SERVICE SECTOR / Computer Modelling Group Ltd. Announces Second
Quarter Results
CALGARY, ALBERTA--Computer Modelling Group Ltd. (CMG) today
announced revenues for the second quarter ended September 30, 1998
of $1,954,036, compared to the second quarter last year of
$2,384,496. Revenues for the first six months were $4,254,509,
compared with the same period last year of $4,447,784. The
Company reported a loss for the first six months of $2,311,358
compared with a loss of $936,992 for the comparative period last
year.
The Company stated that in the comparative period last year the
costs for the new sales offices were capitalized, whereas this
year they are mostly expensed. This change in expenditure
treatment accounts for $1.2 million of the $1.4 million increase
in loss for the first six months of this year compared to the same
period last year. The new sales offices have begun contributing
to the Company's growth, particularly to increases in license
revenues and in CMG's client base of now more than 1,300 users.
During the quarter, the Company experienced increases in revenue
both from software license sales and contract research. These
gains helped to offset lower revenue from consulting services.
Demand remained strong for CMG's advanced process oil and gas
reservoir simulation software, producing revenues of $1,317,244 in
the quarter. This brought software license revenues to $2,728,875
for the first six months of the year, an increase of $371,758 or
16 percent over the same period last year.
"We are very encouraged by the continuing demand for our software"
said Frank Meyer, President and CEO. "At the current low oil
prices, improving the production from existing reservoirs can be
attractive compared with new exploration and we are seeing this in
the growth of our licensing revenues."
The Company's consulting services experienced the effects of
industry spending reductions. The combined consulting and
contract research revenue was $493,091 in the second quarter, down
32 percent compared with $720,115 in the first quarter, and 53
percent compared with $1,049,688 for the second quarter last year.
Mr. Meyer said, "Even though CMG's software business is expected
to remain strong, the Company has undertaken a review of expenses
in response to the downturn in the oil and gas industry. We are
bringing our expenses in line with CMG's revenue expectations. We
are taking action to ensure the Company's long-term sustainability
under the current industry conditions."
CMG's software employs 3D visualization and animation to assist
companies with increasing production from oil and gas reservoirs.
Of existing known oil reserves, more than 70 percent remains in
the ground eluding conventional recovery techniques. CMG's
software identifies "best case" scenarios from analyses that
incorporate data from conventional and 3D seismic, geological
profiles, drilling logs, core samples, production records and
other sources.
Computer Modelling Group Ltd. is an oil and gas service company
that applies advanced technology and support services to optimize
recovery from existing and future reserves. The Company,
recognized by oil and gas companies worldwide as a leading
developer of reservoir modelling software, has sales and technical
support services based in Calgary, Houston, Bakersfield, Beijing,
London, Caracas and Sao Paulo. CMG is the leading supplier of
advanced processes reservoir modelling software in the world with
a blue chip client base of over 140 international oil companies
and technology centres in 27 countries. CMG's common shares are
listed on the Toronto Stock Exchange and trade under the symbol
CPU.
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