Caribou Resources Corp.
TSX VENTURE : CBU

Caribou Resources Corp.

August 23, 2005 19:52 ET

Caribou Resources Corp. Announces Second Quarter Results

CALGARY, ALBERTA--(CCNMatthews - Aug. 23, 2005) - Caribou Resources Corp. ("Caribou") (TSX VENTURE:CBU) is pleased to report its financial and operating results for the three and six months ended June 30, 2005:

Highlights

- Sales volumes increased 285% over the same six month period in 2004 to 1,423 boe/day, while revenues from oil and natural gas have increased 348% to $13.3 million in the six months ended June 30, 2005.

- An 810% increase in cash flow over the six months to June 2004, reflects the growth in production and strong commodity prices.

- Operating netbacks per boe have improved by 36% over 2004 through the addition of new light oil production and strong oil prices. Cash netbacks per boe have improved by 379% over 2004 due to reduced G&A costs per boe.

- Operating costs have been reduced in the Redwater area of central Alberta from approximately $17/boe to $9/boe since this core area was acquired through the Shaker acquisition in October 2004.

- Caribou, as operator, carried out a $15.3 million capital program during the first six months of 2005, with an average working interest of approximately 80% in its two core areas of Central and Northern Alberta.

- Effective June 1, 2005 Caribou became Operator of its Northern core area of Larne where approximately 40% of the Company's production is derived. This change will allow Caribou to realize operating cost savings and minimize production downtime in its wells.

- During the second quarter, the Company announced a Coal Bed Methane sale and farm out agreement with a proven CBM industry partner, Mahalo Energy Ltd., whose sole focus is to develop natural gas from coal. The transaction subsequently closed July 28, 2005. The deal resulted in Caribou receiving a significant cash payment and the Company being carried on a five well work commitment to be completed before year-end. No value was previously attributed to the CBM interests in the Company's McDaniel's Reserve Report. Mahalo has advised that they intend to license up to eight wells in the area for drilling prior to the end of 2005.

- Caribou announced that it had arranged a $10 million development bridge facility to assist in the funding of its summer development/exploitation program.

- The Company was successful in expanding its land position in its new core area on the Peace River Arch. Additional strategic lands in the Larne area of Northern Alberta have been acquired as of July.

- The Company commenced the summer/fall drilling program of approximately $10 million in July with two rigs under contract.

- On August 15, 2005 the Company announced an $18 million equity financing, with closing scheduled for September 8, 2005.



% change
- six
months
ended
June 30,
Three months ended Six months ended 2004 to
June 30 June 30 June 30,
2005 2004 2005 2004 2005

---------------------------------------- ---------------------- --------

Financial ($000's, except shares and per share amounts)

Oil and natural
gas revenues 6,900 1,905 13,276 2,963 348
Cash flow from
operations (1) 3,386 523 6,053 665 810
Per share
- basic (1) 0.12 0.09 0.21 0.16 36
Net loss (970) (140) (2,206) (432) 411
Per share
- basic (0.03) (0.03) (0.08) (0.10) (23)
Per share
- diluted (0.03) (0.03) (0.08) (0.10) (23)
Total assets 94,180 32,271 94,180 32,271 192
Bank debt 15,877 4,842 15,877 4,842 228
Shareholders'
equity 51,029 16,647 51,029 16,647 207
Capital
expenditures 2,184 1,511 15,939 11,549 38
Common shares
outstanding 28,194,165 9,139,328 28,194,165 9,139,328 208
Weighted average
- basic 28,170,056 5,578,098 28,155,982 4,219,142 567
Weighted average
- diluted 28,170,056 5,578,098 28,155,982 4,260,995 561
---------------------------------------- ----------------------

Operating
(boe - 6:1 basis)

Undeveloped land
- net acres 133,733 103,282 133,733 103,282 29

Sales volumes
Natural gas
(mcf/day) 4,814 2,069 4,195 1,407 198
Crude oil and NGL's
(bbls/day) 671 124 724 135 436
Total oil equivalent
(boe/day) 1,473 468 1,423 370 285

Product prices ($)
Natural gas per mcf 7.18 7.22 7.20 6.98 3
Crude oil and NGL's
per bbl 61.51 48.58 59.56 47.68 25
Operating expense
per boe ($) 13.77 12.00 14.02 11.77 19
Netback per boe ($) 30.69 22.68 29.42 21.69 36
---------------------------------------- ----------------------

(1) Cash flow from operations and cash flow from operations per share
are non-GAAP terms that represent net loss adjusted for non-cash items.
The Company evaluates its performance based on these measures. The
Company considers cash flow from operations a key measure as it
demonstrates the Company's ability to generate cash flow necessary to
fund future growth through capital investment and to repay debt.


The second quarter represented the Company's eighth consecutive quarter of growth since inception in December 2003. Caribou was successful in getting all of the Northern Alberta wells drilled in the first quarter on production by mid April. However, the quarter was not without its operational challenges. Average sales in April were approximately 1,600 boe/d. However, sales production was adversely affected in May and June as a result of startup operational issues, wet surface conditions, third party plant outages, and individual well performance. As a result, it is estimated that approximately 140 boe/d were lost over the quarter due to downtime. Startup operational issues with the new gas wells in the Company's Larne core area, surface access constraints due to wet surface conditions and the transition of operatorship were contributing factors to downtime losses. Unscheduled third party plant shutdown associated with compressor problems and a gas plant shutdown due to a lightning strike in Northern Alberta resulted in the loss of approximately 70 boe/d over the quarter. In Central Alberta, it is estimated that approximately 70 boe/d were impaired over the quarter due to a combination of down-hole mechanical problems requiring workover efforts on oil wells at Redwater, delays in service rig availability, wet ground conditions, and third party gas facility turnaround at Wizard Lake. It is estimated that approximately 90 boe/d from one new well in Northern Alberta, will remain shut-in awaiting winter freeze-up when pumping equipment can be installed to deal with loading up problems.

At the time of writing, Caribou has commenced its summer/fall capital expenditure program. This program will consist of a balanced development/exploration drilling program with up to $10 million of planned expenditures, with Caribou as operator. The program includes approximately $7 million in Central Alberta on lands that are 50 - 100% working interest ("WI") and the remainder will be expended in the Peace River Arch (70% WI).

In its Redwater core area, the Company operates a 70% WI in a 2,800 bbl/d oil battery and sales gas pipeline. The Redwater exploitation/development program will include up to three new horizontal infill wells in the original main Basal Quartz light oil pool where the Company has six existing horizontal wells. At the time of writing, drilling has commenced on the first horizontal well (50% WI). The Company is also planning two re-entries to add additional legs to existing horizontal wells. The Company believes that this main pool has approximately five million barrels of oil in place and that less than 300,000 bbls has been recovered to date. Analogy pools in the area, having strong bottom water drive systems similar to Caribou's pool, have realized oil recoveries exceeding 35% of the oil in place indicating that recoverable oil in place may exceed 1.8 million barrels of oil. The first development step-out well on the new Basal Quartz pool at Redwater (100% WI) has been cased and is awaiting completion. This well appears to define a continuation of the oil pool discovered during Q3 2004. The Company is currently considering horizontal development of this new pool.

The Company has also carried out the drilling of the first of three prospects on the Peace River Arch where it has a 70% WI in three sections, and is the Operator. Primary targets of this higher risk, higher impact program are the Charlie Lake/Montney and Kiskatinaw zones with secondary targets including the Belloy and Gething zones. At the time of writing, the well has been drilled and abandoned. Geological and seismic re-evaluation is currently being conducted and further drilling will not commence until this process has been completed.

During the second quarter the Company was successful in negotiating an agreement which has the potential to provide Caribou and its shareholders with a significant low risk opportunity to develop its Coal Bed Methane ("CBM") prospective holdings at Wizard Lake in Central Alberta. This transaction closed July 28, 2005. The Company has farmed out its CBM interests in seventeen net sections in exchange for a significant cash payment and a commitment by a proven CBM industry partner, Mahalo Energy Ltd., to drill five Horseshoe Canyon test wells with Caribou participating on a carried basis. Caribou will retain the option to participate as to 35% of its original interest in the future development of the Horseshoe Canyon resource or elect to retain an override on any Horseshoe Canyon production. An area of mutual interest has also been established to cover the acquisition of other conventional and CBM rights in a six township area. Caribou will retain all other conventional hydrocarbon rights on the Wizard Lake lands and will continue to pursue the drilling of the Ellerslie, Belly River and Edmonton Sands formations. At the time of writing, we have been advised by Mahalo that they intend to licence up to eight wells for drilling prior to December 31, 2005.

Planning is also under way for Caribou's winter drilling program. The Company has planned a minimum capital expenditures program of $12 million which follows up on opportunities resulting from last winter's drilling. The program will include drilling locations on strategic lands (four sections) acquired at a recent crown land sale in the Company's Northern core area which directly offset recent successful wells.

On August 15, 2005 the Company announced an $18 million equity financing, with closing scheduled for September 8, 2005. Proceeds of this financing will be used to reduce debt and fund the 2005 and 2006 capital expenditure programs.



Caribou Resources Corp.
Balance Sheets
As at June 30, 2005 and December 31, 2004
(unaudited)

2005 2004
---------------------------------------------------------- -------------
ASSETS
Current assets
Accounts receivable $ 5,618,083 $ 4,779,315
---------------------------------------------------------- -------------
5,618,083 4,779,315
Property, plant and equipment 85,954,864 78,491,971
Goodwill 2,607,407 2,607,407
---------------------------------------------------------- -------------
$ 94,180,354 $ 85,878,693
---------------------------------------------------------- -------------
---------------------------------------------------------- -------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Bank debt $ 15,877,416 $ 9,206,122
Accounts payable and accrued liabilities 13,562,995 9,628,238
---------------------------------------------------------- -------------
29,440,411 18,834,360

Asset retirement obligations 3,134,450 2,918,925
Future income taxes 10,576,010 11,287,366
---------------------------------------------------------- -------------
43,150,871 33,040,651
---------------------------------------------------------- -------------

SHAREHOLDERS' EQUITY
Share capital 54,639,884 54,511,969
Contributed surplus 873,675 603,997
Retained earnings (deficit) (4,484,076) (2,277,924)
---------------------------------------------------------- -------------
51,029,483 52,838,042
---------------------------------------------------------- -------------
$ 94,180,354 $ 85,878,693
---------------------------------------------------------- -------------
---------------------------------------------------------- -------------


Caribou Resources Corp.
Statements of Operations and Deficit
For the periods ended June 30, 2005
(unaudited)

Three months ended Six months ended
June 30 June 30
2005 2004 2005 2004
----------------------------------------------- ------------------------
REVENUES

Oil and natural gas $ 6,900,377 $ 1,905,476 $13,276,430 $ 2,963,461

Alberta royalty
tax credit 125,000 45,111 250,000 77,089

Interest and
other revenue 1,118 1,903 1,225 9,787

Less: Crown and
other royalties (1,065,802) (472,054) (2,334,493) (790,347)
----------------------------------------------- ------------------------

5,960,693 1,480,436 11,193,162 2,259,990
----------------------------------------------- ------------------------
----------------------------------------------- ------------------------

EXPENSES

Operating 1,845,283 511,327 3,613,101 791,322

General and
administrative 592,747 408,324 1,274,375 752,138

Stock-based
compensation 141,199 48,000 278,534 98,000

Interest 123,408 169,384 226,490 358,956

Accretion 65,330 12,114 127,468 19,685

Depletion and
depreciation 4,511,315 728,845 8,564,131 1,146,290
----------------------------------------------- ------------------------

7,279,282 1,877,994 14,084,099 3,166,391
----------------------------------------------- ------------------------

(1,318,589) (397,558) (2,890,937) (906,401)
----------------------------------------------- ------------------------

Capital taxes (13,533) (12,362) (26,570) (17,363)

Future income
tax recovery 361,694 169,000 711,355 346,046
----------------------------------------------- ------------------------

348,161 156,638 684,785 328,683
----------------------------------------------- ------------------------

Non-controlling
interest - 100,796 - 145,961
----------------------------------------------- ------------------------

NET LOSS FOR
THE PERIOD (970,428) (140,124) (2,206,152) (431,757)

Deficit, beginning
of period as
previously stated (3,513,648) (316,565) (2,277,924) (3,542,013)

Application of
deficit against
contributed surplus - - - 1,229,146

Application of deficit
against share capital - - - 2,276,240

Retroactive application
of changes in
accounting policy - - - 11,695
----------------------------------------------- ------------------------

Deficit, end of period $(4,484,076)$ (456,689) $(4,484,076)$ (456,689)
----------------------------------------------- ------------------------
----------------------------------------------- ------------------------

Net loss per share
Basic $ (0.03)$ (0.03) $ (0.08)$ (0.10)
Diluted $ (0.03)$ (0.03) $ (0.08)$ (0.10)


Weighted average common shares outstanding

Basic 28,170,056 5,578,098 28,155,982 4,219,142

Diluted 28,170,056 5,578,098 28,155,982 4,260,995

Outstanding shares 28,194,165 9,139,328 28,194,165 9,139,328
----------------------------------------------- ------------------------
----------------------------------------------- ------------------------


Caribou Resources Corp.
Statements of Cash Flows
For the periods ended June 30, 2005
(unaudited)

Three months ended Six months ended
June 30 June 30
2005 2004 2005 2004
----------------------------------------------- ------------------------
Cash provided by (used in):

OPERATING
Net loss for
the period $ (970,428)$ (140,124) $(2,206,152)$ (431,757)
Add (deduct) items
not affecting cash:

Depletion and
depreciation 4,511,315 728,845 8,564,131 1,146,290

Non-controlling
interest - (100,796) - (145,961)

Stock-based
compensation 141,199 48,000 278,534 98,000

Interest accretion - 90,011 - 180,022

Accretion 65,330 12,114 127,468 19,685

Interest accrued
on notes payable - 54,032 - 145,087

Future income taxes (361,694) (169,000) (711,355) (346,046)
----------------------------------------------- ------------------------

Cash flow from
operations 3,385,722 523,082 6,052,626 665,320

Change in non-cash
working capital 2,420,918 (3,525,801) 3,360,739 (1,213,624)
----------------------------------------------- ------------------------

5,806,640 (3,002,719) 9,413,365 (548,304)
----------------------------------------------- ------------------------

FINANCING

Bank debt 1,434,247 4,499,557 6,671,294 4,842,038

Repayment of
notes payable - (4,724,327) - (4,724,327)

Issue of common
shares, net
of costs 55,350 5,278,579 119,059 5,801,904
----------------------------------------------- ------------------------

1,489,597 5,053,809 6,790,353 5,919,615
----------------------------------------------- ------------------------

INVESTING

Cash acquired on
purchase of Rainmaker
Ventures Ltd. - 1,709,926 - 1,709,926

Property, plant
and equipment (2,184,322) (1,511,016) (15,938,967)(11,548,543)

Change in non-cash
working capital (5,111,915) (2,250,000) (264,751) 373,000
----------------------------------------------- ------------------------

(7,296,237) (2,051,090) (16,203,718) (9,465,617)
----------------------------------------------- ------------------------

Decrease in cash - - - (4,094,306)

Cash, beginning
of period - - - 4,094,306
----------------------------------------------- ------------------------

Cash, end of period $ - $ - $ - $ -
----------------------------------------------- ------------------------
----------------------------------------------- ------------------------

Supplementary disclosure
Cash interest paid $ 123,408 $ 25,341 $ 226,490 $ 33,847
Cash taxes paid $ - $ 12,362 $ - $ 17,363
----------------------------------------------- ------------------------
----------------------------------------------- ------------------------


Corporate Information

Directors Officers

Gerald D. Sutton, Chairman Christina M. Fehr, BA, MSc
Oakville, Ontario Vice Chairman and CEO

Christina M. Fehr, BA, MSc Ross Robertson, P.Eng
Calgary, Alberta President and COO

Ross G. Robertson, P.Eng Giles Twogood, CA (SA)
Calgary, Alberta Vice President and CFO

Gordon Robertson, P.Geol Douglas Patterson, P.Land
Calgary, Alberta Vice President, Land

Donald J. Rowden, CA Donald Leitch, P.Eng
Bend, Oregon Vice President, Operations

Registrar and transfer agent Daniel P.E. Fournier, LLB
Valiant Trust Company Corporate Secretary
Calgary, Alberta
Corporate Office
Auditors 1545, 101 - 6th Avenue S.W.
PricewaterhouseCoopers LLP Calgary, Alberta T2P 3P4
Calgary, Alberta Phone: (403) 269-5218
Fax: (403) 269-5221
Evaluation Engineers Website: www.cariboures.com
McDaniel & Associates Consultants Ltd. Contact: Christina M. Fehr
Email: cmfehr@cariboures.com
Banker
Canadian Imperial Bank of Commerce Stock Exchange Listing
TSX Venture Exchange
Legal Counsel Symbol: CBU
Blake, Cassels & Graydon LLP
Gowling Lafleur Henderson LLP



Caution to the Reader

Certain information regarding the Company contained herein may constitute forward-looking statements under applicable securities laws. Such statements are subject to known or unknown risks and uncertainties that may cause actual results to differ materially from those anticipated or implied in the forward-looking statements. The risks, uncertainties and other factors that could influence actual results are described in the Company's annual reports to the shareholders and other documents filed with regulatory authorities.

Contact Information

  • Caribou Resources Corp.
    Christina M. Fehr
    Chief Executive Officer & Vice Chairman
    (403) 269-5218
    or
    Caribou Resources Corp.
    Ross Robertson
    President & COO
    (403) 269-5218
    or
    Caribou Resources Corp.
    Suite 1545, 101- 6 Ave SW,
    Calgary, Alberta, T2P 3P4