EARNINGS / Western Star Exploration Announces Third Quarter Results
CALGARY, Nov. 13 /CNW/ - Western Star is pleased to announce that as a
result of our successful exploration program the Company is on target to
increase our oil and gas reserves by 80 percent in 1998. The Company will
realize large increases in production, revenue, and cash flow starting with
the fourth quarter of 1998.
Operating Results
-----------------
Nine months ended September 30 1998 1997 Change
Production
Natural Gas (MCF/d) 3,870 3,543 9%
Oil and NGL'S (BBLS/d) 108 152 -29%
Combined (BOE/d) 495 506 -2%
Sales Price
Natural Gas ($/MCF) $1.90 $1.81 5%
Oil and NGL'S ($/BBL) $19.07 $26.00 -27%
Combined ($/BOE) $19.01 $20.50 -7%
Field Netbacks
Natural Gas ($/MCF) $1.31 $1.27 3%
Oil and NGL'S ($/BBL) $8.62 $17.90 -52%
Combined ($/BOE) $12.11 $14.28 -15%
Wells Drilled
Gross 8 15 -47%
Net 3.9 3.8 3%
Financial Results
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Nine months ended September 30 1998 1997 Change
Net Revenue $2,432,000 $2,704,000 -10%
Cash flow from operations $1,136,000 $1,517,000 -28%
per share $0.12 $0.17 -29%
Net Earnings $115,000 $443,000 -73%
per share $0.02 $0.05 -60%
Capital Expenditures $3,363,000 $3,141,000 7%
Dispositions $759,000 -
Bank Debt, net of working capital $1,593,000 -
Weighted Average Shares
Outstanding 9,840,612 9,084,724 8%
Western Star's ability to achieve net earnings in the current environment
is a direct result of our focus on natural gas. In addition to exploration
and development activity, the disposition of non-core assets and the capital
expenditures on our natural gas assets in our core areas has allowed Western
Star to significantly increase the net asset value per share since December
1997. This value will become apparent in the first quarter of 1999 when
comparisons to the first quarter of 1998 are reported.
Natural Gas
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In the Taber area, Western Star added proven and probable reserves of 7
BCF of natural gas thereby replacing 368 percent of our 1998 forecast natural
gas production. A 4 mmcf/d gas plant and gathering system is currently under
construction and is scheduled to come on production in early December. This
will add 3 mmcf/d to Western Star's natural gas production base. An
additional 5 (3.75 net) wells are to be drilled on this prospect which will
further increase both production and reserves.
At Hanna Garden, Western Star expects to drill 6 (5.3 net) wells late in
the 4th quarter that will add another 2.4 BCF of natural gas reserves.
Production will commence early in the first quarter of 1999.
Financial Results
-----------------
Net revenue for the first nine months of 1998 was $2,432,000 which
compares to $2,702,000 during the same period in 1997. Natural gas revenue,
net of royalties was $1,897,000 an increase of 14 percent when compared to
$1,669,000 realized last year. Crude oil revenues net of royalties decreased
48 percent to $517,000 as the Company's average selling price for oil fell
from $26.00 per barrel to $19.07 per barrel in the first nine months of 1998.
The drop in liquid productions also contributed to this decline in revenue.
Oil and gas operating expenses increased from $691,000 to $778,000 in the
first nine months of 1998 while general and administrative expenses fell from
$496,000 to $423,000 in 1998. Interest expense in 1998 was $95,000.
For the nine-month period that ended September 30, 1998, cash flow from
operations was $1,136,000, a decrease of 28 percent from the $1,517,000
generated during the same period in 1997. On a per share basis, cash flow in
1998 was $0.12 compared to $0.17 in 1997. Net earnings were $115,000 in 1998
compared to $443,000 recorded in the first half of 1997.
During the third quarter, Western Star disposed of five small working
interest properties for $759,000. Proceeds from the sale of these properties
were used to reduce bank debt and will allow the Company to pursue low risk
natural gas drilling opportunities at Hanna Garden and at Taber.
Corporate Outlook
-----------------
Western Star's future prospects are very bright. In December, the Taber
project will begin production at 3,000 mcf/d net to the Company. The Company
has sold forward this production at $2.55 per mcf from November 1998 to
October 1999. This price will serve to protect the cash flow and
profitability of the project. When the natural gas wells at Hanna Garden are
drilled and brought on stream the productive capacity of the Company will
increase to 8,000 mcf/d. This increase in production combined with recent
price increases will allow the Company to expand our 1999 exploration program
to other natural gas projects that are being developed and worked upon by our
exploration team.
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