OKLAHOMA CITY, May 23, 2001 (PRIMEZONE) -- Speaking at the annual meeting of stockholders yesterday, John K. Penton, President of Canaan Energy Corporation (Nasdaq:KNAN) announced that financial and reserve growth is likely to continue through the remainder of 2001. Canaan also reported that the Company had year-to-date successfully completed 94% of the wells in which it had participated.
Mr. Penton stated that 2000 was a year of significant change for Canaan. He said, "We began the year as three privately-held corporations, eight limited partnerships, one unrelated oil and gas company and a registered broker/dealer. We are now collectively and singularly, Canaan Energy Corporation. The one thing that has not changed is our strategy for growth. We continue to focus on low-risk development drilling, extensions of proven developed plays, the acquisition of additional interests in those properties, as well as impact acquisitions when appropriate. Canaan continues to focus on long-lived, natural gas reserves, additional development potential and operations whenever possible. This is the same model that has served the success of our past efforts and we believe will continue to do so."
S. Mark Cain, Canaan's Engineering Manager, reported the year-to-date drilling activity. He said that the Company had participated in the drilling of 28 wells through May 15, 2001. Of the 28 wells, 17 have been successfully drilled and completed, one was a dry hole, five are in the completion process and expected to be successful, and five are currently drilling. Over half of the wells are in the Deep Anadarko Basin area and the remaining wells are in other areas of Oklahoma. Mr. Cain said, "Based on the results year-to-date, the Company expects to meet or exceed its 2001 forecasted activity level of 65 gross wells (10.4 net wells) and net investment forecast of $11.5 million. Although it is early in the productive lives of the wells drilled and completed in 2001, our internal reserve estimates indicate that we will also meet or exceed our forecast of reserve additions and net production increases for this period in 2001."
Michael S. Mewbourn, Chief Financial Officer, recapped financial results for the three months ending March 31, 2001, which was the first full quarter reflective of the Company's acquisition activities in the fourth quarter of 2000. For the latest quarter, Canaan reported net earnings of $3.7 million, or $0.76 per share, on total revenues of $11.4 million. This compares with net earnings of $1.1 million, or $0.31 per share, on total revenues of $3.1 million for the three months ended March 31, 2000. Cash flows from operating activities before working capital changes increased 238% for the three months ended March 31, 2001 to $5.9 million versus $1.7 million for the year-earlier period. EBITDA for the three months ended March 31, 2001 was $8.5 million compared to $1.9 million for the same period of 2000, a 349% increase.
Mr. Penton added that over the past few months, the size of management and technical staff has quadrupled in size, and 36% of the total staff has been added since October 1, 2000. He said, "We believe our staff is second to none and is led by a management team averaging 23 years of industry experience. Our reserves are truly a superb base of properties producing stellar cash flow. With a debt to equity ratio of .85 to 1, the Company has a below industry-average debt level. We plan to invest at least $11.5 million in our 2001 drilling program, which is expected to be financed entirely from cash flow. Any surplus cash will be targeted for acquisitions or debt repayment."
Concluding, Mr. Penton said he recognizes that, as a newly formed public entity, Canaan faces the challenges of liquidity in the marketplace in terms of share price valuation. He concluded, "Depth and breadth in the market is not accomplished in one event and must be approached with patience, proper planning and favorable market timing. We will not submit our stockholders to undue dilution in unfavorable markets."
In actions taken by stockholders at the meeting, the following persons were elected to serve three-year terms as directors of the Company:
Michael S. Mewbourn, Senior Vice-President
and Chief Financial Officer of the Company
Michael P. Cross, President of Twister Gas Services, LLC
Thomas H. Henson, Senior Vice-President of the Company
Canaan Energy Corporation is an independent oil and gas company headquartered in Oklahoma City that engages in the acquisition, development, production and marketing of natural gas and crude oil. The company's holdings are concentrated in the mid-continent region of Oklahoma. For more information, see http://www.canaanenergy.com/.
Forward Looking Statement
This press release includes certain statements that may be deemed to be "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the company expects, believes or anticipates will or may occur in the future are forward looking statements. They include statements regarding the company's drilling plans and objectives, related exploration and development costs, number and location of planned wells, reserve estimates and values, statements regarding the quality of the company's properties and potential reserve and production levels. These statements are based on certain assumptions and analysis made by the company in the light of its experience and perception of historical trends, current conditions, expected future developments and other factors it believes appropriate in the circumstances, including the assumption that there will be no material change in the operating environment for the company's properties and that there will be no material acquisitions or divestitures. Such statements are subject to a number of risks, including but not limited to commodity price risks, drilling and production risks, risks related to weather and unforeseen events, governmental regulatory risks and other risks, many of which are beyond the control of the company. Reference is made to the company's reports filed with the Securities and Exchange Commission for a more detailed disclosure of the risks. For all of these reasons, actual results or developments may differ materially from those projected in the forward-looking statements. The company assumes no obligation to update the forward-looking statements to reflect events or circumstances occurring after the date of the statement.
Following are selected statistics through May 15, 2001 regarding Canaan's 2001 drilling program, as presented at the stockholder meeting:
Drilling Activity
Average
Number of Wells Working
Gross Net Interest
I. Drilled and completed 17 2.7 0.16
II. Dry holes 1 .2 0.20
III. Completing 5 1.3 0.26
IV. Drilling 5 0.7 0.14
----------------------------
Total 28 4.9 0.18
Year to Date Highlights
I. Of the 28 wells, 19 (68%) were booked as proven at December 31,
2000 and 9 (32%) are new additions.
II. Canaan operates three of the wells completed, all of which have
been successful, and one well currently drilling.
III. Activity by area:
Deep Anadarko Basin 17 61%
South-Central Oklahoma 3 11%
Anadarko Shelf 6 21%
Arkoma Basin 2 7%
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Total 28 100%
IV. Actual drilling and completion costs are 25 to 30% higher than
forecasted rates
Comparison of Actual versus Forecast
Forecast Delta % Delta
as of (Actual - vs.
Actual 12/31/2000 Forecast) Forecast
Activity - drilled
(completed or
completing)
Gross wells 23 19 4 21%
Net wells 4.3 3.5 0.8 23%
Net investment
through Apr 2001 ($MM) 3.5 3.0 0.5 15%
Net production -
drilled and completed
wells only (1)
First Quarter 2001
Total (MMCFE) 10 18 (9) (47%)
Average daily (MCFED) 107 202 (95.3) (47%)
Year 2001 Estimates
Total (MMCFE) 370 311 59 19%
Average daily (MMCFED) 1.0 0.9 0.2 19%
(1) Actual values are based on Canaan Energy Corporation's internal
estimates.