Zapata Energy Corporation

Zapata Energy Corporation

November 24, 2009 09:00 ET

Zapata Energy Corporation: Third Straight Quarter of Improved Cash Flow and Net Income

CALGARY, ALBERTA--(Marketwire - Nov. 24, 2009) - ZAPATA ENERGY CORPORATION (TSX VENTURE:ZCO) is pleased to report its financial and operational results for the third quarter and nine months ended September 30, 2009. The Corporation's financial performance continued its quarter to quarter improvement with third quarter cash flow from operations jumping 37 percent to $4.8 million for the quarter. Achievements during the quarter were as follows: 

  • Cash flow of $4.8 million ($0.29/share) for the third quarter of 2009
  • Realized netback of $28.05 per boe and cash flow of $21.06 per boe
  • Profit of $843,977
  • Production of 2,478 boe per day 58 percent oil and NGL
  • 10 well oil drilling program initiated in September, 2009 with nine wells completed for oil
  • Silver Lloydminster waterflood fully operational
  • Significant reserves additions expected as a result of drilling, waterflood and improving production efficiency
 Three months ended September 30 Nine months ended September 30 
 2009 2008 Change 2009 2008 Change 
FINANCIAL (Thousands unless otherwise noted)            
Gross revenue$10,751 $21,282 (49%) $30,650 $55,202 (44%) 
Cash flow from operations4,800 10,081 (52%) 12,172 26,350 (54%) 
  Per share (basic)0.29 0.59 (51%) 0.73 1.54 (53%) 
  Per share (diluted)0.29 0.58 (51%) 0.73 1.53 (52%) 
Net income (loss)844 5,649 (85%) (2,0918,182 (126%) 
  Per share (basic)0.05 0.33 (85%) (0.130.48 (126%) 
  Per share (diluted)0.05 0.33 (85%) (0.130.47 (126%) 
Capital expenditures2,968 8,669 (66%) 12,735 23,845 (47%) 
Bank debt46,800 36,500 2846,800 36,500 28
Bank debt and working capital deficit49,449 42,053 1849,449 42,053 18
Shares outstanding (weighted average)            
  Basic16,667 17,049 (2%) 16,677 17,134 (3%) 
  Diluted16,736 17,251 (3%) 16,677 17,246 (3%) 
OPERATIONAL (before realized derivative gain/loss)            
Natural gas sales (mcf/d)6,295 9,932 (37%) 7,031 9,049 (22%) 
  Average sales price ($/mcf)4.13 8.06 (49%) 4.38 8.58 (49%) 
  Field netback ($/mcf)2.46 3.57 (31 %) 2.05 4.47 (54%) 
Oil sales (bbls/d)1,315 1,099 201,297 1,117 16
  Average sales price ($/bbl)65.17 109.35 (40%) 56.25 100.64 (44%) 
  Field netback ($/bbl)38.81 63.26 (39 %) 30.75 59.38 (48%) 
NGL sales (bbls/d)113 297 (62%) 134 216 (38%) 
  Average sales price ($/bbl)45.47 125.97 (64%) 40.50 103.54 (61%) 
  Field netback ($/bbl)26.34 90.78 (71%) 22.56 76.41 (70%) 
Total sales (boe/d 6:1)2,478 3,052 (19%) 2,603 2,841 (8 %) 
  Average sales price ($/boe)47.17 77.89 (39%) 41.95 74.76 (44%) 
  Field netback ($/boe)28.05 43.25 (35%) 22.03 43.40 (49%) 
Realized derivative gain/loss ($/boe)- (2.081001.18 (3.86130
*Average sales price ($/boe)47.17 75.81 (38%) 43.13 70.90 (39%) 
*Netback ($/boe)28.05 41.16 (32%) 23.21 39.55 (41%) 
 * Includes realized gain (loss) on financial derivatives

Zapata Energy Corporation ("Zapata") is pleased to report a very positive and successful third quarter. Rebounding oil prices and increased oil production provided the Corporation with its third consecutive quarterly increase in cash flow. Third quarter cash flow at $4.8 million was 37 percent higher than that recorded in the second quarter. This equates to a netback of $28.05 per boe and a cash flow generating capability of $21.06 per boe. This financial performance also resulted in a $843,977 profit for the corporation. The Silver Waterflood was fully implemented in late September and is currently showing positive responses with a noticeable increase in production.

The Corporation's current strength is in its oil resource and the strength of oil prices. Field netbacks for oil in the third quarter were $38.81 per bbl which was 2.5 times greater than the $14.76 per boe received for natural gas. Zapata's balanced production base between oil and natural gas continues to provide consistent financial performance at times when one commodity is much weaker than the other. In the third quarter oil and NGL sales accounted for 58 percent of production and contributed 78 percent of the Corporate field netback.

The 10 well drilling program resulted in nine oil wells which are achieving production rates better than initial estimates. Meanwhile costs to drill and tie-in are under budget. As an added benefit, the Alberta drilling credits and royalty incentives have enhanced the economics for drilling in Zapata's core East Central Alberta oil resource area. The success to date has encouraged the Corporation to expand the program by an additional 5 wells for immediate drilling if approvals can be obtained on a timely basis.

Although the current market is testing the industry's ability to thrive, Zapata's core oil resource assets provide the ideal opportunity to provide major value increments to the Corporation.

Zapata is a junior oil and gas production company operating in western Canada and trades on the TSX Venture Exchange under the symbol "ZCO".

This press release may include forward‐looking statements which are statements other than of historical fact, such as information regarding drilling potential and production forecasts. Factors that could cause actual results to differ materially from our expectations include exploration and development risks, commodity prices and operating hazards. A barrel of oil equivalent (boe), derived by converting gas to oil in the ratio of six thousand cubic feet of gas to one barrel of oil, may be misleading, particularly if used in isolation. A boe conversion is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. The term "cash flow from operations" which is expressed before changes in non-cash working capital, is used by the Corporation to analyze operating performance, leverage and liquidity. The term "field netback" is also used by the Corporation to analyze performance. Field netback is calculated by deducting from revenue the amount related to royalties, operating costs and transportation. These terms do not have any standardized meaning prescribed by GAAP and therefore might not be comparable with the calculation of a similar measure for other companies. The reconciliation between net earnings and cash flow from operations can be found in the consolidated statements of cash flows in the consolidated financial statements.

The TSX Venture Exchange has neither approved nor disapproved of the information contained herein.

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