Kick Energy Corporation
TSX : KEC

Kick Energy Corporation

November 10, 2005 17:23 ET

CORRECTION FROM SOURCE:Kick Finds New Oil Reserves

CALGARY, ALBERTA--(CCNMatthews - Nov. 10, 2005) -

Please note that in the press release sent on Nov. 10th at 16:05 ET there were two errors:

In the second paragraph the sentence that read, "Production from the Brazeau area was flat compared to the third quarter 2005..." should have read "Production from the Brazeau area was flat compared to the second quarter 2005..."

In the third paragraph the sentence that read, "Three Nisku wells were drilled in the second quarter resulting..." should have read "Three Nisku wells were drilled in the third quarter resulting..."

The complete and corrected version follows.

All results are expressed in Canadian dollars.

Kick Energy Corporation (TSX:KEC) is pleased to report on operations for the period ended September 30, 2005. Production for the quarter was up 29% to 3,093 boe/d compared to the same period in 2004. Increased production and higher commodity prices resulted in cash flow of $9.4 million, up 83% compared to the third quarter of 2004. Earnings were $3.9 million, up 251% compared to the same period a year ago. Capital spending was $14 million for the quarter while debt remained relatively flat at $22.3 million.

Production from the Brazeau area was flat compared to the second quarter 2005 mainly due to operational challenges including, wet weather conditions, construction and start up delays, as well as some downtime. Operating highly sour Nisku gas and oil wells is complex and requires specialized equipment and skilled personnel. Long lead times for equipment along with impassable roads for equipment moves contributed to lengthy delays in projects, some up to three months. New wells were brought on stream during the quarter, however, production from some existing wells was restricted due to facility bottle necks. Kick's high working interest in its wells along with the typical high productivity of these wells increases the impact that downtime and production delays have on forecasted volumes. Production increases from new wells and facility upgrades are now expected in the first quarter of 2006 rather than the fourth quarter of 2005.

Three Nisku wells were drilled in the third quarter resulting in one Nisku gas well and two cased Nisku wells which are expected to be oil in nature. Of the last five wells drilled all have been cased for Nisku production with an average working interest of 96%. Tie in into existing infrastructure is expected in the first quarter of 2006. Kick expects to drill two additional Nisku tests prior to year end. Due to delays in well licencing in the Pembina area, a second drilling rig was released in October. One licence has now been issued and two are expected shortly. Kick will again accelerate its drilling program when a second rig becomes available.

Installation of field compression at "T" and "KK" pool will be complete in mid November. This will facilitate the production from both gas and oil pools in the immediate area. Production has been intermittent due to the different flow capability of wells and compression is expected to remedy this situation. Pipeline construction from Kick's Pembina oil discovery is expected to be complete by year end. The drilling of two development wells offsetting this discovery is awaiting well licence approval.

Kick continues to acquire land through farm-ins and crown land sales. A Nisku test is currently being drilled on expiring acreage to earn a 100% interest in four sections of land. Kick spent $1 million on a section of land in the Edson area to complement a multi-section farm-in and has committed to drill a 100% working interest, 3,800m, Ireton test. Kick's focus is to find new reserves through exploration.



Balance Sheets
($thousands)

Sept 30, December 31,
(Unaudited) 2005 2004
------------------------------------------------------------------------
------------------------------------------------------------------------
Assets
Current
Accounts receivable 8,830 6,632
Prepaid expenses 104 59
------------------------------------------------------------------------
Total current assets 8,934 6,691

Property and equipment (Note 2) 99,376 75,111
------------------------------------------------------------------------
Total assets 108,310 81,802
------------------------------------------------------------------------
------------------------------------------------------------------------

Liabilities
Current
Accounts payable and accrued
liabilities 22,651 16,367
Production loan (Note 3) 8,627 7,725
------------------------------------------------------------------------
Total current liabilities 31,278 24,092

Asset retirement obligation (Note 4) 3,314 2,352
Future income tax liability 18,710 13,943
------------------------------------------------------------------------
Total liabilities 53,302 40,387
------------------------------------------------------------------------

Shareholders' Equity
Share capital (Note 5) 26,694 24,983
Contributed surplus (Note 5) 3,121 2,215
Retained earnings 25,193 14,217
------------------------------------------------------------------------
Total shareholders' equity 55,008 41,415
------------------------------------------------------------------------
Total liabilities and shareholders'
equity 108,310 81,802
------------------------------------------------------------------------
------------------------------------------------------------------------

Statements of Operations and Retained Earnings
($thousands, except per share amounts)

Three months ended Nine months ended
Sept 30, Sept 30,
(unaudited) 2005 2004 2005 2004
------------------------------------------------------------------------
------------------------------------------------------------------------
Revenue
Oil sales 635 257 1,784 312
Natural gas sales 7,604 4,093 18,551 13,530
Natural gas
liquids sales 10,962 5,879 34,253 16,417
Other 33 19 93 99
Royalty expense
(net of ARTC) (5,123) (3,129) (14,975) (7,461)
------------------------------------------------------------------------
14,111 7,119 39,706 22,897
------------------------------------------------------------------------
Expenses
Operating 2,391 1,742 6,449 5,654
General and
administrative 668 271 1,779 1,030
Depletion and
depreciation 4,213 2,902 12,654 8,953
Accretion of asset
retirement obligation 72 51 193 119
Interest 83 41 224 72
------------------------------------------------------------------------
7,427 5,007 21,299 15,828
------------------------------------------------------------------------
Earnings before
income taxes 6,684 2,112 18,407 7,069
Provision for current
income taxes 2,008 (20) 3,061 14
Provision for future
income taxes 763 1,018 4,370 2,550
------------------------------------------------------------------------
Net earnings 3,913 1,114 10,976 4,505
Retained earnings,
beginning of period 21,280 10,559 14,217 7,168
------------------------------------------------------------------------
Retained earnings,
end of period 25,193 11,673 25,193 11,673
------------------------------------------------------------------------
------------------------------------------------------------------------

Net earnings per share
(Note 6)
Basic 0.09 0.03 0.25 0.11
Diluted 0.09 0.03 0.25 0.10
------------------------------------------------------------------------
Weighted average Common
Shares outstanding (Note 6)
Basic 44,391,094 42,514,574 43,774,550 42,514,574
Diluted 45,479,531 44,348,787 44,798,827 44,094,959
------------------------------------------------------------------------
------------------------------------------------------------------------


Statements of Cash Flows
($ thousands)
Three months ended Nine months ended
Sept 30, Sept 30,
(unaudited) 2005 2004 2005 2004
------------------------------------------------------------------------
------------------------------------------------------------------------

Cash flows related to the
following activities:

Operating activities
Net earnings 3,913 1,114 10,976 4,505
Items not requiring cash
Depletion and depreciation 4,213 2,902 12,654 8,953
Accretion of asset retirement
obligation 72 51 193 119
Provision for future income
taxes 763 1,018 4,370 2,550
Employee stock option expense
(Note 5) 475 58 914 175
------------------------------------------------------------------------
9,436 5,143 29,107 16,302
Changes in non-cash operating
working capital (1,609) (684) (115) 2,153
------------------------------------------------------------------------
Cash provided by operating
activities 7,827 4,459 28,992 18,455
------------------------------------------------------------------------

Financing activities
Proceeds from issue of
shares, net of costs 244 - 2,101 (2)
Increase (decrease) in
production loan 1,673 1,144 902 3,363
------------------------------------------------------------------------
Cash provided by financing
activities 1,917 (1,144) 3,003 3,361
------------------------------------------------------------------------

Investing activities
Additions to property and
equipment (14,023) (12,000) (36,152) (24,897)
Changes in non-cash investing
working capital 4,279 8,685 4,157 1,260
------------------------------------------------------------------------
Cash used in investing
activities (9,744) (3,315) (31,995) (23,637)
------------------------------------------------------------------------
Net cash inflow (outflow) - - - (1,821)
Cash position, beginning
of period - - - 1,821
------------------------------------------------------------------------

Cash position, end of period - - - -

------------------------------------------------------------------------
------------------------------------------------------------------------
Supplemental disclosure of
cash flow information:
Interest 83 41 224 72
Cash taxes 2,008 (20) 3,061 14

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


Quarterly Highlights

Three months ended Sept 30, June 30, Sept 30,
2005 2005 2004
------------------------------------------------------------------------
------------------------------------------------------------------------
Financial
($thousands, except per
share amounts)
Revenue, before royalties 19,234 16,512 10,248
Revenue, net of royalties 14,111 11,261 7,119
Cash flow from operations (1) 9,436 7,650 5,143
Per Common Share - basic 0.21 0.17 0.12
Per Common Share - diluted 0.21 0.17 0.12
Net earnings 3,913 2,134 1,114
Per Common Share - basic 0.09 0.05 0.03
Per Common Share - diluted 0.09 0.05 0.03
Capital expenditures 14,023 10,915 12,000
Working capital deficiency 13,717 11,048 12,504
Bank debt 8,627 6,953 3,363
Common Shares outstanding (millions) 44.8 44.4 42.5

Operating
Average daily production
Light and medium oil (bbls/d) 93 98 51
Natural gas (mcf/d) 8,033 7,688 6,684
NGL (bbls/d) 1,661 1,768 1,237
Barrels of oil equivalent (boe/d) 3,093 3,148 2,402
Average prices
Light and medium oil ($/bbl) 74.32 63.50 55.14
Natural gas ($/ mcf) 10.29 8.09 6.66
NGL ($/bbl) 71.72 63.69 51.64
Barrels of oil equivalent ($/boe) 67.48 57.52 46.29
Wells drilled
Gross 3 3 5
Net 3.0 2.0 4.0
------------------------------------------------------------------------
------------------------------------------------------------------------
(1) Cash flow from operations is a non-GAAP measurement. Management
uses cash flow from operations (before changes in non-cash working
capital) to analyze operating performance and leverage. Cash flow
from operations as presented does not have any standardized meaning
prescribed by Canadian GAAP and therefore it may not be comparable
with the calculation of similar measures for other entities. Cash
flow as presented is not intended to represent operating cash flow
or operating profits for the period nor should it be viewed as
an alternative to cash flow from operating activities, net earnings
or other measures of financial performance calculated in accordance
with Canadian GAAP. All references to cash flow from operations
throughout this report are based on cash flow before changes in
non-cash working capital.


Units of natural gas have been converted into barrel of oil equivalents ("boe") at a ratio of six thousand cubic feet of natural gas to one barrel of oil. Boe's may be misleading, particularly if used in isolation. A boe conversion rate of 6 mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.


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