First Calgary Petroleums Ltd. Reports Second Quarter Results
TSX: FCP
LSE: FPL
CALGARY, Aug. 10 /CNW/ - First Calgary Petroleums Ltd. is pleased to
report financial results for the six months ended June 30, 2005.
Report to Shareholders
First Calgary Petroleums Ltd. (FCP or the Company) is an independent oil
and gas company actively engaged in exploration and development activities in
Algeria. FCP holds 100% of the foreign company interest in Blocks 405b and
406a situated in the Berkine Basinin the Sahara Desert. The Company's common
shares trade on the Toronto Stock Exchange under the symbol FCP and on the AIM
market of the London Stock Exchange under the symbol FPL.
Following the impressive string of drilling success realized during 2003
and 2004 and the corresponding reserves growth, the Company embarked on a
process to seek and evaluate strategic alternatives regarding the future
development of its proved, probable and possible reserves base. The review
commenced in October 2004 with the retention of financial advisers, Lehman
Brothers and Canaccord Capital (Europe) Limited, and continued through to June
2005. The process generated substantial interest in Ledjmet Block 405b,
ranging from an outright purchase to various joint venture development
proposals.
Participants in the process appeared to base their value assessments on
the proved and probable reserves estimates and were unwilling to pay for the
upside envisioned by FCP in the possible and potential reserves.
Notwithstanding, numerous participants expressed interest in joint venturing
with FCP to further explore, appraise and develop the reserves. However, the
lack of firm, acceptable commitments by the third parties regarding the scope
of development plans and timing prevented a satisfactory agreement from being
reached.
In exploring Block 405b, the Company has been aggressive in spacing out
the exploration wells across the Block in order to assess the reserve
potential of the entire Block. Of the total estimated proved, probable and
possible reserves, approximately two thirds are possible reserves which will
require successful appraisal drilling and completions activities to be
reclassified to proved or probable.
Another consideration in evaluating the strategic alternatives was the
potential "commodity price" upside. FCP remains very bullish with respect to
future oil and gas prices. As at December 31, 2004 when the Company's reserves
and future net revenues were last estimated, the price of oil was $42 per
barrel. It was not viewed prudent to forego the potential future "commodity
price" upside associated with retaining 100% of the reserves in order to
accomplish a quick sale or farm-in arrangement.
In concluding the strategic review process, it was decided the long term
value of the Company's assets would be maximized by FCP continuing on a stand
alone basis to further explore, appraise and develop its Algerian holdings.
While such a strategy involves certain risks operationally and financially in
the short term, the Company believes these risks to be manageable.
Accordingly, the third quarter marks the beginning of a new phase for the
Company. The historical focus has been to explore and see what the reserves
potential for the Algerian blocks could be. This question has largely been
answered by the exploration drilling and 3D seismic. Independent engineers
estimated the gross proved, probable and possible reserves at December 31,
2004 to be 13 trillion cubic feet of natural gas equivalent (Tcfe), of which
FCP's net estimated reserves were 2.1 Tcfe. Of these gross reserve totals,
approximately 12.1 Tcfe or 93% is attributed to Ledjmet Block 405b. Of the
12.1 Tcfe attributed to Block 405b, approximately 3.9 Tcfe is categorized as
proved and probable. The focus and strategy in developing these reserves
include two principal initiatives:
- increase the Company's proved and probable reserves through a
programme of appraisal drilling and completions activities; and
- commercialize Block 405b with a staged development plan that targets
the MLE field being on stream in 2008.
As a first step to implementing this strategy, the Company increased its
working capital at June 30, 2005 to $130 million by way of an equity financing
that raised $105 million, net of expenses, with the issuance of 16,925,000
common shares at C$8.10 or pnds stlg 3.59 per share.
This working capital will fund a programme over the next 12 to 18 months
that will satisfy the Company's remaining exploration well commitments (RTN-1
on Block 406a and ZER-1 on Block 405b) but will primarily focus on appraisal
drilling and completion activities that offset existing wells and are intended
to convert possible reserves to proved or probable reserves. The RTN-1 well
recently commenced drilling, a number of well locations are being prepared on
Block 405b and efforts are ongoing to line up additional equipment and
personnel to accelerate the programme.
Simultaneous with the drilling and completions programmes, the Company
intends to aggressively pursue the commercialization of the MLE reserves on
Block 405b. To date, a number of steps have been taken in this initiative
including reservoir modeling and conceptual engineering and facilities design
studies. The Company is assembling a team of experienced personnel dedicated
to the commercialization and development operations.
The first six months of 2005 have been dominated with uncertainty,
speculation and conjecture respecting the value of the Company's assets and
its future direction. These factors have fueled extreme volatility in the
Company's stock price which understandably has triggered anxiety amongst
shareholders. Based upon the quality of the FCP assets and a bullish view of
future oil and gas prices, the Company is convinced the "go forward" plan will
maximize the long term value for shareholders.
Management's Discussion and Analysis
Management's discussion and analysis (MD&A) should be read in conjunction
with the unaudited interim financial statements for the three and six month
periods ended June 30, 2005 and 2004 and the audited financial statements and
MD&A for the year ended December 31, 2004. In this discussion and analysis $
refers to the U.S. dollar and C$ refers to the Canadian dollar. Additional
information is available on FCP's website at www.fcpl.ca or on SEDAR's website
at www.sedar.com.
FCP operates in Algeria where it has the rights to explore and appraise
two large acreage blocks, Ledjmet Block 405b and Yacoub Block 406a. The
Company's rights and obligations are set out in hydrocarbon agreements with
Sonatrach, the national oil company of Algeria, which represents the interest
of the state.
Hydrocarbon Agreements
The hydrocarbon agreements require FCP to conduct certain drilling and
seismic activities over periods of time. The exploration phases of the
agreements extend for five years and are divided into two periods with each
period containing a minimum work commitment. In each agreement, the first
period was for three years, and the Company then had the option to enter a
second exploration period of two years. Each discovery is subject to an
appraisal work programme that may extend beyond the exploration phases of the
agreements. Following the appraisal phase of each discovery, the Company and
Sonatrach will obtain exploitation permits for any reserves determined to be
commercial and all lands not subject to an exploitation permit will be
returned to the government. For Block 406a the exploitation periods for each
commercial oil and natural gas discovery are 15 and 20 years respectively,
plus a five year extension option and are 25 and 30 years for Block 405b.
Ledjmet Block 405b
On Block 405b, FCP is party to a Production Sharing Contract (PSC) with
Sonatrach. The PSC allocates hydrocarbon production between FCP and Sonatrach
in accordance with a sliding scale formula based on such factors as production
levels, product prices and project investment. Pursuant to the formula, the
Company's annual share of production may range from 27.72 percent to
8.16 percent. All Algerian state royalties and income taxes are paid by
Sonatrach from its share of hydrocarbon production.
The Company is in the first year of the second exploration period of the
PSC. The remaining work commitment is to drill one exploration well (ZER-1)
prior to December 2006, estimated to cost $9 million. If the Company fails to
satisfy this work obligation, the rights, other than for which an exploitation
permit has been granted or requested, will be returned and the Company will be
liable to pay Sonatrach a penalty of $6.25 million.
Yacoub Block 406a
On Block 406a, FCP is party to a Joint Venture Agreement (JVA) with
Sonatrach. The JVA allocates 49 percent of the hydrocarbon production or
equivalent volume thereof to the Company. FCP is responsible for paying
Algerian state royalties and income taxes on its share of production. A
portion of the total recoverable natural gas reserves above a certain
threshold will be considered strategic reserves and excluded by Algerian law
from the JVA.
The Company is in the second exploration period of the JVA, which ends in
November 2005. The remaining work commitment is to drill the RTN-1 exploration
well, which was spud on July 31 and is estimated to cost $8 million. If the
Company fails to satisfy this work obligation, all rights to the Block will be
returned and the Company will be liable to pay Sonatrach a penalty of
$12.75 million.
Capital Expenditures
Capital expenditures for the six months ended June 30, 2005 totaled
$23.1 million compared to $38.5 million in the first six months of 2004. Of
the 2005 expenditures:
- $18.5 million related to completion and production testing the LES-2
well, drilling the MLE-6 and ZCHW-1 wells and site preparation costs
for future drilling locations;
- $1.1 million was spent completing the 2004 Block 406a 3D seismic
programme and other geological interpretation activities;
- $0.2 million was spent on Block 405b development activities;
- $0.3 million was paid to Sonatrach for annual training bonuses; and
- $3.0 million related to administrative and support services for the
Algerian operations.
Capital expenditures for the three months ended June 30, 2005 totaled
$10.6 million compared to $24.4 million in 2004. Of the second quarter 2005
expenditures, $8.8 million related to drilling, completion and testing
activities, $0.1 million was spent on MLE commercialization activities,
$0.2 million was spent on seismic and $1.5 million related to administrative
and support services for the Algerian operations.
Liquidity and Capital Resources
FCP continues to rely on equity to fund its operations and capital
programmes. In June 2005, FCP raised $104.6 million, net of issue costs, from
the sale of 16,925,000 common shares through an equity financing (10,577,100
shares at C$8.10 and 6,347,900 shares at pnds stlg 3.59). During the six
months ended June 30, 2005 the Company received $0.7 million for the issuance
of 698,785 common shares from the exercise of stock options and warrants
(three months ended June 30, 2005 - $0.3 million in proceeds from the issuance
of 194,408 common shares). The fully-diluted number of shares outstanding at
the following dates were:
FULLY-DILUTED SHARES OUTSTANDING August 8, June 30, December 31,
2005 2005 2004
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Common shares 201,530,428 200,710,460 183,086,675
Employee stock options 7,009,532 7,406,167 7,629,501
Common share purchase warrants - - 68,785
Non-employee stock options - 450,000 900,000
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Fully-diluted shares outstanding 208,539,960 208,566,627 191,684,961
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The Company had working capital of $130.5 million at June 30, 2005
compared to $52.1 million at December 31, 2004. Changes in the Company's
working capital are primarily a function of the timing and magnitude of its
equity financings and capital expenditures. The net increase in working
capital during the six months ended June 30, 2005 was attributed to
$104.6 million in net proceeds from the June public offering, $23.1 million
used to fund capital expenditures, $0.7 million in proceeds from the exercise
of options and warrants, $1.3 million used to fund operations and a foreign
currency loss of $2.5 million.
During the three months ended June 30, 2005, the $92.5 million net
increase in the Company's working capital was attributed to $104.6 million in
net proceeds from the June public offering, $10.6 million used to fund capital
expenditures, $0.3 million in proceeds from the exercise of options and
warrants, $0.9 million to fund operations and a foreign currency loss of
$0.9 million.
The Company has sufficient working capital at June 30, 2005 to fund its
capital programme and work commitments. Beyond the current planned
expenditures and obligations, it is expected the Company will require
additional capital to fund future operations and capital spending.
In addition, the development of the Company's reserves through to
commercial production will require significant funding that is expected to be
in the form of debt, equity, joint ventures or some combination thereof.
Operating Results and Selected Quarterly Information
2005 2004
(000's of U.S. dollars) Q2 Q1 Q4 Q3 Q2
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Interest Income $ 428 $ 659 $ 386 $ 251 $ 238
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Expenses
General and
administrative 1,414 1,139 1,165 904 1,048
Stock-based compensation 503 746 1,442 975 1,375
Foreign exchange loss
(gain) 932 1,527 (820) (2,151) 1,137
Write-off Yemen investment - - - - -
Other expenses (recovery) 46 (33) (102) 109 92
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2,895 3,379 1,685 (163) 3,652
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Income (loss) (2,467) (2,720) (1,299) 414 (3,414)
Loss per share (0.01) (0.01) (0.01) 0.00 (0.02)
Share capital 482,991 377,857 377,288 172,895 172,376
Working capital
(deficiency) 130,467 38,016 52,115 19,858 48,664
Capital assets 333,157 322,572 310,053 137,911 107,267
Other liabilities (398) (370) (339) (239) (174)
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Shareholders' equity $463,226 $360,218 $361,829 $157,530 $155,757
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Operating Results and Selected Quarterly Information
2004 2003
(000's of U.S. dollars) Q1 Q4 Q3
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Interest Income $ 415 $ 315 $ 81
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Expenses
General and
administrative 910 962 660
Stock-based compensation 1,389 3,579 233
Foreign exchange loss
(gain) 292 (283) (192)
Write-off Yemen investment - 1,035 -
Other expenses (recovery) 90 253 34
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2,681 5,546 735
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Income (loss) (2,266) (5,231) (654)
Loss per share (0.01) (0.03) (0.01)
Share capital 171,897 165,181 62,463
Working capital
(deficiency) 74,659 83,111 (1,150)
Capital assets 82,886 68,708 52,106
Other liabilities (151) (124) (92)
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Shareholders' equity $157,394 $151,695 $ 50,864
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The Company's interest income for the three and six month periods ended
June 30, 2005, was higher compared with the 2004 comparable periods as a
result of higher average cash and term-deposit balances during 2005 and higher
interest rates.
General and administrative expenses were $2.6 million for the six months
ended June 30, 2005 compared with $2.0 million in the comparable 2004 period.
For the three months ended June 30, 2005 and 2004, the general and
administrative expenses were $1.4 and $1.0 million, respectively. The
increased expense during 2005 was mainly attributed to the corporate strategic
review process.
Stock-based compensation expense was $1.2 million for the six months
ended June 30, 2005 compared with $2.8 million in the comparable 2004 period.
For the three months ended June 30, 2005 and 2004, the stock-based
compensation expense was $0.5 and $1.4 million, respectively. The decrease in
expense was primarily attributed to the complete amortization of certain prior
stock option grants and fewer options granted in 2004 and 2005 compared to
prior years.
The Company recorded a foreign exchange loss of $2.5 million for the six
months ended June 30, 2005, of which $0.9 million was incurred during the
second quarter. The loss primarily resulted from the strengthening U.S. dollar
against the Canadian dollar and British pound deposits held. The $1.4 million
loss in the six months ended June 30, 2004 resulted from the strengthening
U.S. dollar against the Canadian dollar deposits held.
Business Risks and Uncertainties
The MD&A for the year ended December 31, 2004 includes an overview of
certain of the business risks and uncertainties facing the Company. Those
risks remain in effect as at June 30, 2005.
Outlook
The Company's business plan over the next 12 to 18 months will focus on:
- increasing the Company's proved and probable reserves through a
programme of appraisal drilling and completions activities;
- completing its exploration drilling commitments; and
- commercializing Block 405b with a staged development plan that
targets the MLE field being on stream in 2008.
Advisory Regarding Forward-Looking Statements
Certain information with respect to the Company contained in this report
contains forward-looking statements. These forward-looking statements are
based on assumptions and are subject to numerous risks and uncertainties, some
of which are beyond FCP's control, including the impact of general economic
conditions, industry conditions, volatility of commodity prices, currency
exchange rate fluctuations, reserve estimates, environmental risks,
competition from other explorers, stock market volatility and the ability to
access sufficient capital. FCP's actual results, performance or achievement
could differ materially from those expressed in, or implied by, these forward-
looking statements and, accordingly, no assurance can be given that any events
anticipated by the forward-looking statements will transpire or occur.
FIRST CALGARY PETROLEUMS LTD.
Consolidated Balance Sheets
(Expressed in thousands of U.S. dollars)
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June 30 December 31
2005 2004
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(Unaudited) (Audited)
Assets
Current assets:
Cash and short-term deposits (note 2) $ 141,598 $ 81,874
Accounts receivable 235 357
Deposits and prepaid expenses 296 758
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142,129 82,989
Property, plant and equipment 333,157 310,053
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$ 475,286 $ 393,042
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued
liabilities (note 3) $ 11,662 $ 30,874
Asset retirement obligations 398 339
Shareholders' equity:
Capital stock (note 4) 482,991 377,288
Contributed surplus (note 4) 10,322 9,441
Cumulative translation adjustment 6,502 6,502
Deficit (36,589) (31,402)
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463,226 361,829
Operations and commitments (note 1)
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$ 475,286 $ 393,042
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See accompanying notes to interim consolidated financial statements.
FIRST CALGARY PETROLEUMS LTD.
Consolidated Statements of Operations and Deficit
(Expressed in thousands of U.S. dollars)
(Unaudited)
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Three months Six months
ended June 30 ended June 30
2005 2004 2005 2004
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Revenue:
Interest $ 428 $ 238 $ 1,087 $ 653
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Expenses:
General and administrative 1,414 1,048 2,553 1,958
Stock-based
compensation (note 4) 503 1,375 1,249 2,764
Foreign exchange loss 932 1,137 2,459 1,429
Capital taxes (recovery) 25 73 (29) 143
Depreciation and accretion 21 19 42 39
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2,895 3,652 6,274 6,333
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Loss for the period (2,467) (3,414) (5,187) (5,680)
Deficit, beginning of period (34,122) (27,103) (31,402) (24,837)
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Deficit, end of period $ (36,589) $ (30,517) $ (36,589) $ (30,517)
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Loss per share (note 4) $ (0.01) $ (0.02) $ (0.03) $ (0.03)
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See accompanying notes to interim consolidated financial statements.
FIRST CALGARY PETROLEUMS LTD.
Consolidated Statements of Cash Flows
(Expressed in thousands of U.S. dollars)
(Unaudited)
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Three months Six months
ended June 30 ended June 30
2005 2004 2005 2004
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Operating activities:
Loss for the period $ (2,467) $ (3,414) $ (5,187) $ (5,680)
Items not involving cash:
Stock-based compensation 503 1,375 1,249 2,764
Unrealized foreign
exchange loss 931 1,100 2,794 1,340
Depreciation and accretion 21 19 42 39
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(1,012) (920) (1,102) (1,537)
Change in non-cash
working capital 1,615 94 (1,206) (193)
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603 (826) (2,308) (1,730)
Financing activities:
Proceeds from issuance
of shares 110,502 - 110,502 -
Proceeds from exercise
of options and warrants 320 416 698 6,992
Issue costs (5,849) (14) (5,864) (14)
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104,973 402 105,336 6,978
Investing activities:
Capital expenditures (10,578) (24,377) (23,087) (38,548)
Change in non-cash
working capital (4,479) 877 (17,423) 936
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(15,057) (23,500) (40,510) (37,612)
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Increase (decrease) in cash
and short-term deposits 90,519 (23,924) 62,518 (32,364)
Effect of exchange rate
fluctuations on cash and
short-term deposits (931) (1,100) (2,794) (1,340)
Cash and short-term deposits,
beginning of period 52,010 86,505 81,874 95,185
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Cash and short-term deposits,
end of period $ 141,598 $ 61,481 $ 141,598 $ 61,481
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See accompanying notes to interim consolidated financial statements.
FIRST CALGARY PETROLEUMS LTD.
Notes to Interim Consolidated Financial Statements
Six Months ended June 30, 2005 (unaudited)
(Expressed in thousands of U.S. dollars unless otherwise indicated)
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The interim consolidated financial statements of First Calgary
Petroleums Ltd. ("the Company") have been prepared by management in
accordance with accounting principles generally accepted in Canada
following the same accounting policies as the consolidated financial
statements for the year ended December 31, 2004. The disclosures
included below are incremental to those included with the annual
consolidated financial statements. The interim consolidated financial
statements should be read in conjunction with the consolidated
financial statements and the notes thereto for the year ended
December 31, 2004.
1. Operations and commitments:
The Company's operations are in Algeria where it has the rights to
explore, appraise and develop two blocks, Yacoub Block 406a
("Block 406a") and Ledjmet Block 405b ("Block 405b"). The Company's
rights and obligations in each block are set out in agreements with
Sonatrach, the national oil company of Algeria. These agreements are
structured such that the Company has committed to conduct certain
minimum exploration activities over a period of time and in return
earns an interest in commercial discoveries. Each discovery is
subject to an appraisal work programme that may extend beyond the
exploration phase of the agreements. Following the appraisal phase
of each discovery, the Company and Sonatrach will obtain exploitation
permits for any reserves determined to be commercial and all lands
not subject to an exploitation permit will be returned to the
government. For Block 406a the exploitation periods for each
commercial oil and natural gas discovery are 15 and 20 years
respectively, plus a five year extension option and are 25 and
30 years for Block 405b.
(a) Block 406a:
In 2000 the Company entered into a joint venture agreement with
Sonatrach to explore Block 406a in the Berkine Basin. The Company
is in the second exploration period which expires in
November 2005. The remaining work obligation is to drill the
RTN-1 exploration well, which was spud on July 31 and is
estimated to cost $8 million. If the Company fails to satisfy
the work obligation, all rights to the Block will be forfeited
and the Company will be liable to pay Sonatrach a penalty of
$12.75 million. In addition to the work commitments, the Company
is obligated to pay an annual training bonus in the amount of
$150 for the duration of the contract, including exploitation
periods.
(b) Block 405b:
In 2001 the Company entered into a production sharing
contract with Sonatrach to explore and appraise Block 405b in the
Berkine Basin. The Company is in the second exploration period
which expires in December 2006. The remaining work obligation is
to drill one exploration well, estimated to cost $9 million.
Should the Company fail to satisfy the work obligation of the
second exploration period, the rights, other than for areas for
which an exploitation permit has been granted or requested, could
be forfeited and the Company will be liable to pay Sonatrach a
penalty of $6.25 million. In addition to the work commitments,
the Company is obligated to pay an annual training bonus in the
amount of $150 for the duration of the contract, including
exploitation periods.
The contract provides the Company with the right to appraise and
develop the MLE reserves discovered with the MLE-1 well. As
compensation for the right to access the MLE discovery, the
Company is committed to pay Sonatrach a reserve-based access fee
of $0.25 per barrel of oil equivalent calculated on the total
estimated recoverable MLE reserves. The access fee will be
determined at the time the MLE reserves are declared commercial
by Sonatrach and will be payable as a deduction from Sonatrach's
share of the MLE development expenditures.
While the Company currently has sufficient resources to meet its
required work commitments, these resources may be directed to other,
optional capital programmes depending on the success of expenditures
and other opportunities which become available to the Company. In
addition, the development of the Company's reserves through to
commercial production will require significant funding in the form of
debt, equity, joint ventures or some combination thereof.
2. Cash and short-term deposits:
The Company considers deposits in banks, certificates of deposit and
short-term investments with original maturities of three months or
less as cash and short-term deposits. The components of cash and
short-term deposits are as follows:
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June 30 December 31
2005 2004
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Cash on deposit:
U.S. dollars $ 13,133 $ 1,833
British pounds 8,459 1,574
Canadian dollars 2,416 482
Algerian dinars 100 577
Bank term deposits:
Canadian dollars 67,992 22,079
British pounds 47,737 54,823
U.S. dollars 1,761 506
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$ 141,598 $ 81,874
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As at June 30, 2005, $1.8 million was restricted until January 2006
for an inventory purchase.
3. Accounts payable and accrued liabilities:
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June 30 December 31
2005 2004
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Trade payables:
U.S. dollars $ 6,451 $ 13,004
Algerian dinars 2,542 3,746
Canadian dollars 664 2,151
British pounds 305 423
Capital accrual:
U.S. dollars 1,700 11,550
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$ 11,662 $ 30,874
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4. Capital stock:
(a) Issued share capital:
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Number of
Shares Amount
---------------------------------------------------------------------
Common shares:
Balance, December 31, 2004 183,086,675 $ 377,288
Issued on public offering (i) 16,925,000 110,502
Issued on exercise of share
purchase warrants (ii) 68,785 177
Issued on exercise of employee
stock options 180,000 262
Issued on exercise of non-employee
stock options (iii) 450,000 259
Transfer from contributed surplus on
exercise of stock options and warrants - 367
Share issue costs - (5,864)
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Balance, June 30, 2005 200,710,460 $ 482,991
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(i) In June 2005 the Company issued 16,925,000 common shares for
gross proceeds of $110.5 million (10,577,100 common shares at
C$8.10 per share and 6,347,900 common shares at pnds stlg 3.59
per share). The issue costs were $5.9 million.
(ii) During the six months ended June 30, 2005, 68,785 common shares
were issued pursuant to the exercise of the following common
share purchase warrants: 36,021 at C$5.00 per share and 32,764
at C$1.11 per share.
(iii) In 2002 the Company granted consultants options to acquire
900,000 common shares at a price of C$0.70 per share of which
450,000 were exercised during the six months ended
June 30, 2005 and the remainder subsequent thereto.
(b) Employee stock options:
Pursuant to the Stock Option Plan, the Company has 11,996,230
common shares reserved for issuance. Stock options granted under
the plan have a term of five years and vesting terms are
determined at the discretion of the Board, ranging between two
and three years. The exercise price of each option is equal to
the market price of the shares on the date preceding the date of
the grant. The following table summarizes the changes in stock
options outstanding at June 30, 2005:
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Number of Weighted Average
Options Exercise Price
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Outstanding, December 31, 2004 7,629,501 C$ 3.47
Exercised (180,000) 1.80
Cancelled (43,334) 12.02
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Outstanding, June 30, 2005 7,406,167 C$ 3.46
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The following table summarizes information about the options
outstanding and exercisable at June 30, 2005:
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Options Outstanding Options Exercisable
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Weighted
Average Weighted Weighted
Remaining Average Average
Range of Contractual Exercise Exercise
Exercise price Options Life Price Options Price
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C$0.50-0.95 2,089,500 1.2 years C$ 0.63 2,089,500 C$ 0.63
C$1.25-1.90 930,334 1.9 years 1.26 930,334 1.26
C$2.36-2.95 950,334 2.6 years 2.61 925,334 2.60
C$4.72-4.72 2,502,333 3.3 years 4.72 1,659,000 4.72
C$7.45-7.81 518,000 3.6 years 7.67 343,000 7.67
C$10.95-15.77 415,666 3.8 years 11.64 265,666 11.45
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7,406,167 2.5 years C$ 3.46 6,212,834 C$ 2.96
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(c) Common share purchase warrants:
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Number of Weighted Average
Warrants Exercise Price
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Outstanding, December 31, 2004 68,785 C$ 3.15
Exercised (68,785) 3.15
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Outstanding, June 30, 2005 - -
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(d) Stock-based compensation expense:
For the six months ended June 30, 2005, the Company recorded
$1.2 million (2004 - $2.8 million) of stock-based compensation
expense with a corresponding increase in contributed surplus
(three months ended June 30, 2005 - $0.5 million;
2004 - $1.4 million). There were no options granted during the
first six months of 2005. The fair value of the options granted
in the six months ended June 30, 2004 was estimated to be C$5.11
per option and was determined using the Black-Scholes option
pricing model with the following assumptions: expected volatility
of 82 percent, risk-free interest rate of 3.8 percent and
expected lives of 3 years.
(e) Contributed surplus:
The changes in the contributed surplus balance are as follows:
---------------------------------------------------------------------
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Balance, December 31, 2004 $ 9,441
Amortization of expense for options
previously granted 1,248
Options and warrants exercised,
transfer to share capital (367)
---------------------------------------------------------------------
Balance, June 30, 2005 $ 10,322
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(f) Per share amounts:
The loss per share is based on the weighted average shares
outstanding for the period. The weighted average shares
outstanding for the three and six month periods ended June 30,
2005 were 183,804,617 and 183,670,798 respectively, (2004 -
165,380,528 and 164,571,937). The effect upon conversion of
outstanding options is anti-dilutive.
5. Segmented information:
The Company's activities are conducted in two geographic segments:
Canada and Algeria. All activities relate to exploration and
development of petroleum and natural gas in Algeria.
Three months ended June 30 Canada Algeria Total
---------------------------------------------------------------------
2005
Capital expenditures $ - $ 10,578 $ 10,578
---------------------------------------------------------------------
2004
Capital expenditures $ 4 $ 24,373 $ 24,377
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Six months ended June 30 Canada Algeria Total
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2005
Capital expenditures $ 17 $ 23,070 $ 23,087
Assets 142,472 332,814 475,286
---------------------------------------------------------------------
2004
Capital expenditures $ 6 $ 38,542 $ 38,548
Assets 60,340 108,889 169,229
---------------------------------------------------------------------
For further information: Kenneth C. Rutherford, Vice President, Finance
& Chief Financial Officer, First Calgary Petroleums Ltd., Suite 900, 520 - 5
Avenue SW, Calgary, AB T2P 3R7, tel: (403) 264-6697, email: info(at)fcpl.ca,
fax: (403) 264-3955, web site: www.fcpl.ca; European contacts: James
Henderson, Pelham Public Relations, Tel: +44 (0) 207 743 6673; Carina Corbett,
4C - Burvale Limited, Tel: +44 (0) 207 907 4761
(FCP. FPL)
END
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