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Gold/Mining/Energy : KERM'S KORNER -- Ignore unavailable to you. Want to Upgrade?

To: Kerm Yerman who wrote (13901)	11/28/1998 5:21:00 AM
From: Kerm Yerman	Respond to of 15196

EARNINGS / Genesis Exploration Ltd. to acquire Sturgeon Lake assets & releases third quarter results CALGARY, AB., Nov. 18 /CNW/ - GENESIS EXPLORATION LTD. (''Genesis'') has signed a purchase and sale agreement to acquire an average 93% working interest in an oil producing property and 21% interest in a 20 mmcf/d gas processing plant in the Sturgeon Lake area of Northwestern Alberta. Third party engineering evaluations indicate the property has proven reserves of 5 million barrels of 38 degrees API oil. It is currently producing at a rate of 1,650 b/d of oil and 1 mmcf/d of gas. The anticipated closing date for the purchase is on or around November 25, 1998 and the purchase price is expected to be $31 million after adjustments. In the third quarter, Genesis drilled 27 (16.5 net) tests to an average depth of 2,400 m. Well results include 18 (9.53 net) gas, 1 (1.0 net) oil and 8 (5.94 net) D&A for an overall success rate of 64%. Significant exploration results were posted in the Windfall, Grouard and Dawn areas of Alberta. The Company's internal engineering indicates third quarter proven reserve adds to be in excess of 5 million BOE. Capital expenditures of $25.2 million for the third quarter were similar to the first two quarters giving total nine month net capital expenditures of $86.6 million (1997 - $75.0 million). Nine month capital expenditures for land were $6.5 million, seismic $8.2 million, drilling and completions $45.7 million and tangibles $12.8 million. Net acquisitions for the nine months were $13.4 million. Earnings were $4,191,000 ($0.14 per share) for the nine months ended September 30, 1998 compared to $3,401,000 ($0.15 per share) in 1997. Cash flow of $9,084,000 ($0.30 per share) for the nine months was down from 1997 cash flow of $10,942,000 ($0.50 per share) although revenue was up by a million dollars to $23,291,000 (1997 - $22,161,000). The most significant factors for reduced cash flow were lower oil prices, higher operating costs and higher interest expense. Oil and NGLs averaged $17.01/bbl in 1998 to date compared to $23.96/bbl in 1997. Natural gas prices averaged $1.80/mcf (1997 - $1.66/mcf). Overall product price averaged $17.67/BOE versus $19.14/BOE in 1997. Higher operating costs of $5.79/BOE (1997 - $5.19/BOE) resulted mainly from non-operated properties. Interest costs were up one million dollars as a result of both higher debt and an increase of approximately 2% in interest rates. Third quarter production averaged 5,300 BOE/d. Daily rates for gas were up 25% at 37.1 mmcf/d compared to 29.6 mmcf/d for the same period one year ago. Oil and NGL rates were up 8% this quarter at 1,589 b/d compared to 1,470 b/d last year. This is consistent with the Company's continued focus on natural gas drilling for 1998. Current production rates prior to taking into account the above-mentioned acquisition are 8,000 BOE/d with 70% of that being natural gas (10 mcf of natural gas = 1 barrel of oil). The Company expects to average 6,000 BOE/d for 1998.