Chirripo Resources Inc.
TSX VENTURE : CHO

Chirripo Resources Inc.

August 30, 2005 13:39 ET

Chirripo Resources Inc.: 2005 First Half Results

CALGARY, ALBERTA--(CCNMatthews - Aug. 30, 2005) - Chirripo Resources Inc. (TSX VENTURE:CHO) (the "Company") is pleased to announce its first half results for 2005:

An 18% increase in sales volumes coupled with a 22% increase in field netbacks propelled the Company's cash flow from operations higher by 54% to $1,030,070 for the first six months in 2005 from $667,253 for the same six-month period in 2004. The Company's first half 2005 net earnings declined 11% to $203,736 compared with $229,210 for the same period in 2004 as the Company's non-cash expenses for the first six months of 2005 collectively increased 93% over the same period in 2004. A 22% increase in sales volumes combined with a 25% increase in field netbacks contributed to the Company's cash flow from operations improving 76% to $566,538 for the second quarter of 2005 from $322,323 for the same three-month period in 2004. The Company's second quarter 2005 net earnings increased 70% to $128,142 compared with $75,220 for the comparative period in 2004.

The Company's total revenue climbed 45% to $2,181,646 for the first half of 2005 from $1,507,261 for the comparative period in 2004. Oil and NGL revenues, for the first six months of 2005, increased 98% to $1,148,508 from $579,454 for the same period in 2004 reflecting the combined effect of a 30% increase in average prices realized and a 52% increase in sales volumes. Higher gas prices contributed to natural gas revenues improving 11% to $1,033,138 for the first six months of 2005 from last year's comparative six-month period of $927,807. The Company's total revenue climbed 47% to $1,164,697 for the second quarter 2005 from $793,540 for the comparative period in 2004. Oil and NGL revenues, for the second quarter 2005, increased 94% to $582,856 from $300,322 for the comparative period in 2004 reflecting the combined effect of a 28% increase in average prices realized and a 36% increase in sales volumes. Higher gas prices and increased gas production contributed to natural gas revenues for the second quarter 2005 improving 18% to $581,841 from last year's comparative three-month period of $493,218.

The Company's average oil price increased 30% to $59.01 per bbl in 2005 from $45.36 per bbl in the first half of 2004. Similarly, Chirripo's NGL prices followed suit, increasing 30% to $48.37 per bbl in 2005 from $37.09 per bbl in 2004. As a result, the Company's average price for oil and NGLs increased the same percentage to $58.39 per bbl in 2005 from $44.75 per bbl in 2004. In the first six months of 2005 the Company's average gas price increased 12% to $7.30 per mcf from $6.52 per mcf realized in the same six-month period in 2004. The Company's average oil price increased 28% to $61.28 per bbl in 2005 from $48.02 per bbl in the second quarter of 2004. Chirripo's NGL prices followed suit, increasing 28% to $49.95 per bbl in 2005 from $38.88 per bbl in 2004. As a result, the Company's average price for oil and NGLs rose 28% to $60.66 per bbl in 2005 from $47.27 per bbl in 2004. In the second quarter of 2005 the Company's average gas price increased 10% to $7.47 per mcf from $6.77 per mcf realized in the same three-month period in 2004.

Sales averaged 239 boe per day for the first six months of 2005, an increase of 18% from 203 boe per day in 2004. Oil and NGL sales increased 52% from 71 bbls per day year to date 2004 to 108 bbls per day for the same six-month period in 2005. All of the production gains were generated from the Company's Amigo area. Included in the Company's oil and NGL average sales for the first six months of 2005 is 7 (2004 - 7) bbls per day of NGLs. Natural gas sales decreased marginally, on a year-over-year basis, to 782 mcf per day for the first half of 2005. The flat gas sales were primarily due to production gains at Amigo offsetting declines on the Company's wells at Gordondale and Shekilie. Production averaged 248 boe per day in the second quarter 2005, an increase of 22% from 203 boe per day in 2004. Oil and NGL sales increased 51% from 70 bbls per day for the second quarter 2004 to 106 bbls per day for the same three-month period in 2005. All of the production gains were generated from the Company's Amigo area. Included in the Company's oil and NGL average sales for the second quarter of 2005 is 6 (2004 - 7) bbls per day of NGLs. Natural gas sales increased 7%, on a quarter-over-quarter basis, to 856 mcf per day for the second quarter of 2005. The increase in gas sales was primarily due to production gains at Amigo offset by declines on the Company's wells at Gordondale and Shekilie.

Capital spending net of dispositions decreased by 11% to $1,830,333 for the first half of 2005 from $2,053,019 for the comparative period in 2004. The Company spent 33% of its first half 2005 capital program completing the tie-in of 2.0 (1.0 net) gas wells at Bilawchuk and Amigo with the Bilawchuk well waiting on compression at the end of June. The remainder of the Company's first half 2005 capital program was spent shooting three lines of 2-D seismic at Auger, participating in the successful completion and tie-in of 2.0 (0.1 net) oil wells at Bulwark and an unsuccessful re-entry into one well (net) at Shekilie. The Company's first half 2005 capital expenditure program was funded 56% by cash flow from operations (2004 - 32%), 5% from the issuance of shares (2004 - 68%) and the remainder from an increase in bank debt and working capital. On April 13, 2005 the Company amended its acquisition loan to include a development facility of up to $500,000 to equip and tie-in production and increased the limit of its operating demand loan from $2,400,000 to $3,000,000.



Operational and Financial Highlights

Three Months Ended Six Months Ended
($ thousands except where noted) 2005 2004 2005 2004
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Natural gas sales (mcf/d) 856 800 782 786
Natural gas revenue 582 493 1,033 928
Natural gas price ($/mcf) 7.47 6.77 7.30 6.52
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Oil and NGLs sales (bbls/d) 106 70 108 71
Oil and NGL revenue 583 300 1,149 579
Oil and NGLs price ($/bbl) 60.66 42.27 58.39 44.75
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Total sales (boe/d) (1) 248 203 239 203

Cash flow from operations 567 322 1,030 667
Per share - basic ($) 0.050 0.022 0.092 0.068
Per share - fully diluted ($) 0.049 0.022 0.090 0.065
------------------------------------------------------------------------
Net earnings (loss) 128 75 204 229
Per share - basic ($) 0.011 0.006 0.018 0.023
Per share - fully diluted ($) 0.011 0.006 0.018 0.022
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Capital expenditures - net 571 564 1,830 2,053
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(1) Natural gas converted at 6 mcf per 1 barrel of oil.


Due to wet weather and regulatory permit delays, the booster compressor installed at Bilawchuk has only come on stream during the latter part of August. The gas well, in which Chirripo has a 50% working interest, has flowed intermittently since August 19 at a rate of 750 mcf per day. The flow rate is expected to stabilize at 900 mcf per day once the compressor has been optimized to prevent the formation of hydrates in the gathering system. In addition, the Company has placed on production two (2.0 net) oil wells at Bear Canyon. With the expected stabilized production at Bilawchuk, the Company's total field production is estimated to be 325 boe per day at the end of August.

The Company has licensed a well in Tangent in the Peace River Arch area to the Belloy formation. The well will target three Mannville Sandstones and two Montney Sandstones and is expected to be drilled prior to the end of the third quarter. The Company is proposing a well at McLean's Creek offsetting an older well using 3D seismic to gain structure. The well would target both Gilwood oil and Gething gas.

During the second quarter, the Company's board of directors retained a financial advisor to pursue strategic alternatives to maximize shareholder value. Though no acceptable offers were tendered, Chirripo's management will continue the process of identifying and evaluating potential business combinations.

Shares outstanding: 11,248,768

This News Release Has Been Neither Approved Nor Disapproved by the TSX Venture Exchange.

Contact Information

  • Chirripo Resources Inc.
    Issa Abu-Zahra
    President and Chief Executive Officer
    (403) 261-5858
    or
    Chirripo Resources Inc.
    David A. Dakers
    Secretary and Chief Financial Officer
    (403) 261-5858