First Calgary Petroleums Ltd. Reports Third Quarter Results
TSX: FCP LSE: FPL
CALGARY, Nov. 10 /CNW/ - First Calgary Petroleums Ltd. is pleased to
report financial results for the nine months ended September 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.
In June of this year, FCP concluded a review of strategic options to
maximize the value of the Company. Based upon a number of considerations
articulated in the Company's second quarter report to shareholders, 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. Accordingly, the third quarter marked the beginning of a
new phase for the Company with its focus locked on two principal initiatives:
- Generating production and cash flow; and
- Increasing the proved and probable oil and gas reserves.
To generate production and cash flow, the Company is working with
Sonatrach, Algeria's national oil company and FCP's partner, to commercialize
and develop Ledjmet Block 405b. FCP's current plan is to develop the Block in
stages once each discovery is appraised, with first production from the MLE
field targeted for 2008.
The Company is actively finalizing the MLE appraisal and reserves
information and evaluating a number of possible development scenarios which
will be reviewed with Sonatrach. Based on this review, the actual development
and engineering plan will be formulated. Once the MLE development plan has
been agreed to, FCP and Sonatrach will jointly seek markets for the planned
production.
Algeriahas export capacity of approximately 67 billion cubic metres
(BCM) per year of natural gas and plans to increase this capacity to 85 BCM
per year by 2010. Accordingly, the staged development of Block 405b coincides
with Algeria's export goals.
Along with the Block 405b commercialization initiative, FCP plans to
increase its proved and probable reserves over the next 12 months through
drilling and completions activities. Current plans include drilling up to
seven wells to offset and extend existing discoveries to the west of the MLE
field. In addition, the Company's remaining exploration commitment well,
ZER-1, will be drilled on the north west part of the Block. Drilling locations
have been selected and site preparations are nearing completion for the next
three wells: LES-3, MZLN-2 and ZER-1. To accelerate the drilling activity, FCP
has contracted a second drilling rig and is negotiating for a third, which, if
contracted, will give the Company three drilling rigs operational in the first
quarter of 2006.
FCP's second block in Algeria's Berkine Basin is Yacoub Block 406a. With
the five year exploration period for this Block ending on November 10th of
this year, much of the Company's focus and attention during the third quarter
was on drilling exploration prospects and completing the drilling commitments
pursuant to the Block 406a contract.
During the third quarter, the RTN-1 exploration well was drilled on an
independent structure north of the ZCH-1 discovery well. The RTN-1 wireline
logs indicated limited hydrocarbons and the well was abandoned, as announced
on September 8, 2005.
Following RTN-1, FCP drilled the ZCH-2 appraisal well which has been
logged and cased as a potential oil and gas well. The Company has been granted
a three month extension beyond the end of the exploration period to complete
its appraisal and delineation of the ZCH reserves and to submit a development
plan. Given the complexity of the ZCH reservoirs as they are currently
understood, the three month extension may not allow sufficient time to fully
appraise the discovery and assess its commercial viability. Accordingly, FCP
will request additional time to complete the ZCH assessment. In the event
additional time is not granted, the Company may decide to cease further
activity on the ZCH discovery and focus its resources entirely on Block 405b.
Going forward, the commercialization and development of Block 405b is a
major undertaking that will transform FCP into an exploration and production
company. FCP is excited to pursue the MLE development as the initial stage in
this transformation and the value it will create 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 nine month
periods ended September 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 rights to explore and appraise two
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 agreements with Sonatrach govern the exploration, appraisal and
exploitation of hydrocarbons for each Block. The exploration period of the
agreements extend for five years and require FCP to conduct certain drilling
and seismic activities. In return, FCP will earn an interest in commercial
discoveries. Each discovery is subject to an appraisal work programme that may
extend beyond the exploration period of the agreements. Following the
appraisal 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.
Ledjmet Block 405b
On Block 405b, FCP is party to a Production Sharing Contract (PSC) with
Sonatrach. The Company is in the fourth year of the 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.
During the exploitation period, 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 to 8.16 percent. All Algerian state royalties and income taxes are
paid by Sonatrach from its share of hydrocarbon production. Exploitation
periods for each commercial oil and natural gas discovery are 25 and 30 years,
respectively.
Yacoub Block 406a
On Block 406a, FCP is party to a Joint Venture Agreement (JVA) with
Sonatrach. The five year exploration period ended on November 10, 2005 at
which time all of the Block acreage, excluding the acreage surrounding the ZCH
discovery, was returned to the Algerian government. All of the exploration
work commitments on this Block have been satisfied. The Company has been
granted a three month extension beyond the end of the exploration period to
complete its appraisal and delineation of the ZCH reserves and to submit a
development plan (see Business Risks and Uncertainties).
Pursuant to the JVA, exploitation periods for each commercial oil and
natural gas discovery are 15 and 20 years, respectively, plus a five year
extension option. During the exploitation period, 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.
Capital Expenditures
Capital expenditures for the nine months ended September 30, 2005 totaled
$36.4 million compared to $69.1 million in the first nine months of 2004. Of
the 2005 expenditures:
- $30.4 million related to completion and production testing the
LES-2 well, drilling the MLE-6, ZCHW-1, RTN-1, and ZCH-2 wells and
site preparation costs for future drilling locations;
- $1.2 million was spent completing the 2004 Block 406a 3D seismic
programme and other geological interpretation activities;
- $0.3 million was spent on MLE field development activities;
- $0.3 million was paid to Sonatrach for annual training bonuses;
and
- $4.2 million related to administrative and support services for
the Algerian operations.
Capital expenditures for the three months ended September 30, 2005
totaled $13.3 million compared to $30.6 million in 2004. Of the third quarter
2005 expenditures, $11.8 million related to drilling, completion and testing
activities, $0.1 million was spent on MLE field development activities,
$0.1 million was spent on seismic and $1.3 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 nine
months ended September 30, 2005 the Company received $1.5 million for the
issuance of 1,842,253 common shares from the exercise of stock options and
warrants (three months ended September 30, 2005 - $0.8 million in proceeds
from the issuance of 1,143,468 common shares).
The fully-diluted number of shares outstanding at the following dates
were:
November September December
FULLY-DILUTED SHARES OUTSTANDING 10, 2005 30, 2005 31, 2004
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Common shares 201,986,928 201,853,928 183,086,675
Employee stock options 6,478,033 6,664,366 7,629,501
Common share purchase warrants - - 68,785
Non-employee stock options - - 900,000
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Fully-diluted shares outstanding 208,464,961 208,518,294 191,684,961
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The Company had working capital of $120.1 million at September 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 nine months ended September 30, 2005 was attributed to
$104.6 million in net proceeds from the June public offering, $36.4 million
used to fund capital expenditures, $1.5 million in proceeds from the exercise
of options and warrants, $1.4 million used to fund operations and a foreign
currency loss of $0.3 million.
During the three months ended September 30, 2005, the $10.4 million net
decrease in the Company's working capital was attributed to $13.3 million used
to fund capital expenditures, $0.8 million in proceeds from the exercise of
options and warrants, $0.1 million to fund operations and a foreign currency
gain of $2.2 million.
The Company has sufficient working capital at September 30, 2005 to fund
its planned 2006 capital programme and remaining work commitment. Beyond the
current planned expenditures and obligations, 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. FCP
is currently evaluating several development scenarios for the MLE field. The
gross development costs of the various scenarios range up to $800 million
(FCP net $600 million). To develop the Block 405b total proved, probable and
possible reserves, the gross development costs could reach $2 billion (FCP net
$1.5 billion). FCP is obligated to finance 75 percent of the development
expenditures assuming Sonatrach will exercise its right to participate in the
development.
Operating Results and Selected Quarterly Information
2005 2004
(000's of U.S. dollars) Q3 Q2 Q1 Q4
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Interest Income $ 1,039 $ 428 $ 659 $ 386
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Expenses
General and administrative 1,001 1,414 1,139 1,165
Stock-based compensation 373 503 746 1,442
Foreign exchange loss (gain) (2,181) 932 1,527 (820)
Write-off Yemen investment - - - -
Other expenses (recovery) 49 46 (33) (102)
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(758) 2,895 3,379 1,685
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Income (loss) 1,797 (2,467) (2,720) (1,299)
Income (loss) per share 0.01 (0.01) (0.01) (0.01)
Share capital 483,852 482,991 377,857 377,288
Working capital (deficiency) 120,145 130,467 38,016 52,115
Capital assets 346,438 333,157 322,572 310,053
Other liabilities (405) (398) (370) (339)
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Shareholders' equity $466,178 $463,226 $360,218 $361,829
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2004 2003
(000's of U.S. dollars) Q3 Q2 Q1 Q4
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Interest Income $ 251 $ 238 $ 415 $ 315
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Expenses
General and administrative 904 1,048 910 962
Stock-based compensation 975 1,375 1,389 3,579
Foreign exchange loss (gain) (2,151) 1,137 292 (283)
Write-off Yemen investment - - - 1,035
Other expenses (recovery) 109 92 90 253
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(163) 3,652 2,681 5,546
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Income (loss) 414 (3,414) (2,266) (5,231)
Income (loss) per share 0.00 (0.02) (0.01) (0.03)
Share capital 172,895 172,376 171,897 165,181
Working capital (deficiency) 19,858 48,664 74,659 83,111
Capital assets 137,911 107,267 82,886 68,708
Other liabilities (239) (174) (151) (124)
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Shareholders' equity $157,530 $155,757 $157,394 $151,695
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The Company's interest income for the three and nine month periods ended
September 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 $3.6 million for the nine months
ended September 30, 2005 compared with $2.9 million in the comparable 2004
period. For the three months ended September 30, 2005 and 2004, the general
and administrative expenses were $1.0 and $0.9 million, respectively. The
increased expense during 2005 was mainly attributed to the corporate strategic
review process and higher employee levels.
Stock-based compensation expense was $1.6 million for the nine months
ended September 30, 2005 compared with $3.7 million in the comparable 2004
period. For the three months ended September 30, 2005 and 2004, the stock-
based compensation expense was $0.4 and $1.0 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 $0.3 million for the nine
months ended September 30, 2005 primarily due to a strengthening U.S. dollar
against British pound deposits. During the third quarter, FCP recorded a
$2.2 million foreign exchange gain primarily due to gains realized on the
conversion of foreign currency cash balances to U.S. dollars and a weakening
U.S. dollar against Canadian dollar deposits.
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 September 30, 2005.
The exploration period on Block 406a ended on November 10, 2005 and the
Company has been granted a three month extension to complete its appraisal and
delineation of the ZCH reserves and to submit a development plan. Given the
complexity of the ZCH reservoirs as they are currently understood, the three
month extension may not allow sufficient time to fully appraise the discovery
and assess its commercial viability. Accordingly, FCP will request additional
time to complete the ZCH assessment. In the event additional time is not
granted, the Company may decide to cease further activity on the ZCH discovery
and focus its resources entirely on Block 405b. Based upon the Company's
independent reserves report prepared as at December 31, 2004, the estimated
future net revenue attributed to the Block 406a estimated reserves was
approximately 10 percent of the Company's total estimated future net revenue.
Outlook
The Company's primary objectives going forward are to generate production
and cash flow as expeditiously as possible and increase the proved and
probable oil and gas reserves.
FCP's activities on Block 405b will focus on commercializing the Block
with a staged development plan that targets the MLE field being on stream in
2008, increasing the proved and probable reserves through appraisal drilling
and completions activities and completing its remaining exploration drilling
commitment.
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.
November 10, 2005
FIRST CALGARY PETROLEUMS LTD.
Consolidated Balance Sheets
(Expressed in thousands of U.S. dollars)
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September December
30 2005 31 2004
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(Unaudited) (Audited)
Assets
Current assets:
Cash and short-term deposits (note 2) $ 131,050 $ 81,874
Accounts receivable 258 357
Deposits and prepaid expenses 357 758
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131,665 82,989
Property, plant and equipment 346,438 310,053
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$ 478,103 $ 393,042
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities
(note 3) $ 11,520 $ 30,874
Asset retirement obligations 405 339
Shareholders' equity:
Capital stock (note 4) 483,852 377,288
Contributed surplus (note 4) 10,616 9,441
Cumulative translation adjustment 6,502 6,502
Deficit (34,792) (31,402)
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466,178 361,829
Operations and commitments (note 1)
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$ 478,103 $ 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 ended Nine months ended
September 30 September 30
2005 2004 2005 2004
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Revenue:
Interest $ 1,039 $ 251 $ 2,126 $ 904
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Expenses:
General and administrative 1,001 904 3,554 2,862
Foreign exchange loss (gain) (2,181) (2,151) 278 (722)
Stock-based compensation
(note 4) 373 975 1,622 3,739
Capital taxes (recovery) 28 89 (1) 232
Depreciation and accretion 21 20 63 59
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(758) (163) 5,516 6,170
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Income (loss) for the period 1,797 414 (3,390) (5,266)
Deficit, beginning of period (36,589) (30,517) (31,402) (24,837)
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Deficit, end of period $ (34,792) $ (30,103) $ (34,792) $ (30,103)
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Income (loss) per share
(note 4) $ 0.01 $ 0.00 $ (0.02) $ (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 ended Nine months ended
September 30 September 30
2005 2004 2005 2004
-------------------------------------------------------------------------
Operating activities:
Income (loss) for the
period $ 1,797 $ 414 $ (3,390) $ (5,266)
Items not involving cash:
Stock-based compensation 373 975 1,622 3,739
Unrealized foreign exchange
loss (gain) 273 (2,110) 521 (770)
Depreciation and accretion 21 20 63 59
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2,464 (701) (1,184) (2,238)
Change in non-cash working
capital (3,239) 33 (2,231) (160)
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(775) (668) (3,415) (2,398)
Financing activities:
Proceeds from issuance
of shares - - 110,502 -
Proceeds from exercise
of options and warrants 806 384 1,505 7,376
Issue costs (26) - (5,890) (14)
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780 384 106,117 7,362
Investing activities:
Capital expenditures (13,295) (30,599) (36,382) (69,147)
Change in non-cash working
capital 576 8,940 (16,847) 9,876
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(12,719) (21,659) (53,229) (59,271)
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Increase (decrease) in
cash and short-term deposits (12,714) (21,943) 49,473 (54,307)
Effect of exchange rate
fluctuations on cash
and short-term deposits 2,166 2,110 (297) 770
Cash and short-term deposits,
beginning of period 141,598 61,481 81,874 95,185
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Cash and short-term deposits,
end of period $ 131,050 $ 41,648 $ 131,050 $ 41,648
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See accompanying notes to interim consolidated financial statements.
FIRST CALGARY PETROLEUMS LTD.
Notes to Interim Consolidated Financial Statements
Nine months ended September 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. (FCP or 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 and appraise 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
govern the exploration, appraisal and exploitation of hydrocarbons
for each Block. The exploration period of the agreements extend for
five years and require FCP to conduct certain drilling and seismic
activities over periods of time. In return, FCP will earn an
interest in commercial discoveries. Each discovery is subject to an
appraisal work programme that may extend beyond the exploration
period of the agreements. Following the appraisal 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.
(a) Block 406a:
In 2000 the Company entered into a Joint Venture Agreement (JVA)
with Sonatrach to explore Block 406a in the Berkine Basin. The
five year exploration period ended on November 10, 2005 at which
time all of the Block acreage, excluding the acreage surrounding
the ZCH discovery, was returned to the Algerian government. All
of the exploration work commitments on this Block have been
satisfied. The Company has been granted a three month extension
beyond the end of the exploration period to complete its
appraisal and delineation of the ZCH reserves and to submit a
development plan. Given the complexity of the ZCH reservoirs as
they are currently understood, the three month extension may not
allow sufficient time to fully appraise the discovery and assess
its commercial viability. Accordingly, FCP will request
additional time to complete the ZCH assessment. In the event
additional time is not granted, the Company may decide to cease
further activity on the ZCH discovery.
Pursuant to the JVA, exploitation periods for each commercial oil
and natural gas discovery are 15 and 20 years, respectively, plus
a five year extension option. During the exploitation period, 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. In addition,
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
(PSC) with Sonatrach to explore and appraise Block 405b in the
Berkine Basin. The Company is in the fourth year of the
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.
During the exploitation period, 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 to
8.16 percent. All Algerian state royalties and income taxes are
paid by Sonatrach from its share of hydrocarbon production.
Exploitation periods for each commercial oil and natural gas
discovery are 25 and 30 years, respectively. In addition, 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
remaining work commitment, 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. FCP is
currently evaluating several development scenarios for the MLE field.
The gross development costs of the various scenarios range up to
$800 million (FCP net $600 million). To develop the Block 405b total
proved, probable and possible reserves, gross development costs could
reach $2 billion (FCP net $1.5 billion). FCP is obligated to finance
75 percent of the development expenditures assuming Sonatrach will
exercise its right to participate in the development.
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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September December
30 2005 31 2004
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Cash on deposit:
U.S. dollars $ 4,966 $ 1,833
Algerian dinars 1,314 577
Canadian dollars 468 482
British pounds 270 1,574
Bank term deposits:
U.S. dollars 114,131 506
British pounds 5,288 54,823
Canadian dollars 4,613 22,079
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$ 131,050 $ 81,874
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As at September 30, 2005, $1.8 million was restricted until
January 2006 for an inventory purchase.
3. Accounts payable and accrued liabilities:
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September December
30 2005 31 2004
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Trade payables:
U.S. dollars $ 4,661 $ 13,004
Algerian dinars 1,958 3,746
Canadian dollars 276 2,151
British pounds 75 423
Capital accrual:
U.S. dollars 4,550 11,550
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$ 11,520 $ 30,874
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4. Capital stock:
(a) Issued share capital:
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Number of
Shares Amount
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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 68,785 177
Issued on exercise of employee stock
options 873,468 810
Issued on exercise of non-employee
stock options(ii) 900,000 518
Transfer from contributed surplus on
exercise of stock options and warrants - 447
Share issue costs - (5,890)
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Balance, September 30, 2005 201,853,928 $ 483,852
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(i) In June 2005 the Company closed a financing arrangement by
issuing 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 $5.9 million.
(ii) Relate to stock options granted to consultants in 2002.
(b) Employee stock options:
Pursuant to the Stock Option Plan, the Company has 11,302,762
common shares reserved for issuance. Stock options granted
under the plan have a term of five years and vesting terms are
determined at the discretion of the Board, ranging between two
and three years. The exercise price of each option is equal to
the market price of the shares on the date preceding the date
of the grant. The following table summarizes the changes in
stock options outstanding at September 30, 2005:
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Weighted
Average
Number of Exercise
Options Price
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Outstanding, December 31, 2004 7,629,501 C$ 3.47
Exercised (873,468) 1.13
Cancelled (91,667) 11.15
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Outstanding, September 30, 2005 6,664,366 C$ 3.67
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The following table summarizes information about the options
outstanding and exercisable at September 30, 2005:
---------------------------------------------------------------------
Options Outstanding Options Exercisable
---------------------------------------------------------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Range of Contractual Exercise Exercise
Exercise price Options Life Price Options Price
---------------------------------------------------------------------
C$0.50-0.95 1,621,700 1.0 years C$ 0.63 1,621,700 C$ 0.63
C$1.25-1.90 755,000 1.7 years 1.25 755,000 1.25
C$2.36-2.95 900,000 2.3 years 2.60 900,000 2.60
C$4.72-4.72 2,502,333 3.1 years 4.72 1,659,000 4.72
C$7.45-7.81 501,333 3.3 years 7.66 343,000 7.67
C$10.95-15.77 384,000 3.9 years 11.63 244,000 11.40
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6,664,366 2.4 years C$ 3.67 5,522,700 C$ 3.18
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---------------------------------------------------------------------
(c) Common share purchase warrants:
---------------------------------------------------------------------
Weighted
Average
Number of Exercise
Warrants Price
---------------------------------------------------------------------
Outstanding, December 31, 2004 68,785 C$ 3.15
Exercised (68,785) 3.15
---------------------------------------------------------------------
Outstanding, September 30, 2005 - -
---------------------------------------------------------------------
---------------------------------------------------------------------
(d) Stock-based compensation expense:
For the nine months ended September 30, 2005, the Company
recorded $1.6 million (2004 - $3.7 million) of stock-based
compensation expense with a corresponding increase in
contributed surplus (three months ended September 30, 2005 -
$0.4 million; 2004 - $1.0 million). There were no options granted
during the first nine months of 2005. The fair value of the
options granted in the nine months ended September 30, 2004 was
estimated to be C$5.20 per option and was determined using the
Black-Scholes option pricing model with the following
assumptions: expected volatility of 81 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:
---------------------------------------------------------------------
Balance, December 31, 2004 $ 9,441
Amortization of expense for options previously granted 1,622
Options and warrants exercised, transfer to share capital (447)
---------------------------------------------------------------------
Balance, September 30, 2005 $ 10,616
---------------------------------------------------------------------
---------------------------------------------------------------------
(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 nine month periods ended
September 30, 2005 were 201,487,820 and 189,675,069 respectively,
(2004 - 165,527,237 and 164,892,695).
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 September 30 Canada Algeria Total
---------------------------------------------------------------------
2005
Capital expenditures $ 2 $ 13,293 $ 13,295
---------------------------------------------------------------------
2004
Capital expenditures $ 10 $ 30,589 $ 30,599
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Nine months ended September 30 Canada Algeria Total
---------------------------------------------------------------------
2005
Capital expenditures $ 19 $ 36,363 $ 36,382
Assets 131,802 346,301 478,103
----------------------------------------------------------------------
2004
Capital expenditures $ 16 $ 69,131 $ 69,147
Assets 40,889 139,023 179,912
---------------------------------------------------------------------
For further information: Richard G. Anderson, President & Chief
Executive Officer, FIRST CALGARY PETROLEUMS LTD., Suite 900,
520 - 5 Avenue SW, Calgary, AB, T2P 3R7, tel: (403) 264-6697,
fax: (403) 264-3955, email: info(at)fcpl.ca, 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
(FPL)
END
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