in response to
posted on Apr 06, 2008 05:05PM
The Future is Bright
GEOCAN loses $15.35-million in 2007
2008-04-01 12:54 ET - News Release
Mr. Wayne Wadley reports
GEOCAN ENERGY INC. ANNOUNCES 2007 RESULTS AND PROVIDES UPDATE
GEOCAN Energy Inc. has released financial results for the year ended Dec. 31, 2007. Cash flow from operating activities for 2007 was $9.25-million, or 17 cents per share (diluted), as compared with $18.36-million, or 33 cents per share (diluted), in 2006. Cash flow was negatively impacted primarily by asset sales in the spring of 2007, and associated lower production volumes, lower natural-gas and heavy-oil prices, reduced netbacks from heavy-oil production (partially as a result of a strengthening Canadian dollar), by higher interest and bank-charge expense and, finally, higher operating costs in 2007.
Earnings loss for 2007 was $15.35-million, or 27 cents per share (diluted), as compared with an earnings loss of $970,000, or two cents per share (diluted), in 2006. The earnings loss for 2007 resulted primarily from a goodwill writedown of $2.65-million taken in the third quarter on the 2005 Assure Energy Inc. acquisition and $21.5-million of depletion depreciation and accretion (DD&A) charge.
Average production was 2,545 barrels of oil equivalent per day in 2007 down from 3,077 barrels of oil equivalent per day in 2006, due predominantly to the sale of 229 barrels of oil equivalent per day minor non-core assets in the spring of 2007, as well as normal declines.
Further information regarding the company's 2007 results is contained in the company's annual information form, the Dec. 31, 2007, and 2006 audited consolidated financial statements of the company, the attached notes and the management's discussion and analysis relating thereto as well as in GEOCAN's 2007 annual report, all of which are available for viewing on SEDAR and on the company's website.
Recent asset-sale transactions
On March 6, 2008, the company sold all of its heavy-oil assets in the Lloydminster area, including its Dee Valley SAGD property, for $50.9-million, inclusive of closing adjustments, with an effective date of Feb. 1, 2008. On March 28, 2008, the company closed the sale of certain minor unit and non-unit interests in the Carrot Creek area of west-central Alberta for approximately $2.28-million (before closing adjustments), with an effective date of Dec. 1, 2007. It is anticipated that the remaining Carrot Creek transaction for approximately $380,000 (before closing adjustments) will close in early April.
These transactions represent average net December production rates of 1,453 barrels of oil equivalent per day of heavy oil and associated natural gas from the Lloydminster area, and 43 barrels of oil equivalent per day of light-oil and natural-gas production from the Carrot Creek area. Proceeds from the Lloydminster area heavy-oil asset sale were used to redeem the Assure Energy Series A preferred shares and Series B preferred shares in the total amount of $2.03-million, to pay out the company's $5-million mezzanine financing facility and to pay down the company's senior bank credit facility by $41.8-million. Proceeds from the Carrot Creek sale will be applied to the senior bank credit facility in a similar manner.
Review of strategic alternatives
On March 6, 2008, the company reported in Stockwatch its intent to review strategic alternatives to maximize shareholder value. The process will evolve over the coming months and its outcome is unknown at present. In the interim, the company continues with a capital program aimed at maintaining and potentially enhancing production through various cost-effective, near-term payout initiatives.
We seek Safe Harbor.