First Calgary Petroleums Ltd. Announces 2007 Second Quarter Results
CALGARY, Aug. 2 /CNW/ - First Calgary Petroleums Ltd. ("FCP" or the
"Company") announces its results for the six months ended June 30, 2007.
HIGHLIGHTS
Drilling success on Algeria Block 405b
- Continued appraisal of the TAGI zone with success in LES and MZLN
pools
- LES-9 well recently spudded to evaluate structural extension of the
TAGI - potential to add significant recoverable resources
- FCP estimates that recent drilling and testing results in the "LES-
LEC"TAGI oil pool has added significant proven reserves over the year
end (2006) audited values assigned to this area.
MLE Commercialisation
- Discussions underway with partner Sonatrach on expansion of MLE gas
plant and associated pipelines, to accommodate volumes from the CAFC
as part of an integrated Block 405b development strategy
- Expansion targeted to produce in range of 300-400 MMCF/D gas and up
to 80 MB/D liquids
- Front End Engineering and Design (FEED) work progressing, following
award of contract in June 2007
Financial
- C$145 million (net) raised in April 2007 equity bought deal to fund
2007 capital programme
- FCP has concluded that the new Windfall Profits Tax will apply to
FCP's liquids production only
Richard Anderson, President and CEO commented:
"The first half of 2007 has seen excellent progress with both the TAGI
drilling and the MLE field development. The LES-LEC/MZLN TAGI pools will
represent a major second development project to follow MLE. As a result, FCP
is on the way to becoming a significant liquids and gas producer.
"Long term financing continues to be a focus area. Good progress on this
front is being made in this area with the assistance of our advisors Citigroup
and Deutsche Bank, with a number of alternative options being considered."
First Calgary Petroleums Ltd. is an oil and gas exploration company
actively engaged in international exploration and development activities in
Algeria. The Company's common shares trade on the Toronto Stock Exchange in
Canada (FCP) and on the AIM market of the London Stock Exchange in the UK
(FPL).
First Calgary Petroleums Ltd.
Six months ended June 30, 2007 (unaudited)
(in thousands of U.S. dollars unless otherwise indicated)
-------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS
Management's discussion and analysis (MD&A) is a review of operations,
current financial position and outlook for First Calgary Petroleums Ltd.
(First Calgary, FCP or the Company). It should be read in conjunction with the
unaudited interim financial statements for the six month periods ended
June 30, 2007 and 2006 and the audited financial statements and MD&A for the
year ended December 31, 2006. In this discussion and analysis $ refers to the
U.S. dollar and C$ refers to the Canadian dollar.
OPERATIONAL REVIEW
Appraisal Operations
Having completed the five year exploration phase in 2006, in December
last year First Calgary received an extension under its production sharing
contract (PSC) with Sonatrach to complete its Ledjmet Block 405b appraisal
activities of the Central Area Field Complex (CAFC), and to submit
commerciality reports and apply for exploitation permits thereon.
FCP continued to operate two drilling rigs and a single test spread on
the block through the end of the second quarter. It is anticipated that FCP
will release one more rig, endeavoring to complete its appraisal of the CAFC
by the first quarter of 2008.
The appraisal of the TAGI zone continued to be the focus of the drilling
effort throughout Q2 2007, with the ongoing success in the LES and MZLN pools.
To date FCP has drilled 5 wells in the "LES-LEC" TAGI oil pool (LES-3, LES-6,
LES-7 and LEC-2) and has recently logged LES-8 in early July. This pool has
been mapped utilizing 3D seismic and well control, representing an area of
approximately 29 km(2). The pool has additional upside potential that will be
tested by the LES-9 location that recently commenced drilling.
In addition to LES-LEC TAGI pool, FCP is also continuing to appraise the
MZLN TAGI pool (gas/condensate) that was discovered with the MZLN-2 well. The
MZLN-4 well results support that the TAGI pool extends to the NE from MZLN-2,
and additional drilling at MZLN-5 (currently drilling) and MZLN-6 are planned
to evaluate the resource potential of this pool.
FCP believes that the latest drilling, well test results and seismic
interpretation will result in a significant increase in the proven reserves
assigned to the LES-LEC and MZLN TAGI pools over FCP's audited year-end (2006)
reserve report. Of particular interest is the LES-9 appraisal well, which is
being drilled on a structural extension to the LES-LEC TAGI pool. If
successful, LES-9 could also add substantially to the recoverable reserves in
the LES-LEC TAGI pool.
In addition to the evaluation of the TAGI zone within the CAFC, FCP has
continued to appraise the Lower Devonian with deep well penetrations and
testing at LEW-3, LES-6, LES-7, LEC-2, MZLN-4 and the upcoming wells at MZLN-5
and LES-9.
The LES/LEC/MZLN TAGI pools represent a second major anchor development
project to MLE. Being mostly oil and liquids, the TAGI pools in CAFC are
transforming FCP into both an oil and gas company based on these recent
appraisal results. The remaining appraisal drilling programme within the CAFC,
which is focusing on the upside potential of the TAGI zone, will be completed
with the drilling of the LES-9 and MZLN-6 wells. The CAFC appraisal programme
is anticipated to be completed and the development plan submitted by Q1 2008.
The ZER-2 appraisal well, located in the northern part of the block
4.3 km SW of ZER-1, finished drilling in early January to a depth of 4562
metres. Testing operations were completed in the first quarter. FCP is
evaluating the test results with its partner Sonatrach.
In anticipation of an extensive development drilling programme in the
CAFC and the approved development drilling programme in MLE, FCP has entered
into a contract with Western-Geophysical to shoot a high resolution seismic
programme covering the MLE field area and the primary pool areas within the
CAFC. FCP has received approval from Sonatrach, FCP's partner, to shoot and
process 250 Km2 of seismic utilizing Western's state of the art "Q-Land"
acquisition system. FCP anticipates the new seismic will better define subtle
fault traps and stratigraphic details that will enhance the development
planning of the pools in both field areas.
Readers are referred to the map which is available on the Company's
website at www.fcpl.ca
MLE Commercialisation
This past year's commercialisation activities culminated in February 2007
in FCP receiving approval from the Algerian regulatory authority ALNAFT for
the Development Plan for the MLE oil and gas field on Block 405b. This
approval signifies a key milestone reached for First Calgary as it grows into
an oil and gas development and production company in addition to its focus on
exploration.
Included as part of the Block 405b development planning are a gas plant
and field gathering system and facilities designed to process 230 million
cubic feet of sales gas per day (MMCF/D) on a gross basis and associated
natural gas liquids and oil. FCP is currently in discussions with its partner
Sonatrach regarding the expansion of the approved gas plant and associated
pipelines, to accommodate volumes from the CAFC as part of an integrated block
development strategy. Expansion is being targeted to produce in the range of
300 - 400 MMCF/D sales gas with up to 80 thousand barrels per day (MB/D) of
liquids.
In order to achieve first production in early 2010, FCP has established
an aggressive project timeline. An experienced project management team has
been staffed to ensure that the project timeline is achieved. As planned, the
Front End Engineering and Design (FEED) contract was awarded in the second
quarter of 2007. Some of the key project deliverables for 2007 and early 2008
are completing the FEED work, identifying and ordering long-lead items (LLI),
and tendering and awarding the engineering, procurement and construction (EPC)
contract.
FINANCIAL RESULTS
Three months ended Six months ended
June 30 June 30
------------------- -------------------
2007 2006 2007 2006
-------------------------------------------------------------------------
Net income (loss) $ (1,613) $ 6,577 $ (4,010) $ 5,264
The three and six month periods ended June 30, 2007 are in net loss
positions compared to net income positions in 2006 due to foreign exchange
gains realised in Q2-06 and increasing G&A costs as detailed below.
Three months ended Six months ended
June 30 June 30
------------------- -------------------
2007 2006 2007 2006
-------------------------------------------------------------------------
Interest $ 1,502 $ 1,902 $ 2,493 $ 2,788
Interest income was lower in 2007 than the comparable 2006 period due to
higher average cash and cash equivalents on hand in 2006.
Three months ended Six months ended
June 30 June 30
------------------- -------------------
2007 2006 2007 2006
-------------------------------------------------------------------------
General and administrative $ 4,394 $ 2,114 $ 8,616 $ 3,829
Capitalised (1,108) (637) (2,366) (1,080)
------------------- -------------------
Expensed $ 3,286 $ 1,477 $ 6,250 $ 2,749
The increase in general and administrative costs in 2007 is primarily the
result of growing employee levels required to manage and operate the Algerian
projects. Capitalised G&A is higher in 2007 due to growth in operational
staffing, resulting in increased capitalised salaries.
Three months ended Six months ended
Property, plant and equipment June 30 June 30
expenditures ------------------- -------------------
2007 2006 2007 2006
-------------------------------------------------------------------------
Drilling, completion and testing $ 30,147 $ 34,105 $ 70,189 $ 58,066
Geological and geophysical 891 894 1,669 1,646
MLE commercialisation 3,608 634 10,750 6,032
-------------------------------------------------------------------------
34,646 35,633 82,608 65,744
Block management and
administration 3,463 5,299 6,244 10,044
Corporate 395 190 558 230
-------------------------------------------------------------------------
Total property, plant and
equipment expenditures 38,504 41,122 89,410 76,018
Less non-cash expenditures
(stock-based compensation,
asset retirement provisions) 1,358 972 2,267 1,634
-------------------------------------------------------------------------
Net cash property, plant and
equipment expenditures $ 37,146 $ 40,150 $ 87,143 $ 74,384
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Capital expenditures are lower in the three months ended June 30, 2007 as
FCP used two drilling rigs compared to three in 2006. This is partially offset
by increasing MLE commercialisation costs. Costs for the six months ended June
2007 are higher than 2006 as more wells were drilled with the same number of
drilling rigs.
Liquidity and Capital Resources
First Calgary had $123.3 million of working capital on hand as at
June 30, 2007 compared with $82.7 million at the end of 2006. Cash balances
and short-term investments were $143.8 million at the end of the quarter. The
Company has no credit or debt agreements in place.
Given the nature of an exploration company, FCP's financial resources
fluctuate with the amount and timing of equity financings and its capital
programme. The $40.6 million increase in the Company's working capital from
December 31, 2006 is primarily the result of the proceeds of an equity issue
in April this year, offset by capital expenditure for commercialisation of MLE
and appraisal drilling.
In April 2007 FCP raised C$145 million net of expenses from the issue of
30 million common shares at a price of C$5.08 per common share. Together with
existing resources, this financing will provide the Company with working
capital needed to appraise the CAFC and invest in MLE field pre-development
expenditures.
Development of the Ledjmet Block 405b reserves through to commercial
production will require significant funding, with 75 percent being FCP's
share. To date, FCP has relied upon equity to fund its short-term operations
and capital programmes. Development funding is expected to be in the form of
debt, equity, quasi-equity, joint venture farm-out arrangements or some
combination thereof. First Calgary has been approached by a number of parties
seeking to fund the block development and appointed Citigroup in 2006 as sole
advisor to the Company on project debt for the MLE field development. Deutsche
Bank was also appointed as corporate financial advisor in 2006, and FCP is
working with the assistance of both banks on development funding.
The gross development cost of the MLE field is currently estimated at
$1.0 - $1.3 billion (depending on plant and pipeline sizes), and will mainly
be incurred in 2008 and 2009. These cost estimates will be refined by the MLE
FEED work now underway. Development cost estimates for the CAFC will be
developed as appraisal work is completed. To date, no financing arrangements
have been entered into to fund the Ledjmet development. However, the Company
is advancing discussions regarding a variety of alternative funding
arrangements as referred to above, and expects to determine the financing plan
later this year.
The Company is listed on the Toronto Stock Exchange and the AIM market of
the London Stock Exchange. The diluted numbers of shares outstanding at the
following dates were:
August 1, June 30, December 31,
2007 2007 2006
-------------------------------------------------------------------------
Common shares 254,419,030 254,419,030 223,686,330
Employee stock options 12,067,901 12,067,901 9,135,600
-------------------------------------------------------------------------
Diluted shares outstanding 266,486,931 266,486,931 232,821,930
-------------------------------------------------------------------------
Selected Quarterly Information
2007 2006
(000's of
U.S. dollars) Q2 Q1 Q4 Q3 Q2 Q1
-------------------------------------------------------------------------
Interest income $ 1,502 $ 991 $ 1,633 $ 2,052 $ 1,902 $ 886
Income (loss) (1,613) (2,397) (1,506) (266) 6,577 (1,313)
Income (loss) per
share (0.01) (0.01) (0.01) 0.00 0.03 (0.01)
Total Assets 775,867 643,642 650,053 649,354 641,938 491,776
2005
(000's of
U.S. dollars) Q4 Q3
-------------------------------------
Interest income $ 887 $ 1,039
Income (loss) (4,181) 1,797
Income (loss) per
share (0.02) 0.01
Total Assets 482,776 478,103
Interest income is higher in Q2 2007 compared to Q1 2007 due to higher
average cash and cash equivalent balances on hand (equity financing completed
in April 2007).
Total assets have increased due to the proceeds on the April share issue.
Outlook
First Calgary's primary objective is to commercialise Block 405b,
starting with the MLE field, then expanding the development to incorporate the
CAFC. In addition, new exploration acreage is being sought to utilize the
Company's experienced exploration team and expand its exploration portfolio.
In the short-term, over the period to early next year, key activities
include:
- Complete the FEED work for MLE;
- Identify and order long lead items necessary for the MLE field
development;
- Prepare tender documents for the EPC contract for the MLE
development;
- Finalise appraisal drilling of the CAFC and continue to formulate a
second stage development plan for the CAFC;
- Determine and execute the financing for the MLE field development and
ongoing activities in the CAFC; and
- Continue to seek attractive new exploration acreage opportunities.
Changes in accounting policies
(a) Financial Instruments - recognition and measurement
This new standard requires all financial instruments within its scope,
including all derivatives, to be recognized on the balance sheet initially at
fair value. Subsequent measurement of all financial assets and liabilities
except those held-for-trading and available for sale are measured at amortized
cost determined using the effective interest rate method. The effect of
adopting the new standard is not material to the financial statements.
(b) Other comprehensive income
The new standards require a statement of comprehensive income, which is
comprised of net earnings (loss) and other comprehensive income (loss). For
the company, there are no items in comprehensive income (loss) other than net
earnings (loss).
Under the new accounting standards, cumulative translation adjustments
are included in accumulated other comprehensive income. As a result, the
Company's cumulative translation adjustment at December 31, 2006 and June 30,
2007 of $6.5 million has been reclassified to accumulated other comprehensive
income in shareholders' equity.
(c) Accounting policies not yet adopted
Two new Canadian accounting standards have been issued which will require
additional disclosure in the Company's financial statements commencing
January 1, 2008, about the Company's financial instruments as well as its
capital and how it is managed.
Internal Controls Over Financial Reporting
Internal controls have been designed to provide reasonable assurance
regarding the reliability of the Company's financial reporting and the
preparation of financial statements together with other financial information
for external purposes in accordance with Canadian GAAP. During the quarter
ended June 30, 2007, there have been no changes in the design of the Company's
internal controls over financial reporting that have materially affected, or
are reasonably likely to materially affect, the Company's internal controls
over financial reporting.
Business Risks and Uncertainties
The MD&A and Annual Information Form (AIF) for the year ended
December 31, 2006 includes an overview of certain business risks and
uncertainties facing the Company. Those risks remain in effect as at June 30,
2007.
Advisory Regarding Forward-Looking Statements
Certain information with respect to the Company contained in this report,
including management's assessment of future plans and operations, 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 timing and receipt of joint venture
and government approvals, 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 ability to access sufficient capital.
In addition, actual results may vary because FCP principally operates in less
developed legal systems than jurisdictions with more established economies and
relies on continuing existing strategic relationships and forming new ones
with other entities in the oil and gas industry, such as joint venture parties
and farm-in partners. 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.
Company Information
Additional information is available on FCP's website at www.fcpl.ca or on
SEDAR's website at www.sedar.com.
FIRST CALGARY PETROLEUMS LTD.
Consolidated Balance Sheets
(unaudited) June 30, December 31,
(in thousands of U.S. dollars) 2007 2006
-------------------------------------------------------------------------
Assets
Current assets
Cash and cash equivalents $ 143,788 $ 108,489
Accounts receivable 1,218 738
Deposits and prepaid expenses 1,591 707
-------------------------------------------------------------------------
146,597 109,934
Property, plant and equipment 629,270 540,119
-------------------------------------------------------------------------
$ 775,867 $ 650,053
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accrued liabilities $ 23,278 $ 27,226
Asset retirement obligations 901 687
Future income taxes 18,200 18,200
Shareholders' equity
Capital stock (note 3) 763,023 631,933
Contributed surplus (note 3) 21,654 19,186
Accumulated other comprehensive income 6,502 6,502
Deficit (57,691) (53,681)
-------------------------------------------------------------------------
733,488 603,940
Operations and commitments (note 2)
-------------------------------------------------------------------------
$ 775,867 $ 650,053
-------------------------------------------------------------------------
See accompanying notes to interim consolidated financial statements.
FIRST CALGARY PETROLEUMS LTD.
Consolidated Statements of Operations and Deficit
Three months ended Six months ended
(unaudited) June 30 June 30
(in thousands of U.S. dollars) 2007 2006 2007 2006
-------------------------------------------------------------------------
Revenue
Interest $ 1,502 $ 1,902 $ 2,493 $ 2,788
Expenses
General and administrative 3,286 1,477 6,250 2,749
Foreign exchange gain (1,169) (6,854) (1,108) (6,860)
Stock-based compensation (note 3) 841 682 1,074 1,593
Depreciation and accretion 157 20 287 42
-------------------------------------------------------------------------
3,115 (4,675) 6,503 (2,476)
Income (loss) for the period (1,613) 6,577 (4,010) 5,264
Deficit, beginning of period (56,078) (40,286) (53,681) (38,973)
-------------------------------------------------------------------------
Deficit, end of period (57,691) (33,709) (57,691) (33,709)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Income (loss) per share (note 3)
Basic and diluted $ (0.01) $ 0.03 $ (0.02) $ 0.02
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying notes to interim consolidated financial statements.
FIRST CALGARY PETROLEUMS LTD.
Consolidated Statements of Cash Flows
Three months ended Six months ended
(unaudited) June 30 June 30
(in thousands of U.S. dollars) 2007 2006 2007 2006
-------------------------------------------------------------------------
Operating activities
Income (loss) for the period $ (1,613) $ 6,577 $ (4,010) $ 5,264
Items not involving cash
Stock-based compensation 841 682 1,074 1,593
Foreign exchange gain (1,487) (607) (1,548) (670)
Depreciation and accretion 157 42 287 75
-------------------------------------------------------------------------
(2,102) 6,694 (4,197) 6,262
Change in non-cash working
capital (624) (636) (1,243) 1,863
-------------------------------------------------------------------------
(2,726) 6,058 (5,440) 8,125
-------------------------------------------------------------------------
Financing activities
Proceeds from issuance
of shares 135,671 150,941 135,671 150,941
Proceeds from exercise
of options 1,142 2,202 1,281 2,359
Issue costs (6,549) (7,942) (6,549) (7,942)
-------------------------------------------------------------------------
130,264 145,201 130,403 145,358
Investing activities
Property, plant and equipment
expenditures (37,146) (40,150) (87,143) (74,384)
Change in non-cash working capital 514 (2,938) (4,039) 3,101
-------------------------------------------------------------------------
(36,632) (43,088) (91,182) (71,283)
-------------------------------------------------------------------------
Change in cash and cash
equivalents 90,906 108,171 33,781 82,200
Exchange rate fluctuations
on change in cash and cash
equivalents 1,533 (77) 1,518 (7)
Cash and cash equivalents,
beginning of period 51,349 81,981 108,489 107,882
-------------------------------------------------------------------------
Cash and cash equivalents,
end of period $143,788 $190,075 $143,788 $190,075
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying notes to interim consolidated financial statements.
First Calgary Petroleums Ltd.
Six months ended June 30, 2007 (unaudited)
(in thousands of U.S. dollars unless otherwise indicated)
-------------------------------------------------------------------------
These 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, 2006, except as noted
below. 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, 2006.
1. Changes in accounting policies:
(a) Financial Instruments - recognition and measurement
This new standard requires all financial instruments within its
scope, including all derivatives, to be recognized on the balance
sheet initially at fair value. Subsequent measurement of all
financial assets and liabilities except those held-for-trading and
available for sale are measured at amortized cost determined using
the effective interest rate method. The effect of adopting the new
standard was not material to the financial statements.
(b) Other comprehensive income
The new standards require a statement of comprehensive income, which
is comprised of net earnings and other comprehensive income. For the
company, there are no items in comprehensive income other than the
loss for the period.
Under the new accounting standards, cumulative translation
adjustments are included in accumulated other comprehensive income.
As a result, the Company's cumulative translation adjustment at
December 31, 2006 and June 30, 2007 of $6.5 million has been
reclassified to accumulated other comprehensive income in
shareholders' equity.
(c) Accounting policies not yet adopted
Two new Canadian accounting standards have been issued which will
require additional disclosure in the Company's financial statements
commencing January 1, 2008, about the Company's financial instruments
as well as its capital and how it is managed.
2. Operations and commitments:
First Calgary currently has the rights to appraise and develop
Ledjmet Block 405b (Block 405b) in Algeria. The Company's rights and
obligations on Block 405b are set out in a Production Sharing
Contract (PSC) with Sonatrach, the national oil company of Algeria.
The nature of current operations and the terms or commitments under
the PSC are summarised as follows.
The five year exploration period of the PSC ended on December 26,
2006. All exploration work commitments under the PSC were completed.
FCP has retained two main acreage parcels for further appraisal and
potential development, the MLE field and the Central Area Field
Complex (CAFC).
In February 2007, First Calgary received approval from the Algerian
regulatory authority ALNAFT of the Development Plan for the MLE oil
and gas field. The total gross cost of the MLE development is
currently estimated at $1.0 - $1.3 billion, and will be mainly
incurred in 2008 and 2009. The costs will be funded 75% by FCP and
25% by Sonatrach. The total project cost estimate will be refined
during 2007 as engineering and design plans are completed. In
addition to the development costs, FCP has obligations to Sonatrach
for the MLE access fee and annual training bonuses. The MLE access
fee is compensation for the right to develop the MLE reserves
discovered by Sonatrach with the MLE-1 well, and will result in FCP
paying for the first $45 million of Sonatrach's development costs.
The annual training bonus is $150 thousand, indexed for inflation,
for the duration of the contract.
Sonatrach agreed to extend the Block 405b exploration period for
24 months commencing December 26, 2006 in order to complete the
appraisal of the CAFC and to submit commerciality reports and apply
for exploitation permits thereon. Following the appraisal of the
CAFC, the remaining lands not subject to an exploitation permit will
be returned to the government.
First Calgary has committed the commercialisation of its revenue
interest in the natural gas production on Block 405b to Sonatrach
through a long term take or pay gas marketing agreement signed in
November 2006. Pursuant to the agreement, Sonatrach will market the
total natural gas production from Block 405b using a price formula
linked to the price of European oil products. During the exploitation
period, the PSC allocates hydrocarbon production between FCP,
Sonatrach and the Algerian State in accordance with a sliding scale
formula based on such factors as production levels, product prices,
project investments and rates of inflation. 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, except the new
Windfall Profits Tax. In 2006 the Algerian government announced a new
Windfall Profits Tax. Having studied the detailed legislation, FCP is
of the view that the Windfall Profits Tax will apply to its share of
liquids production, but not gas revenue. Exploitation periods for
each commercial oil and natural gas discovery are 25 and 30 years,
respectively.
The development of the Block 405b reserves through to commercial
production will require additional funding in the form of debt,
equity and quasi equity, joint ventures or some combination thereof.
3. Capital stock:
(a) Issued share capital:
Number of
Shares Amount
---------------------------------------------------------------------
Common shares:
Balance, December 31, 2006 223,686,330 $ 631,933
Issued on public offering (i) 30,000,000 135,671
Issued on exercise of employee stock
options 732,700 1,281
Transfer from contributed surplus - 687
Issue costs - (6,549)
---------------------------------------------------------------------
Balance, June 30, 2007 254,419,030 $ 763,023
---------------------------------------------------------------------
---------------------------------------------------------------------
(i) On April 24, 2007 the Company issued 30,000,000 common shares
for gross proceeds of $135.7 million at a price of C$5.08 per
common share. The issue costs were $6.5 million.
(b) Employee stock options:
The Company has up to 10% of its issued and outstanding common
shares available for issuance pursuant to its Stock Option Plan.
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 closing market price of the shares on the
date preceding the date of the grant. The following table
summarises the changes in stock options outstanding during the
six months ended June 30, 2007:
Weighted
Avg.
Number of Exercise
Options Price
---------------------------------------------------------------------
Outstanding, December 31, 2006 9,135,600 C$5.98
Granted 4,050,000 5.19
Exercised (732,700) 1.92
Forfeited (384,999) 7.49
---------------------------------------------------------------------
Outstanding, June 30, 2007 12,067,901 C$5.91
---------------------------------------------------------------------
---------------------------------------------------------------------
The following table summarises information about the options
outstanding and exercisable at June 30, 2007:
Options Outstanding Options Exercisable
------------------- -------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Range of Contractual Exercise Exercise
Exercise Price Options Life (years) Price Options Price
---------------------------------------------------------------------
C$ 1.25 - 1.25 200,000 0.2 years C$1.25 200,000 C$1.25
C$ 2.36 - 2.60 445,000 0.6 years 2.59 445,000 2.59
C$ 4.72 - 4.72 2,117,500 1.3 years 4.72 2,117,500 4.72
C$ 5.08 - 6.39 7,004,067 4.2 years 5.65 2,111,399 6.27
C$ 7.22 - 8.59 1,044,000 3.0 years 7.57 514,002 7.71
C$ 8.65 -10.50 1,008,334 3.7 years 9.41 423,338 9.42
C$11.10 -15.77 249,000 2.6 years 11.96 199,000 12.08
---------------------------------------------------------------------
12,067,901 3.3 years C$5.91 6,010,239 C$5.82
---------------------------------------------------------------------
---------------------------------------------------------------------
(c) Stock-based compensation expense:
For the six months ended June 30, 2007, the Company recorded
$3.2 million (2006 - $3.2 million) of stock-based compensation
expense with a corresponding increase in contributed surplus
(three months ended June 30, 2007 - $2.1 million; 2006 -
$1.6 million). Of the total stock-based compensation expense, the
Company has capitalised $1.3 million and $2.1 million for the
three and six month periods ended June 30, 2007 (2006 -
$0.9 million and $1.6 million respectively).
The fair value of the options granted in the three months ended
June 30, 2007 was estimated to be C$2.44 (2006 - C$5.45) per
option and was determined using the Black-Scholes option pricing
model with the following assumptions: expected volatility of
59 percent (2006 - 64 percent), risk-free interest rate of
3 percent (2006 - 4 percent) and expected lives of 4 years (2006
- 4 years).
The fair value of the options granted in the six months ended
June 30, 2007 was estimated to be C$2.49 (2006 - C$4.79) per
option and was determined using the Black-Scholes option pricing
model with the following assumptions: expected volatility of
59 percent (2006 - 65 percent), risk-free interest rate of
3 percent (2006 - 4 percent) and expected lives of 4 years (2006
- 4 years).
(d) Contributed surplus:
The changes in the contributed surplus balance are as follows:
---------------------------------------------------------------------
Balance, December 31, 2006 $ 19,186
Options granted 3,155
Options exercised (687)
---------------------------------------------------------------------
Balance March 31, 2007 $ 21,654
---------------------------------------------------------------------
---------------------------------------------------------------------
(e) Per share amounts:
The income (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 period ended June 30,
2007 were 246,479,389 and 235,214,160 respectively (2006 -
218,985,821 and 211,045,789).
4. 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.
Canada Algeria Total
---------------------------------------------------------------------
Three months ended June 30
Capital expenditures
2007 $ 404 $ 36,742 $ 37,146
2006 $ 148 $ 40,002 $ 40,150
Canada Algeria Total
---------------------------------------------------------------------
Six months ended June 30
Capital expenditures
2007 $ 573 $ 86,570 $ 87,143
2006 $ 182 $ 74,202 $ 74,384
Total Assets
2007 $146,293 $629,574 $775,867
2006 $191,610 $450,328 $641,938
For further information: First Calgary Petroleums Ltd.: Richard G. Anderson,
President and CEO, Tel: (403) 264-6697; John van der Welle, Finance Director
and CFO, Tel: +44 (0) 203 159 4010; Other contacts: David Nabarro, Nabarro
Wells & Co. Limited, Tel + 44 (0) 207 710 7400; James Henderson, Pelham Public
Relations, Tel: +44 (0) 207 743 6673; Carina Corbett, 4C - Burvale Limited,
Tel: +44 (0) 207 559 6710
(FPL)
END
First Calgary Petroleums (LSE:FPL)
Historical Stock Chart
From Jun 2024 to Jul 2024
First Calgary Petroleums (LSE:FPL)
Historical Stock Chart
From Jul 2023 to Jul 2024
