First Calgary Petroleums Ltd. Reports Second Quarter Results
TSX: FCP LSE: FPL
CALGARY, Aug. 12 /CNW/ - First Calgary Petroleums Ltd. is pleased to
report financial results for the six months ended June 30, 2004.
Report to Shareholders
First Calgary Petroleums Ltd. ("FCP" or the "Company"), an international
exploration company active in Algeria, operates Ledjmet Block 405b and Yacoub
Block 406a in the Berkine Basin. In this report, $ refers to the U.S. dollar
and C$ refers to the Canadian dollar.
FCP continued to experience excellent drilling results on both of its
blocks during the second quarter with the LEC-1 and ZCH-1 exploration wells.
With four additional Block 405b wells currently drilling or planned for the
remainder of the year (MZLN-1, LES-1, MZLS-1 and LEW-1), the Company will
drill seven wells in 2004. In addition to the active drilling programme, FCP
is continuing to acquire 3D seismic data which will be used to evaluate more
of the Company's Berkine lands and identify additional drilling locations.
Ledjmet Block 405b
On Block 405b, there are currently six cased gas and condensate wells, of
which the Company drilled five. On a cumulative basis, the wells production
tested 91,620 barrels of oil equivalent per day consisting of 424 million
cubic feet of gas per day and 21,081 barrels of condensate per day.
The following is a summary of the wells, production test results obtained
to date and wells planned for the remainder of the year:
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Barrels of Million cubic Barrels of
Well (1) Status oil equivalent feet of gas condensate
per day (2) per day per day
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MLE-1 Cased & tested 8,911 43 1,745
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MLE-2 Cased & tested 44,330 189 12,874
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MLE-3 Cased & tested 24,743 127 3,643
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MLE-4 Cased & tested 5,090 23 1,223
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MLE-5 Cased & tested 8,546 42 1,596
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LEC-1 Cased & testing
in progress
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MZLN-1 Drilling
-------------------------------------------------------------------------
LES-1 Drilling
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MZLS-1 2004 Location
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LEW-1 2004 Location
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91,620 424 21,081
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(1) This table does not include the ZCH-1 well (Block 406a) which
production tested 8,545 barrels of hydrocarbon liquids and
56.2 million cubic feet of gas per day.
(2) Using a conversion ratio of 6 thousand cubic feet of gas to 1 barrel
of oil equivalent.
During the quarter ended June 30, 2004, FCP completed production testing
the MLE-5 appraisal well. The well was drilled to assess the eastern extension
of the MLE Field onto a previously undrilled fault block.
Following the MLE-5 well, FCP's drilling programme focused on exploring
the acreage west of the MLE Field. The Company drilled and logged the LEC-1
exploration well to total depth of 4,437 metres. LEC-1 is FCP's first
exploration well on the Block and one of the targets identified from the 2003
seismic programme. The well was drilled to evaluate a structural high,
separate from the MLE Field. The wireline logs indicate the presence of
42 metres of net hydrocarbon pay over multiple intervals. A production testing
programme is currently underway and results are expected to be available in
September.
Near the end of the quarter, FCP commenced drilling operations on the
MZLN-1 well which has a projected depth of 4,500 metres and offsets the
abandoned MZL-1 well, drilled in 1987. The MZLN-1 well has two objectives: to
confirm and extend the hydrocarbon pay identified in the MZL-1 borehole and to
explore for new reserves in additional geological horizons. MZLN-1 is expected
to reach total depth in August.
Subsequent to June 30, 2004, FCP commenced drilling operations on the
LES-1 exploration well. This well, having a planned depth of 4,500 metres, is
anticipated to reach total depth in September and will be used to evaluate a
separate structure on the southern part of Block 405b.
The Company has also recently completed the 550 km(2) 3D seismic
acquisition programme covering the Block's western acreage. Processing of the
field data is in progress and initial interpretation of this survey is
expected to be completed during the third quarter. FCP now has 3D seismic data
covering essentially the entire Block and is well positioned to explore the
balance of its undrilled lands.
Yacoub Block 406a
During the second quarter FCP drilled its first discovery on Block 406a,
ZCH-1. The exploration well, located on the southeast portion of the Block, is
approximately 30 km from the nearest producing hydrocarbon accumulations. The
cumulative initial production test rates, completed in July, were
8,545 barrels of hydrocarbon liquids (comprised of 6,376 barrels of light oil
and 2,169 barrels of condensate) and 56.2 million cubic feet of natural gas
per day from several geological zones at various wellhead flowing pressures.
The well encountered multiple light oil reservoirs and multiple gas reservoirs
with high yields of associated condensate. Test results are being further
analyzed to project reservoir sizes and to assess production potential.
FCP holds its hydrocarbon rights in Block 406a pursuant to a joint
venture between the Company and Sonatrach, held 49% and 51% respectively. A
portion of the total recoverable natural gas reserves will be considered
strategic reserves and will be excluded by Algerian law from the joint
venture.
Encouraged by the ZCH-1 results, FCP has commenced a 613 km(2) 3D seismic
programme on the Block to delineate the size of the structure and define both
appraisal and further exploration drilling locations. The acquisition,
processing and initial interpretation of this survey are expected to be
completed around the end of the year.
The ZCH-1 discovery on Block 406a is significant for the Company. With a
sizeable unexplored acreage position on this structural trend, it has the
potential to add materially to the Company's reserves. This discovery provides
an excellent complement and balance to the gas and condensate discoveries on
Ledjmet Block 405b.
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, 2004 and 2003 and the audited financial
statements and MD&A for the year ended December 31, 2003.
Operations and Capital Expenditures
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.
The hydrocarbon agreements require FCP to conduct certain drilling and
seismic activities over periods of time. The exploration and appraisal phases
of the agreements that extend for five years are divided into two periods with
each period containing a minimum work commitment. In each agreement, the first
period is for three years, and the Company then has the option to enter a
second exploration period of two years. Following the exploration and
appraisal phase of each agreement, the Company and Sonatrach will obtain
exploitation permits for any reserves determined to be commercial, subject to
certain exclusions, and all lands not subject to an exploitation permit will
be returned to the government.
Ledjmet Block 405b
The Company is in the third year of the first exploration period of the
Block 405b hydrocarbon agreement. The first exploration period will end in
December 2004. At June 30, 2004, FCP has met all of the first period work
commitments with the drilling of the LEC-1 exploration well, which is
currently being tested. Based upon the drilling results obtained to date and
the seismic data on the Block, the Company is optimistic about the exploration
potential of the undrilled lands to the west of the MLE and LEC discoveries.
Accordingly, FCP expects to commit to the second exploration period, at which
time FCP will be required to relinquish 30% of the Block's acreage. The work
commitment for the two year second exploration period includes acquiring
additional seismic and drilling one exploration well by December 31, 2006.
As part of the Block 405b hydrocarbon agreement, FCP obtained the right
to appraise and develop the MLE reserves discovered with the MLE-1 well. FCP
has now drilled four MLE appraisal wells: MLE-2, MLE-3, MLE-4 and MLE-5. As
compensation for the right to access the MLE discovery, the Company is
committed to pay Sonatrach a 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.
Yacoub Block 406a
The Company is in the first year of the second exploration period of the
Block 406a hydrocarbon agreement. With the drilling of the ZCH-1 exploration
well, FCP has satisfied all of its first exploration period work commitments.
The second exploration period will end in November 2005 and its work
commitment includes the acquisition of seismic and drilling two additional
exploration wells. The cost of this commitment is currently estimated at
$12.75 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 $12.75 million.
Capital Expenditures
Capital expenditures for the six months ended June 30, 2004 totaled
$38.5 million compared to $17.6 million in the comparable period in 2003. Of
the 2004 expenditures, $30.5 million related to drilling, completion and
testing activities, $5.0 million was spent on seismic and $3.0 million related
to administrative and support services for the Algerian operations.
Capital expenditures for the three months ended June 30, 2004 totaled
$24.4 million compared to $8.9 million in 2003. In the second quarter of 2004
the Company production tested the MLE-5 appraisal well, completed drilling the
LEC-1 and ZCH-1 exploration wells and continued a 550 km(2) 3D seismic
programme on Block 405b. Of the second quarter 2004 expenditures,
$19.4 million related to drilling, completion and testing activities,
$4.1 million was spent on seismic and $0.9 million related to administrative
and support services for the Algerian operations.
Following the ZCH-1 discovery, the Company increased its Block 406a 2004
capital programme to include a 613 km(2) 3D seismic program estimated to cost
$6.0 million. This seismic data will be used to identify future drilling
locations.
Liquidity and Capital Resources
FCP continues to rely on equity to fund its operations and capital
programmes. The Company had working capital of $48.7 million at June 30, 2004
compared to $83.1 million at December 31, 2003. Changes in the Company's
working capital are primarily a function of the timing and magnitude of its
equity financings and capital expenditures. The $34.4 million reduction in
working capital for the six months ended June 30, 2004 is attributed to
$38.5 million of capital expenditures, $7.0 million in proceeds from the
exercise of options and warrants and $2.9 million to fund operations. During
the three months ended June 30, 2004, the $26.0 million reduction in the
Company's working capital is attributed to $24.4 million of capital
expenditures, $0.4 million in proceeds from the exercise of options and
warrants and $2.0 million to fund operations.
FCP has an active seismic and drilling programme planned for the
remainder of 2004 that will be funded substantially by the Company's working
capital. It is expected the Company will require additional capital prior to
the end of 2004 to fund operations and future capital spending. The capital
markets presently appear receptive to the oil and gas sector and the Company
believes this environment will continue into the foreseeable future. In
addition, the development of the Block 405b reserves through to commercial
production will require significant funding that is expected to be in the form
of equity, debt, joint ventures or some combination thereof. The Company has
been approached by a number of parties seeking to fund the Ledjmet
development. To date, no financing arrangements have been made, however, the
Company is optimistic the necessary funding will be available when required
under reasonable commercial terms.
The Company is listed on the Toronto Stock Exchange and the AIM market of
the LondonStock Exchange. For the six months ended June 30, 2004,
$7.0 million has been received from the issuance of 2,422,725 common shares
pursuant to the exercise of stock options and warrants. During the three
months ended June 30, 2004 the Company received $0.4 million for the issuance
of 194,333 common shares from the exercise of stock options and warrants.
The fully-diluted number of shares outstanding at August 5, 2004,
June 30, 2004 and December 31, 2003 were as follows:
August 5, June 30, December 31,
2004 2004 2003
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Common shares 165,529,411 165,479,411 163,056,686
Employee stock options 9,077,668 9,012,668 9,018,401
Common share purchase warrants 154,549 204,549 1,913,209
Non-employee stock options 900,000 900,000 900,000
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Fully-diluted shares outstanding 175,661,628 175,596,628 174,888,296
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Operating Results and Selected Quarterly Information
2004 2003
(000's of
U.S. dollars) Q2 Q1 Q4 Q3 Q2 Q1
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Interest and
other income $ 238 $ 415 $ 315 $ 81 $ 118 $ 124
Expenses
General and
administrative 1,048 910 962 660 539 442
Stock-based
compensation 1,375 1,389 3,579 233 214 653
Foreign exchange
loss (gain) 1,137 292 (320) (192) 633 421
Write-off Yemen
investment - - 1,035 - - -
Earthquake
donation - - - - 1,000 -
Other expenses 92 90 290 34 97 8
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3,652 2,681 5,546 735 2,483 1,524
Net loss (3,414) (2,266) (5,231) (654) (2,365) (1,400)
Net loss
per share (0.02) (0.01) (0.03) (0.01) (0.02) (0.01)
Share capital 172,376 171,897 165,181 62,463 62,295 62,194
Working capital
(deficiency) 48,664 74,659 83,110 (1,150) 10,383 19,947
Capital assets 107,267 82,886 68,708 52,106 41,061 29,085
Other liabilities (174) (151) (123) (92) (91) (61)
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Shareholders'
equity $155,757 $157,394 $151,695 $ 50,864 $ 51,353 $ 48,971
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2002
(000's of
U.S. dollars) Q4 Q3
-------------------------------------
Interest and
other income $ 75 $ 84
Expenses
General and
administrative 543 743
Stock-based
compensation 31 214
Foreign exchange
loss (gain) (81) 60
Write-off Yemen
investment - -
Earthquake
donation - -
Other expenses 5 5
-------------------------------------
498 1,022
Net loss (423) (938)
Net loss per share (0.01) (0.01)
Share capital 40,351 38,482
Working capital
(deficiency) 6,640 13,954
Capital assets 18,862 10,053
Other liabilities (22) (22)
-------------------------------------
Shareholders'
equity $ 25,480 $ 23,985
-------------------------------------
-------------------------------------
The Company's interest and other income for the three and six month
periods ended June 30, 2004, were higher compared with the 2003 comparable
periods as a result of higher average cash and term-deposit balances on hand
during 2004.
The Company's general and administrative expenses were $2.0 million for
the six months ended June 30, 2004 compared with $1.0 million in the
comparable 2003 period. For the three months ended June 30, 2004 and 2003, the
general and administrative expenses were $1.0 and $0.5 million, respectively.
The increased expense during 2004 is primarily attributed to increased
employee levels, administrative support, investor relations expenses and stock
exchange listing fees.
Stock-based compensation expense was $2.8 million for the six months
ended June 30, 2004 compared with $0.9 million in the comparable 2003 period.
For the three months ended June 30, 2004 and 2003, the stock-based
compensation expense was $1.4 and $0.2 million, respectively. The increased
2004 expense is primarily attributed to the accrued vesting of options granted
in the fourth quarter of 2003 and to higher estimated option fair values.
The Company recorded a foreign exchange loss of $1.4 million for the six
months ended June 30, 2004, of which $1.1 million was incurred during the
second quarter. The loss primarily resulted from the effects of the weakening
U.S. dollar against Canadian dollar deposits held during the quarter. A
$0.6 million loss was recorded in the comparable 2003 period due primarily
from foreign exchange rate changes on British pound holdings generated from
the February 2003 public share offering. The Company changed its functional
currency in the fourth quarter of 2003 from the Canadian dollar to the
U.S. dollar. The functional currency is the unit of reference by which all
foreign currency transactions are measured and foreign exchange gains or
losses determined.
Business Risks and Uncertainties
The MD&A for the year ended December 31, 2003 includes an overview of
certain of the business risks and uncertainties facing the Company. Those
risks remain in effect as at June 30, 2004.
Outlook
The Company has an active exploration programme planned for the remainder
of the year. The Company has two drilling rigs contracted and will continue
its exploration drilling on a number of seismically identified structures.
In addition, work is continuing to formulate plans for the MLE
development, which is a major undertaking for the Company. Carrying this
project through to commercial production as expeditiously as possible
continues to be a priority.
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.
August 5, 2004
FIRST CALGARY PETROLEUMS LTD.
Consolidated Balance Sheets
(Expressed in thousands of U.S. dollars)
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June 30 December 31
2004 2003
-------------------------------------------------------------------------
(Unaudited) (Audited)
Assets
Current assets:
Cash and short-term deposits (note 3) $ 61,481 $ 95,185
Accounts receivable 120 144
Deposits and prepaid expenses 361 326
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61,962 95,655
Property, plant and equipment 107,267 68,708
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$169,229 $164,363
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities
(note 4) $ 13,298 $ 12,544
Asset retirement obligations 174 124
Shareholders' equity:
Capital stock (note 5) 172,376 165,181
Contributed surplus (note 5) 7,396 4,849
Cumulative translation adjustment 6,502 6,502
Deficit (30,517) (24,837)
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155,757 151,695
Operations and commitments (note 1)
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$169,229 $164,363
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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)
-------------------------------------------------------------------------
Three months ended Six months ended
June 30 June 30
(Unaudited) 2004 2003 2004 2003
-------------------------------------------------------------------------
(Restated (Restated
see note 2) see note 2)
Revenue:
Interest and other income $ 238 $ 118 $ 653 $ 242
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Expenses:
General and administrative 1,048 539 1,958 982
Stock-based compensation
(note 5) 1,375 214 2,764 867
Foreign exchange loss 1,137 633 1,429 1,054
Algerian earthquake
relief donation - 1,000 - 1,000
Capital taxes 73 88 143 88
Depreciation 17 7 35 13
Accretion of asset
retirement obligations 2 2 4 3
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3,652 2,483 6,333 4,007
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Loss for the period (3,414) (2,365) (5,680) (3,765)
Deficit, beginning of period (27,103) (16,586) (24,837) (15,186)
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Deficit, end of period $(30,517) $(18,951) $(30,517) $(18,951)
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Loss per share (note 5) $ (0.02) $ (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)
-------------------------------------------------------------------------
Three months ended Six months ended
June 30 June 30
(Unaudited) 2004 2003 2004 2003
-------------------------------------------------------------------------
(Restated (Restated
see note 2) see note 2)
Operating activities:
Loss for the period $ (3,414) $ (2,365) $ (5,680) $ (3,764)
Items not involving cash:
Stock-based compensation 1,375 214 2,764 867
Foreign exchange loss
on cash 1,100 - 1,340 -
Depreciation 17 7 35 13
Accretion of asset
retirement obligations 2 2 4 3
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(920) (2,142) (1,537) (2,881)
Change in non-cash
working capital 94 (198) (193) (260)
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(826) (2,340) (1,730) (3,141)
Financing activities:
Proceeds from issuance
of shares - - - 23,121
Proceeds from exercise
of warrants 272 - 6,335 307
Proceeds from exercise
of options 144 118 657 238
Issue costs (14) (17) (14) (1,722)
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402 101 6,978 21,944
Investing activities:
Capital expenditures (24,377) (8,943) (38,548) (17,553)
Change in non-cash
working capital 877 1,048 936 1,412
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(23,500) (7,895) (37,612) (16,141)
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Increase (decrease) in cash
and short-term deposits (23,924) (10,134) (32,364) 2,662
Effect of exchange rate
fluctuations on cash
and short-term deposits (1,100) 2,051 (1,340) 3,286
Cash and short-term deposits,
beginning of period 86,505 26,453 95,185 12,422
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Cash and short-term deposits,
end of period $ 61,481 $ 18,370 $ 61,481 $ 18,370
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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, 2004 (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
and following the same accounting policies as the annual consolidated
financial statements for the year ended December 31, 2003. 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 annual
consolidated financial statements and the notes thereto in the
Company's annual report for the year ended December 31, 2003.
1. Operations and commitments:
The Company is focusing operations in Algeria where it has the rights
to explore, appraise and develop two acreage 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
hydrocarbon agreements with Sonatrach, the national oil company of
Algeria. These hydrocarbon 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, subject to certain exclusions respecting
Block 406a.
(a) Block 406a:
In 2000 the Company entered into a joint venture agreement with
Sonatrach to explore Block 406a in the Berkine Basin.
At June 30, 2004 the Company had fulfilled its first exploration
period work obligations with the drilling of the ZCH-1
exploration well. The Company has elected to enter the second
exploration period extending the exploration rights for two years
through to November 2005. The work obligation for the second
exploration period is to conduct a seismic programme and drill
two exploration wells. The estimated cost of this work is
$12.75 million. If the Company fails to satisfy the work
obligations, the rights, other than for areas for which an
exploration permit has been granted or requested, could be
forfeited and the Company will be liable to pay Sonatrach a
penalty. The penalty for failure to complete the second
exploration period work obligation is $12.75 million. In addition
to the work commitments, the Company is obligated to pay an
annual training bonus in the amount of $150 thousand for the
duration of the contract.
(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. At June 30, 2004 the Company had fulfilled its first
exploration period work obligations with the drilling of the
LEC-1 exploration well. The contract provides the Company with
the right to appraise and develop the MLE Field previously
discovered on the Block. Should the Company exercise this right,
a reserve-based access fee of $0.25 per barrel of oil equivalent
will be owed to Sonatrach on the commercialization of the Field.
The contract also provides the Company with the option to enter a
second exploration period that would extend through to
December 2006. The work obligation for the second exploration
period is to conduct a seismic programme and drill one
exploration well. The estimated cost of this work is
$11.0 million. Should the Company elect into the second
exploration period and fails to satisfy the work obligation of
that 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 thousand for the duration of the contract.
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 Block 405b reserves through to
commercial production will require additional funding in the form of
equity, debt, joint ventures or some combination thereof.
2. Changes in accounting policies and restatement of prior periods:
In the fourth quarter of 2003, the Company adopted three new
accounting policies which require restatement of the previously
reported 2003 interim financial statements. The new accounting
policies were the change to the U.S. dollar as the Company's
reporting currency, the recognition of compensation expense for stock
options granted to employees after January 1, 2003 and the new
accounting standard for asset retirement obligations.
3. 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
2004 2003
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Cash on deposit:
U.S. dollars $ 13,174 $ 50,912
Canadian dollars 179 791
British pounds 135 286
Algerian dinars 1,666 50
Bank term deposits:
Canadian dollars 45,825 42,644
U.S. dollars 502 502
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$ 61,481 $ 95,185
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4. Accounts payable and accrued liabilities:
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June 30 December 31
2004 2003
---------------------------------------------------------------------
Trade payables:
U.S. dollars $ 4,363 $ 8,312
Algerian dinars 1,890 711
Canadian dollars 515 536
British pounds 142 55
Euros 5 -
Capital accrual:
U.S. dollars 6,383 2,930
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$ 13,298 $ 12,544
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5. Capital stock:
(a) Issued share capital:
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Number of
Shares Amount
---------------------------------------------------------------------
Common shares:
Outstanding, December 31, 2003 163,056,686 $165,181
Issued on exercise of share purchase
warrants(i) 1,708,660 6,335
Issued on exercise of stock options 714,065 657
Transfer from contributed surplus
on exercise of stock options and warrants - 217
Share issue costs - (14)
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Outstanding, June 30, 2004 165,479,411 $172,376
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(i) During the six months ended June 30, 2004, 1,708,660 common
shares were issued pursuant to the exercise of the following
common share purchase warrants: 44,681 at C$2.50 per share
and 1,663,979 at C$5.00 per share.
(b) Employee stock options:
Pursuant to the Stock Option Plan, the Company has
13,497,730 common shares reserved for issuance at June 30, 2004.
Stock options granted under the plan have a term of five years
and vesting terms are at the discretion of the Board. The
exercise price of each option is equal to the closing market
price of the shares on the date preceding the date of grant. The
following table summarizes the changes in stock options
outstanding:
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Weighted
Average
Number of Exercise
Options Price
---------------------------------------------------------------------
Outstanding, December 31, 2003 9,018,401 C$ 2.47
Granted 775,000 9.34
Exercised (714,065) 1.22
Cancelled (66,668) 3.58
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Outstanding, June 30, 2004 9,012,668 C$ 3.15
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The following table summarizes information about the options
outstanding and exercisable at June 30, 2004:
Options Outstanding Options Exercisable
---------------------------------------------------------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Range of Contractual Exercise Exercise
Exercise price Options Life Price Options Price
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C$0.50-0.85 2,175,000 2.3 years C$ 0.63 2,175,000 C$ 0.63
C$0.95-1.06 425,000 0.5 years 1.05 425,000 1.05
C$1.23-1.90 1,730,334 1.9 years 1.28 1,380,334 1.27
C$2.36-2.95 1,062,334 3.6 years 2.60 644,001 2.58
C$4.72-6.00 2,525,000 4.3 years 4.72 838,334 4.72
C$7.45-10.55 725,000 4.6 years 7.69 241,667 7.69
C$10.95-11.55 370,000 4.9 years 11.15 76,667 11.10
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9,012,668 3.1 years C$ 3.15 5,781,003 C$ 2.06
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(c) Common share purchase warrants:
The following table summarizes the changes in common share
purchase warrants outstanding:
---------------------------------------------------------------------
Weighted
Average
Number of Exercise
Warrants Price
---------------------------------------------------------------------
Outstanding, December 31, 2003 1,913,209 C$ 4.70
Exercised (1,708,660) 4.94
---------------------------------------------------------------------
Outstanding, June 30, 2004 204,549 C$ 2.75
---------------------------------------------------------------------
---------------------------------------------------------------------
At June 30, 2004, all of the outstanding common share purchase
warrants are exercisable; 86,021 expire on April 19, 2005 and the
remaining 118,528 expire on June 9, 2007.
(d) Non-employee stock options:
In 2002 the Company granted consultants options to acquire
900,000 common shares at a price of C$0.70 per share.
At June 30, 2004, all of these options remain outstanding, are
fully vested and expire January 24, 2007.
(e) Stock-based compensation expense:
For the six months ended June 30, 2004, the Company recorded
$2.8 million ($1.4 million for the three months ended) as
stock-based compensation expense with a corresponding increase in
contributed surplus. The weighted average fair value of the
options granted in the six months ended June 30, 2004 was
calculated to be C$5.11 per option using the Black-Scholes option
pricing model with the following assumptions: expected volatility
of 82%, risk-free interest rate of 3.8% and expected lives of
3 years.
Had options granted to employees in 2002 been accounted for using
the fair value method, the net loss for the six months ended
June 30, 2004 would have been higher by $0.1 million
(2003 - $0.2 million). The pro forma fair values were determined
using the Black-Scholes option pricing model with the following
assumptions: expected volatility of 95%, risk-free interest rate
of 5% and expected lives of 5 years.
(f) Contributed surplus:
The changes in contributed surplus balance are as follows:
---------------------------------------------------------------------
---------------------------------------------------------------------
Balance, December 31, 2003 $ 4,849
Options granted 2,764
Options and warrants exercised (217)
---------------------------------------------------------------------
Balance, June 30, 2004 $ 7,396
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---------------------------------------------------------------------
(g) 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, 2004 were 165,380,528 and 164,571,937, respectively
(2003 - 124,604,103 and 120,658,576).
6. 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. The entire Algerian
activities are in support of the exploration operations, and as a
result, are capital in nature. All revenues, expenses and losses for
the periods presented are related to operations in Canada.
Three months ended June 30 Canada Algeria Yemen Total
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2004
Capital expenditures $ 4 $ 24,373 $ - $ 24,377
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---------------------------------------------------------------------
2003
Capital expenditures $ 45 $ 8,898 $ - $ 8,943
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Six months ended June 30 Canada Algeria Yemen Total
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2004
Capital expenditures $ 6 $ 38,542 $ - $ 38,548
Assets $ 60,340 $108,889 $ - $169,229
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---------------------------------------------------------------------
2003
Capital expenditures $ 52 $ 17,501 $ - $ 17,553
Assets $ 18,505 $ 40,307 $ 785 $ 59,597
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/For further information: contact: 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, fax:
(403) 264-3955, email: info(at)fcpl.ca, web site: www.fcpl.ca; European
contacts: James Henderson, COLLEGE HILL, Tel: +44 (0) 207 457 2020;
Carina Corbett, 4C COMMUNICATIONS LTD., Tel: +44 (0) 207 907 4761/
(FPL FCP.)
END
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