Drilcorp Energy Ltd.

Drilcorp Energy Ltd.

August 29, 2005 17:03 ET

Drilcorp Releases Q2 2005 Results and Corporate Update

CALGARY, ALBERTA--(CCNMatthews - Aug. 29, 2005) - Drilcorp Energy Ltd. (TSX VENTURE:DCL) ("Drilcorp") has released its financial and operating results for the six month period ended June 30,2005.

Drilcorp's first half 2005 was highlighted by the lead-up to a contested shareholder meeting, culminating in a change in the Board of Directors on April 4, 2005. The Company incurred just over $1.9 million in meeting costs relating to this special shareholders meeting. These expenses greatly impacted first half cash flow and income. Removing these one time costs results in first half 2005 normalized cash flow of $1.8 million, and pre-tax earnings of $0.2 million. Now that the shareholder dispute is resolved, normalized operations will allow Drilcorp to generate positive cash flow and earnings, given the positive commodity price environment.

HIGHLIGHTS Six Months Ended June 30
2005 2004
Production and Prices
Natural gas sales (mcfd) 1,776 1,733
Oil and NGL sales (bpd) 191 173
Average daily sales 6:1 (boepd) 486 462
Average natural gas price ($/mcf) 7.35 6.83
Average oil price ($/bbl) 59.41 40.62

Financial ($)
Oil and gas revenue 4,279,340 3,323,445
Cash flow from operations (129,728) 1,059,835
Net income (loss) (1,327,308) 164,408

Drilcorp reports that its current production is in excess of 600 boepd. Production and sales for the first half 2005 fluctuated with an average of 486 boepd (485 boepd for the three months ended June 30, 2005) as the Company experienced production disruptions related to equipment installation, commissioning and maintenance activities. In June of 2005, the Company had a pipeline break, in the Jayar field, resulting in 20 days lost production amounting to 70 boepd of lost production averaged over the three-month period ended June 30, 2005. In April and May 2005 the Company experienced compressor breakdowns, in the Jayar field, resulting in a total of 10 days lost production for the field. During the period there were additional equipment and processing disruptions affecting the periods overall production performance. The Company also reports that the pipeline break in the Jayar field did not cause any environmental issues, and that it was repaired with full production restored by July 10, 2005. Third quarter results will be impacted by 10 days of lost production from the field.

The Company reports that it has recently approved a capital budget committing the Company to drill 10 gross (6.5 net) wells and undertake facility improvements, over the next 12 month period at an expected net cost of $7.6 million. Financing for this program will come from a combination of internally generated cash flow and working capital.

The Company reports that Bruce Ryan, Chief Financial Officer, will be leaving the Company effective September 16, 2005. Drilcorp is currently seeking a replacement, and in the interim, Mr. Rick Wlodarczak, CA, will be assuming his duties as the acting Chief Financial Officer. The Board of Directors would like to thank Mr. Ryan for his valuable contribution to the company and the continuity he provided through recent events.

Drilcorp advises that its 2005 second quarter interim report, which includes managements' discussion and analysis in addition to the unaudited financial statements, has been filed and is available on www.sedar.com.

Drilcorp is a Calgary based junior oil and gas company, which explores for, develops, produces and sells crude oil, natural gas liquids and natural gas in Alberta. Drilcorp's common shares trade on the TSX Venture Exchange under the symbol DCL.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this media release.

Contact Information

  • Drilcorp Energy Ltd.
    Rick Wlodarczak
    Managing Director, Corporate
    (403) 264-5453
    Drilcorp Energy Ltd.
    Darrell Brown
    Managing Director, Operations
    (403) 264-5453