998, Ulster
continued to produce record operating and financial results.
Record natural gas and NGL production volumes (up 39 percent),
combined with strong natural gas prices and reduced operating
costs generated record cash flows (up 68 percent) and record net
earnings (up 358 percent).
Fred Woods, President and Chief Operating Officer of Ulster
stated, "our strong growth during the first nine months of 1998
has been fuelled by Ulster's most aggressive and successful
exploration program ever. In response to this success, the Board
of Directors has authorized a $30 million increase in the 1998
capital budget to $155 million. These additional funds will be
used to expand our 1998-99 winter drilling program on the Peace
River Arch, capitalize on current low land prices and take
advantage of strategic property acquisitions."
OPERATING AND FINANCIAL RESULTS
Ulster's third quarter natural gas and related NGL production
jumped 39 percent to average 116.5 MMcf per day and 5,300 barrels
of NGL per day. Light oil production remained flat at 5,600
barrels per day for the third quarter of 1998, as a result of an
extended plant turnaround at Wimborne in Central Alberta and a
reduction in oil drilling activity. On a combined basis, Ulster's
production increased 25 percent to reach a record 22,550 boe per
day, with natural gas and related NGL comprising 75 percent of
Ulster's total production.
Ulster's cash flow from operations rose 68 percent to $24.4
million ($0.56 per fully diluted share), while net earnings jumped
358 percent to $5.1 million ($0.12 per fully diluted share) during
the third quarter of 1998. The combination of higher production
levels, strong natural gas prices and reduced operating costs
fuelled this growth. For the first nine months of 1998, Ulster
also achieved record cash flow and net earnings of $65.2 million
($1.49 per fully diluted share) and $12.8 million ($0.30 per fully
diluted share), respectively.
Ulster's natural gas price averaged $2.49 per Mcf during the first
three quarters as a result of stronger commodity pricing and the
realization of approximately $0.55 in marketing enhancements.
Crude oil and NGL prices averaged $18.60 and $12.08 per barrel,
respectively, as a result of the current weakness in world oil
markets.
Ulster's continuous focus on efficiencies in all areas of its
operations resulted in a reduction in natural gas operating costs
to $0.34 per Mcf, and oil and NGL operating costs to $4.64 per
barrel. On a combined basis, Ulster's operating costs were
reduced 10 percent to average $4.01 per boe during the first three
quarters of the year.
The foregoing factors combined to generate a nine month production
netback of $13.55 per boe - continuing Ulster's history of
achieving top quartile netbacks.
EXPLORATION AND EXPLOITATION ACTIVITIES
For the first nine months of 1998, Ulster continued its most
aggressive gas exploration program ever, drilling a total of 64
gross (41.7 net) wells, which included 35 exploratory wells. The
Company's drilling program achieved an impressive 80 percent
success rate and resulted in 37 gross (20.9 net) natural gas
wells, 13 gross (10.6 net) oil wells and 2 gross (2.0 net)
injector wells.
PEACE RIVER ARCH
The Peace River Arch is the cornerstone of Ulster's natural gas
growth strategy. Natural gas pools within this area typically
have large, liquids-rich, long-life reserves.
At Wapiti, Ulster has drilled 19 gas wells year-to-date. This
total includes four significant new pool discoveries that have
both increased production and expanded our future prospects for
the area. In response to this drilling success, we have increased
Ulster's winter drilling program up to 25 wells in the Wapiti
area, with prospects ranging in size from 5 Bcf to 200 Bcf.
At Gold Creek, Ulster continued to enjoy exploratory success with
its high impact program. During the quarter, we extended this
play by casing an exploratory well (50 percent working interest)
on a new Wabamun prospect. The multi-zone completion of this well
will be undertaken in early November. This winter's Wabamun
exploration program includes an extensive seismic program to
delineate identified prospects and the drilling of a 3,900 metre
high impact test at Leland with reserve potential of 200 Bcf.
Year-to-date, we have added 165,000 acres to Ulster's land
inventory in the Peace River Arch. This brings our total holdings
in the area to over 690,000 acres (60 percent working interest).
Our expanded land base and extensive play inventory provide the
base for a 1998-99 drilling program of 45 wells in this area.
CENTRAL ALBERTA
In Central Alberta, Ulster continued to limit its light oil
drilling activity while acquiring strategic light oil properties
that complement our existing asset base.
At Wimborne, Ulster expanded its holdings to 91 percent in this
100 million barrel, light oil field.
Our ongoing strategy is to continue to add reserves and production
at reasonable costs, through drilling and acquisition in the
current low-price environment.
Looking forward to the fourth quarter of 1998, Mr. Woods said,
"all of the key ingredients are in place for Ulster to achieve
continued record results: production volumes will jump to 25,500
boe per day with the addition of our year-to-date drilling
successes; cash flow from operations and net earnings will
continue at a record pace due to strong natural gas prices; and
our expanded capital budget will be used to execute our most
ambitious winter drilling program ever!"
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".
Note:
This media release contains forward-looking information. Actual
results may differ. The risks, uncertainties and other factors
which could influence actual results are described in Ulster's
1997 Annual Report and other documents previously filed with
regulatory authorities.
/T/
Highlights
Three Months Ended Nine Months Ended
September 30, September 30,
Percent Percent
1998 1997 Change 1998 1997 Change
Financial (thousands,
except per share amounts)
Revenue $37,800 $25,804 46 $101,271 $ 86,645 17
Cash flow from
Operations 24,433 14,580 68 65,236 53,063 23
per common share
- fully diluted 0.56 0.40 40 1.49 1.45 3
Net earnings 5,138 1,123 358 12,751 8,691 47
per common share
- fully diluted 0.12 0.03 300 0.30 0.25 20
"Record cash flow and net earnings for nine months"
Production Volumes
Natural gas (MMcf/d) 116.5 91.8 27 106.0 93.8 13
NGL (bbls/d) 5,300 3,000 77 4,600 2,400 92
Crude oil (bbls/d) 5,600 5,800 (3) 5,800 6,400 (9)
--------------------------------------------------------------
Total boe (per day) 22,550 17,980 25 21,000 18,180 16
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"Record natural gas and NGL production volumes"
Selling Prices
Natural gas ($/Mcf)$ 2.66 $ 1.62 64 $ 2.49 $ 1.78 40
NGL ($/bbl) 10.33 16.64 (38) 12.08 19.54 (38)
Crude oil ($/bbl) 18.21 25.46 (28) 18.60 26.39 (30)
"Premium natural gas price achieved"
Netback (per boe)
Selling price $20.70 $19.29 7 $20.38 $21.03 (3)
Royalties (2.62) (3.88)(32) (2.82) (3.76)(25)
Production expenses (4.07) (4.26) (4) (4.01) (4.44)(10)
--------------------------------------------------------------
Netback $14.01 $11.15 26 $13.55 $12.83 6
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"Top quartile netback continues"
Balance Sheet
Long-term debt $235,016 $194,466 21 $235,016 $194,466 21
Shareholders'
equity 377,412 353,837 7 377,412 353,837 7
"Solid balance sheet maintained"
Wells Drilled
Gross 20 29 (31) 64 53 21
Net 11.4 20.8 (45) 41.7 38.8 7
Success rate
(net)(percent) 87 90 (3) 80 83 (3)
"Successful high impact drilling program" |
