EARNINGS / Pacific Tiger Energy Inc.: Year End Results - June 30,
1998
ME SYMBOL: PTE
NOVEMBER 23, 1998
MONTREAL, QUEBEC--Pacific Tiger Energy Inc. announces that for its
first year of operation ended June 30, 1998, the Company recorded
a loss of $512,967 or $0.04 per share. During the year, the
Company completed the transactions whereby it acquired a 90
percent interest in each of SWI petroleum concession, the NASANUN
and WICHIAN BURI Production licenses all located in Thailand.
During the period under review, the production of crude oil
totalled 85,856 barrels and generated $1,355,708 of revenue at an
average of $15.79 per barrel. The costs associated with operation
totalled $658,891 plus $348,257 for depreciation and depletion of
oil properties. General and administrative expenses amounted to
$1,208,378 which include administrative charges in Thailand,
corporate expenses in Canada and non-recurring expenses associated
with Stock Exchange listing.
Subsequent to year end, measures were taken to reduce drastically
these expenses to cope with severe economic conditions in the oil
industry.
The liquid assets decreased by $6,655,532 showing a balance of
$1,520,924 at year-end. Cash was used mainly to complete the
acquisitions and was invested in drilling and exploration
programs.
The Board of Director wish to take this opportunity to thank all
shareholders for their support and confidence.
October 14, 1998
AUDITORS' REPORT
To the Shareholders of Pacific Tiger Energy Inc.
We have audited the consolidated balance sheet of Pacific Tiger
Energy Inc. as at June 30, 1998 and the consolidated statements of
loss and deficit and changes in financial position for the year
then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform an audit to obtain reasonable assurance whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation.
In our opinion, these consolidated financial statements present
fairly, in all material respects, the financial position of the
Company as at June 30, 1998 and the results of its operations and
the changes in its financial position for the year then ended in
accordance with generally accepted accounting principles in
Canada.
Chartered Accountants
/T/
CONSOLIDATED BALANCE SHEET
June 30
1998 1997
____________________________________________________________
Assets
Current assets
Cash $1,519,329 $340,728
Money market investments 1,595 7,835,728
Receivables 1,452,183 8,980
Inventories 315,468 -
Prepaid expenses 39,981 -
Deferred acquisition costs - 351,768
____________________________________________________________
3,328,556 8,537,204
Capital assets (Note 4) 5,448,745 5,657
____________________________________________________________
$8,777,301 $8,542,861
____________________________________________________________
Liabilities
Current liabilities
Accounts payable and
accrued liabilities $906,802 $159,395
Shareholders' Equity
Share capital (Note 5) 9,538,247 9,538,247
Deficit (1,667,748) (1,154,781)
____________________________________________________________
7,870,499 8,383,466
____________________________________________________________
$8,777,301 $8,542,861
____________________________________________________________
CONSOLIDATED STATEMENT OF LOSS AND DEFICIT
Ten-month
Year ended period ended
June 30 June 30
1998 1997
_______________________________________________________________
Revenue
Crude oil production $1,355,708 $-
Interest 163,808 43,824
_______________________________________________________________
1,519,516 43,824
Operating costs 658,891 -
Depreciation 348,257 1,156
Administrative expenses 1,208,378 254,341
Gain on foreign-exchange (183,043) -
Write-off of goodwill - 261,930
_______________________________________________________________
2,032,483 517,427
_______________________________________________________________
Net loss for the year (512,967) (473,603)
Deficit, beginning of year (1,154,781) (651,178)
Share issue expenses - (30,000)
_______________________________________________________________
Deficit, end of year $(1,667,748) $(1,154,781)
_______________________________________________________________
Loss per share $(0.04) $(0.04)
_______________________________________________________________
CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
Ten-month
Year ended period ended
June 30 June 30
1998 1997
_______________________________________________________________
Operating activities
Net loss for the year $(512,967) $(473,603)
Item not affecting cash
Depreciation 348,257 1,156
_______________________________________________________________
(164,710) (472,447)
Net change in non-cash items (699,477) (201,353)
_______________________________________________________________
Cash used for operating activities (864,187) (673,800)
Financing activities
Issue of share capital and
share capital to be issued - 9,115,646
Share issue expenses - (30,000)
Due to a director and officer - (115,231)
Advances from shareholders - (115,149)
_______________________________________________________________
Cash generated from
financing activities - 8,855,266
Investing activities
Additions to capital assets (5,791,345) (5,010)
_______________________________________________________________
Cash used for investing activities (5,791,345) (5,010)
_______________________________________________________________
Change in cash and cash equivalents
during the year (6,655,532) 8,176,456
Cash and cash equivalents,
beginning of year 8,176,456 -
_______________________________________________________________
Cash and cash equivalents,
end of year $1,520,924 $8,176,456
_______________________________________________________________
Cash and cash equivalents
consist of:
Cash $1,519,329 $340,728
Money market investments 1,595 7,835,728
_______________________________________________________________
$1,520,924 $8,176,456
_______________________________________________________________
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1998
1 Incorporation
The Company was incorporated under the Quebec Companies Act on
September 30, 1994 under the name 9010-0272 Quebec Inc. and was
subsequently renamed to Montcalm Resources Inc. On June 12, 1997,
the articles of incorporation of the Company were modified and its
name, upon a reverse takeover, was changed to Pacific Tiger Energy
Inc.
The Company's activities are the exploration for and development of
oil and gas properties in Asia and The South Pacific.
2 Summary of significant accounting policies
Basis of consolidation
The consolidated financial statements of the Company include the
accounts of the Company and its subsidiary, Pacific Tiger Energy
Pte. Ltd. All inter-company transactions and balances have been
eliminated.
Capital assets
Computer and office equipment
Computer and office equipment are recorded at cost and depreciated
using the declining balance method at rates of 20 percent and 30
percent, respectively, or the straight-line method at rates of 5
years and 3 years, respectively.
Oil and gas properties
The Company follows the full cost method of accounting for oil and
gas operations whereby all costs associated with the exploration
for and development of oil and gas reserves are initially
capitalized. Such costs include land acquisition costs, geological
and geophysical expenses, carrying charges on non-producing
properties, costs of drilling both productive and non-productive
wells and overhead charges directly related to acquisition,
exploration and development activities.
The capitalized costs, together with the costs of production
equipment, are depleted and depreciated on the unit-of-production
method based on the estimated gross proven reserves. The costs of
acquiring and evaluating unproved properties are initially excluded
from the depletion calculation. These unproved properties are
assessed periodically to ascertain whether impairment has occurred.
When proven reserves are assigned or the property is considered to
be impaired, the cost of the property or the amount of the
impairment is added to costs subject to depletion and depreciation.
Proceeds from the sale of oil and gas are applied against
capitalized costs, with no gain or loss recognized, unless such a
sale would significantly alter the rate of depletion and
depreciation.
In applying the full cost method, the Company performs a ceiling
test which restricts the capitalized costs less accumulated
depletion and depreciation from exceeding an amount equal to the
estimated undiscounted value of future net revenues from proven oil
and gas reserves, based on current prices and costs, and after
deducting estimated future and general administrative expenses,
financing costs and income taxes.
Inventories
Inventories of materials and supplies are valued at cost or less.
Foreign currencies
Monetary assets and liabilities in foreign currencies are
translated into Canadian dollars at the exchange rates prevailing
at the end of the year. Gains or losses on translation are
included in the statement of loss. Other items which affect income
are translated at the rate of exchange prevailing on each
transaction date.
Foreign operations
The operations of Pacific Tiger Energy Pte. Ltd., a subsidiary
company, are considered to be integrated. Accordingly, monetary
items are translated at the rate of exchange at the balance sheet
dates, non-monetary items are translated at historical exchange
rates and expense items are translated at average rates during the
applicable accounting periods. Gains or losses on translation of
monetary items are included in the consolidated statement of loss
and deficit.
Loss per share
Loss per share is calculated on the weighted average number of
shares outstanding during the year.
Measurement uncertainty
The amounts recorded for depletion and depreciation of oil and gas
properties are based on estimates. The ceiling test is based on
estimates of proved reserves, production rates, oil and natural gas
prices, future costs and other relevant assumptions. By their
nature, these estimates are subject to measurement uncertainty and
the effect of changes in such estimates on the financial statements
of future periods could be significant.
3 Business acquisition
During the year, the Company completed the acquisition of all of
the outstanding shares of Monument Resources (Thailand) Ltd. and
Cairn Energy Far East Ltd. and of a 40 percent interest in the
Wichian Buri production license from Dragon Far East Limited. As
a result of these transactions, the Company now owns a 90 percent
interest in the SWI petroleum concession and Na Sanun and Wichian
Buri production licenses and which are all located in Thailand.
These acquisitions have been accounted for by the purchase method
and the accounts have been consolidated since July 1, 1997, which
is the effective date of the transactions. The purchase price was
allocated to net assets acquired at fair value as follows:
Net assets acquired
Oil and gas properties $3,473,727
_______________________________________________________________
Consideration given
Cash $3,473,727
_______________________________________________________________
4 Capital assets
1998 1997
Accumulated Net book Net book
Cost depreciation value value
_______________________________________________________________
Oil and gas
properties $5,776,727 $345,879 $5,430,848 $-
Computer
equipment 5,170 2,283 2,887 4,124
Office equipment 16,518 1,508 15,010 1,533
_______________________________________________________________
$5,798,415 $349,670 $5,448,745 $5,657
_______________________________________________________________
5 Share capital
1998 1997
_______________________________________________________________
Authorized
An unlimited number of
common shares without
par value
Issued
13,937,882 Common shares $9,538,247 $9,538,247
_______________________________________________________________
Options
Certain directors, officers and consultants of the Company hold
976,000 common share purchase options. 450,000 options are
exercisable at a price of $1.10 per share and expire in 2001, and
526,000 options, at a price of $0.42 per share, expire in 2001.
6 Income taxes
The Company has accumulated losses for tax purposes of
approximately $6,900,000 which may be carried forward and used to
reduce taxable income in future years prior to June 30, 2006 and
for which no future tax benefit has been recognized in the
accounts.
7 Financial instruments
Fair value
The Company has determined the estimated fair values of its
financial assets and liabilities based on appropriate valuation
methodologies. However, considerable judgement is necessary to
develop these estimates.
Short-term financial assets and liabilities are valued at their
carrying amounts, which are reasonable estimates of their fair
values. The fair values of the money market investments
approximate the market values of similar short-term investments and
approximates their carrying values.
Interest rate risk
Cash, receivables and accounts payable and accrued liabilities are
non-interest bearing. The money market investments have a fixed
rate of interest.
8 Related party transactions
During the year, approximately $156,853 of consulting services were
charged to the Company by directors and officers. This balance is
included in accounts payable as at June 30, 1998.
During the year, the Company paid $181,465 (US$128,000) (June 30,
1997 - $118,000 (US$86,000)) to a director and officer for certain
management, office and secretarial services. The transactions are
in the normal course of operations and are measured at the exchange
amount, which is the amount of consideration established and agreed
to by the related parties.
9 Contingency
The Company is presently the object of a lawsuit in the amount of
$1,232,756 related to a contract signed by the Company containing
a termination clause which was subsequently exercised by the
Company. The plaintiff argues that an extension was reached
through a verbal agreement and as such, claims unpaid fees,
disbursements and damages to reputation. Management is defending
the action and denies that the contract was extended and that any
monies whatsoever are owed by the Company.
Various other notices and claims are pending against the company.
It is the opinion of management that final determination of these
claims will not have a material adverse effect on the financial
position or the results of the company.
10 Segmented information
The Company's operations are concentrated in Asia and the South
Pacific. Consequently, almost all assets are located in this area.
Revenues are fully generated from Thailand and, except for some
Canadian administrative expenses, the remaining costs are incurred
also in Asia and the South Pacific.
11 Year 2000 Issue
The Year 2000 Issue arises because many computerized systems use
two digits rather than four to identify a year. Date-sensitive
systems may recognize the year 2000 as 1900 or some other date,
resulting in errors when information using year 2000 dates is
processed. In addition, similar problems may arise in some systems
which use certain dates in 1999 to represent something other than
a date. The effects of the Year 2000 Issue may be experienced
before, on, or after January 1, 2000, and, if not addressed, the
impact on operations and financial reporting may range from minor
errors to significant systems failure which could affect an
entity's ability to conduct normal business operations. It is not
possible to be certain that all aspects of the Year 2000 Issue
affecting the entity, including those related to the efforts of
customers, suppliers or other third parties, will be fully
resolved.
12 Subsequent event
Subsequent to the year-end, the Company acquired the remaining 10
percent interest in the SWI petroleum concession and Na Sanun and
Wichian Buri production licenses.
13 Comparative figures
Certain comparative figures from the prior year have been restated
to comply with the current year's presentation of the financial
statements. |
