Kick Energy Corporation

Kick Energy Corporation

March 21, 2005 17:04 ET

Kick Locks in 2005 Growth with New Finds


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: KICK ENERGY CORPORATION

TSX SYMBOL: KEC

MARCH 21, 2005 - 17:04 ET

Kick Locks in 2005 Growth with New Finds

CALGARY, ALBERTA--(CCNMatthews - March 21, 2005) -

All results are expressed in Canadian dollars.

Kick Energy Corporation (TSX:KEC) is pleased to report an exceptional
year of growth in 2004. Success with the drill bit combined with strong
commodity prices resulted in record revenues for the year. Cash flow
increased 70% from $14 million in 2003 to $24 million in 2004.
Production increased by 60% to average 2,585 boe/day and the price
received for each boe increased by 15% over 2003, to average $46.92.
Kick's production growth was attained despite a longer than expected
plant turnaround in 2004 and a five week disruption in production due to
a pipeline failure. All production growth was through the drill bit
which is indicative of the potential to find new reserves in the Brazeau
area. Kick's goal is to grow average production again in 2005 by over
50%.

Kick focused its drilling on exploration by drilling nine exploration
wells and three development wells. All of these wells were operated by
Kick and drilled in the Brazeau area except one (0.2 net), which was
drilled in the Ricinus area. Ten of the wells targeted the Nisku
formation with seven finding hydrocarbon bearing reef, of which two
proved to be uneconomic. Drilling two of the exploration wells resulted
in Kick earning interests in over 10,000 net acres of land. This
accounted for half of the increase in undeveloped land acreage from
33,130 net acres in 2003 to 52,436 net acres in 2004. On the development
side, Kick drilled one Rock Creek well in the Brazeau area and
recompleted two Nisku wells in both the Rock Creek and Ostracod zones.

Two of the new Nisku wells, in the immediate "T" pool area, were brought
on stream in mid November at a rate of approximately 1,800 boe/day and a
third Nisku well, offsetting "AA" pool, began producing in mid February
2005 at 300 boe/day. Kick has also completed and equipped three (2.2
net) Rock Creek wells. These wells are on production at approximately
110 boe/d, net to Kick. Three (2.5 net) additional uphole completions
are expected to be on stream by the end of the first quarter of 2005.
Production from Kick's new Nisku oil pool continues to be intermittent.
A compressor was installed in the first quarter of 2005 to ensure
continuous operations by allowing the flow line to be operated at lower
pressure to avoid hydrates.

Capital expenditures in 2004 totalled $35.4 million, up 40% from 2003.
Future drilling prospects were secured through land and seismic
expenditures of $6.2 million. Kick's undeveloped land base increased 58%
over the previous year to total 52,436 net acres. Kick's undeveloped
land was evaluated at $18.9 million at year end by an independent land
company.

At year end, total debt including working capital deficiency was $17.4
million, 0.7 times 2004 cash flow. The capital budget for 2005 is
currently set at $50 million and includes the drilling of 13 to 15 Nisku
tests. The expenditures will be funded with cash flow and additional
bank debt. Kick maintains a conservative approach to debt by not
exceeding a debt to annualized cash flow ratio of 1:1 based on estimated
current year cash flow.

Kick has two years of Nisku drilling locations in front of it and
continues to add to its prospect inventory. In 2004, Kick shot seismic
offsetting its 30 kilometre Rat Creek Pipeline and several attractive
reef structures have since been identified. Drilling of these prospects
will take place over the next two years with two wells scheduled for the
first half of 2005. Wells offsetting "T" pool and "AA" pool will also be
drilled prior to break-up.

In the last three years, Kick has raised capital of less than $15
million while increasing production from 90 boe/d to over 3,500 boe/d.
This success has created an entity that can support a capital program of
$50 million in 2005.

The Special and Annual Meeting of shareholders will be held at 3:00 p.m.
(local time) on Wednesday, April 27th, 2005 in the Great Room #3 of the
Sandman Hotel located at 888 - 7th Avenue, S.W., Calgary, Alberta. All
shareholders are encouraged to attend.



Proved Reserve Reconciliation

Light & Medium Oil Natural Gas
------------------------------------------------------------------------
Gross (1) Net (2) Gross (1) Net (2)
(mbbls) (mbbls) (bcf) (bcf)
------------------------------------------------------------------------
------------------------------------------------------------------------
Reserves at Dec. 31, 2003 17 16 12.9 9.0
Extensions - - 2.5 1.8
Technical revisions 378 315 (2.1) (1.4)
Discoveries 45 16 3.0 2.1
Production (15) (11) (2.6) (1.9)
------------------------------------------------------------------------
Reserves at Dec. 31, 2004 425 336 13.7 9.6
------------------------------------------------------------------------
------------------------------------------------------------------------


NGL's Total Reserves
------------------------------------------------------------------------
Gross (1) Net (2) Gross (1) Net (2)
(mbbls) (mbbls) (mboe) (mboe)
------------------------------------------------------------------------
------------------------------------------------------------------------
Reserves at Dec. 31, 2003 1,299 870 3,469 2,385
Extensions 368 265 778 560
Technical revisions 456 313 476 400
Discoveries 371 259 921 624
Production (499) (365) (946) (693)
------------------------------------------------------------------------
Reserves at Dec. 31, 2004 1,995 1,342 4,698 3,276
------------------------------------------------------------------------
------------------------------------------------------------------------

(1) Gross reserves are the Company's working interest share before the
deduction of royalties.
(2) Net reserves are the Company's working interest share after the
deduction of royalties.


Proved Plus Probable Reserve Reconciliation

Light & Medium Oil Natural Gas
------------------------------------------------------------------------
Gross (1) Net (2) Gross (1) Net (2)
(mbbls) (mbbls) (bcf) (bcf)
------------------------------------------------------------------------
------------------------------------------------------------------------
Reserves at Dec. 31, 2003 163 148 17.9 12.4
Extensions - - 3.8 2.7
Technical revisions 364 298 (1.8) (0.9)
Discoveries 66 20 3.6 2.4
Production (15) (11) (2.6) (1.9)
------------------------------------------------------------------------
Reserves at Dec. 31, 2004 578 454 20.8 14.8
------------------------------------------------------------------------
------------------------------------------------------------------------


NGL's Total Reserves
------------------------------------------------------------------------
Gross (1) Net (2) Gross (1) Net (2)
(mbbls) (mbbls) (mboe) (mboe)
------------------------------------------------------------------------
------------------------------------------------------------------------
Reserves at Dec. 31, 2003 1,703 1,145 4,842 3,359
Extensions 519 374 1,145 824
Technical revisions 603 395 674 549
Discoveries 430 299 1,091 725
Production (499) (365) (946) (693)
------------------------------------------------------------------------
Reserves at Dec. 31, 2004 2,756 1,848 6,806 4,764
------------------------------------------------------------------------
------------------------------------------------------------------------


(1) Gross reserves are the Company's working interest share before the
deduction of royalties.
(2) Net reserves are the Company's working interest share after the
deduction of royalties.


Balance Sheets

As at December 31,
($ thousands) 2004 2003
------------------------------------------------------------------------
------------------------------------------------------------------------
(Restated
- Note 4)
Assets
Current
Cash and cash equivalents - 1,821
Accounts receivable 6,632 5,209
Prepaid expenses 59 34
------------------------------------------------------------------------
Total current assets 6,691 7,064

Property and equipment (Note 2) 75,111 51,920
------------------------------------------------------------------------
Total assets 81,802 58,984
------------------------------------------------------------------------
------------------------------------------------------------------------

Liabilities
Current
Accounts payable and accrued liabilities 16,367 14,333
Production loan (Note 3) 7,725 -
------------------------------------------------------------------------
Total current liabilities 24,092 14,333

Asset retirement obligation (Note 4) 2,352 1,593
Future income tax liability (Note 5) 13,943 10,068
------------------------------------------------------------------------
Total liabilities 40,387 25,994
------------------------------------------------------------------------

Shareholders' Equity
Share capital (Note 6) 24,983 23,875
Contributed surplus (Note 6) 2,215 1,947
Retained earnings 14,217 7,168
------------------------------------------------------------------------
Total shareholders' equity 41,415 32,990
------------------------------------------------------------------------
Total liabilities and shareholders' equity 81,802 58,984
------------------------------------------------------------------------
------------------------------------------------------------------------


Statements of Operations and Retained Earnings

For the years ended December 31,
($thousands except per share amounts) 2004 2003
------------------------------------------------------------------------
------------------------------------------------------------------------
(Restated
- Note 4)
Revenue
Oil sales 826 165
Natural gas sales 18,229 11,457
Natural gas liquids sales 25,343 12,203
Other 126 132
Royalty expense (11,908) (4,721)
Alberta royalty tax credit 500 500
------------------------------------------------------------------------
33,116 19,736
------------------------------------------------------------------------
Expenses
Operating 7,521 4,393
General and administrative (Note 6) 1,515 1,193
Depletion and depreciation 12,793 5,192
Accretion of asset retirement
obligation (Note 4) 184 125
Interest 130 -
------------------------------------------------------------------------
22,143 10,903
------------------------------------------------------------------------
Earnings before income taxes 10,973 8,833
Provision for current income taxes 47 96
Provision for future income taxes (Note 5) 3,877 2,430
------------------------------------------------------------------------
Net earnings 7,049 6,307
Retained earnings, beginning of year
As previously stated 7,168 1,210
Retroactive adjustment for change
in accounting policy (Note 4) - (349)
------------------------------------------------------------------------
Retained earnings, end of year 14,217 7,168
------------------------------------------------------------------------
------------------------------------------------------------------------
Net earnings per share (Note 7)
Basic 0.17 0.15
Diluted 0.16 0.15
------------------------------------------------------------------------
Weighted average Common Shares outstanding
Basic 42,521,099 41,935,492
Diluted 44,360,449 42,687,390
------------------------------------------------------------------------
------------------------------------------------------------------------

Statements of Cash Flows

For the years ended December 31,
($ thousands except per share amounts) 2004 2003
------------------------------------------------------------------------
------------------------------------------------------------------------
(Restated
- Note 4)
Cash flows related to the following activities:
Operating activities
Net earnings 7,049 6,307
Items not requiring cash
Depletion and depreciation 12,793 5,192
Accretion of asset retirement obligation 184 125
Provision for future income taxes (Note 5) 3,877 2,430
Employee stock option expense (Note 6) 269 117
Donation of used office equipment 2 -
------------------------------------------------------------------------
24,174 14,171
Changes in non-cash operating working capital 1,006 (1,468)
------------------------------------------------------------------------
Cash provided by operating activities 25,180 12,703
------------------------------------------------------------------------
Financing activities
Proceeds from issue of shares, net of costs 1,106 1,276
Increase in production loan 7,725 -
------------------------------------------------------------------------
Cash provided by financing activities 8,831 1,276
------------------------------------------------------------------------
Investing activities
Additions to property and equipment (35,413) (25,231)
Changes in non-cash investing working capital (419) 5,738
------------------------------------------------------------------------
Cash used in investing activities (35,832) (19,493)
------------------------------------------------------------------------
Net cash inflow (1,821) (5,514)
Cash and cash equivalents, beginning of year 1,821 7,335
------------------------------------------------------------------------
Cash and cash equivalents, end of year - 1,821
------------------------------------------------------------------------
------------------------------------------------------------------------
Supplemental disclosure of cash flow information:
Interest paid 130 -
Income taxes paid 47 96
------------------------------------------------------------------------
------------------------------------------------------------------------


Corporate Highlights
Three months ended Year ended
December 31, December 31, December 31, December 31,
2004 2003 2004 2003
------------------------------------------------------------------------
------------------------------------------------------------------------
Financial
($thousands, except
per share amounts)
Revenue, before
royalties 14,167 5,793 44,524 23,957
Revenue, net
of royalties 10,219 4,736 33,116 19,736
Cash flow from
operations (1) 7,872 3,065 24,174 14,171
Per Common Share
- basic 0.19 0.07 0.57 0.34
Per Common Share
- diluted 0.18 0.07 0.54 0.33
Net earnings 2,543 (243) 7,049 6,307
Per Common Share
- basic 0.06 (0.01) 0.17 0.15
Per Common Share
- diluted 0.06 (0.01) 0.16 0.15
Capital
expenditures 10,515 10,255 35,413 25,231
Working capital
deficiency 9,676 7,269
Bank debt 7,725 -
Common Shares
outstanding
(millions) 42.8 42.5
Operating
Average daily
production
Light and
medium oil (bbls/d) 99 47 42 12
Natural gas (mcf/d) 7,268 5,156 7,085 4.491
NGL (bbls/d) 1,737 780 1,363 840
Barrels of oil
equivalent (boe/d) 3,047 1,686 2,585 1,600
Average prices
Light and medium
oil ($/bbl) 56.39 38.21 54.27 38.21
Natural gas ($/mcf) 7.03 6.07 7.03 6.99
NGL ($/bbl) 55.85 37.86 50.81 39.82
Barrels of oil
equivalent ($/boe) 50.43 37.13 46.92 40.80
Wells drilled
Gross 2 3 12 8
Net 2.0 2.7 10.2 7.2
Gross reserves
- proved plus
probable (2)
Light and medium
oil (mbbls) 574 161
Natural gas (bcf) 20.8 17.8
NGL (mbbls) 2,756 1,703
Barrels of oil
equivalent (mboe) 6,795 4,836
Net reserves - proved
plus probable (3)
Light and medium
oil (mbbls) 454 148
Natural gas (bcf) 14.8 12.4
NGL (mbbls) 1,848 1,145
Barrels of oil
equivalent (mboe) 4,764 3,359
Undeveloped land
(net acres) 52,436 33,130
------------------------------------------------------------------------
------------------------------------------------------------------------
(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.
(2) Gross reserves are the Company's working interest share before the
deduction of royalties.
(3) Net reserves are the Company's working interest share after the
deduction of royalties.


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

-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Kick Energy Corporation
    Timothy T. Hunt
    President & CEO
    (403) 262-9801
    (403) 264-3268 (FAX)
    Email: info@kickenergy.com
    Website: www.kickenergy.com