OKLAHOMA CITY, May 16, 2001 (PRIMEZONE) -- Canaan Energy Corporation ("Canaan") (Nasdaq:KNAN) today announced financial results for the three months ended March 31, 2001.
For the three months ended March 31, 2001, 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.
In October 2000, Canaan completed the acquisition of eight affiliated limited partnerships ("Partnerships"); Indian Oil Company ("Indian"), a privately held oil and gas company based in Oklahoma City, Oklahoma; and Canaan Securities, Inc. ("CSI"), an unaffiliated broker/dealer, which owned an interest in the Partnerships. The acquisition of the Partnerships was accounted for as a reorganization of entities under common control in a manner similar to a pooling of interests. The acquisitions of Indian and CSI were accounted for as purchases. Accordingly, the results of operations of the Partnerships have been included with Canaan's results for the first quarter of both 2001 and 2000. The results of operations of Indian and CSI have been included only for the first quarter of 2001.
Revenues for the first quarter of 2001 increased 266% vs. the first quarter of 2000, principally due to higher oil and gas prices and to production increases, as a result of the acquisition of Indian. Net earnings for the first quarter of 2001 increased by 235% compared to the first quarter of 2000. The effect of increased revenues was somewhat offset by additional general and administrative expenses attributable to a significant increase in Canaan's professional staff. Income tax expense increased from $2,247,000 to $2,256,000 for the three months ended March 31, 2001 as compared to $9,000 for the same period of 2000. As previously discussed, results of operations for the Partnerships have been included for the entire three months ended March 31, 2000. However, any income tax liability associated with the operations of Partnerships did not arise until the actual consummation of the transactions in October 2000. If the Partnership earnings had been taxable for the entire first quarter of 2000, the effective tax would have been comparable to the first quarter of 2001.
Cash flows from operating activities before working capital changes increased 238% for the three months ended March 31, 2001 to $5.9 million vs. $1.7 million for the three months ended March 31, 2001, principally due to higher oil and gas prices and increased production. 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.
MANAGEMENT COMMENT
Leo Woodard, Chairman and CEO of Canaan, commented, "First quarter 2001 represents our first full quarter reflective of activity associated with the recent acquisition of Indian Oil Company. This additional size, coupled with the current price environment, is producing strong cash flow, with which we can meet or exceed our forecasted drilling expenditures of $11.5 million in 2001 without incurring further bank debt. We anticipate that any unused cash flow will be directed toward the acquisition of producing properties or the reduction of existing bank debt."
Canaan Energy Corporation is an independent oil and gas exploration and production company headquartered in Oklahoma City. Canaan trades on the Nasdaq under the symbol KNAN. 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 financial and operating data for the quarters ended March 31, 2001 and 2000 (in thousands, except per share data and as noted):
----------------------------
Three months ended March 31,
----------------------------
2001 2000
----------------------------
(unaudited)
Revenues:
Oil and natural gas sales $ 11,421 $ 3,121
Costs and expenses:
Lease operating 1,098 430
Production taxes 828 262
Depreciation, depletion
and amortization 1,725 624
General and administrative
expenses 1,080 557
Interest expense 830 156
---------- ----------
Total costs and expenses 5,561 2,029
Other income,
principally interest 127 29
---------- ----------
Earnings before income taxes 5,987 1,121
Income taxes 2,256 9
---------- ----------
Net earnings $ 3,731 $ 1,112
========== ==========
Earnings per share:
Basic $ 0.76 $ 0.31
Diluted $ 0.76 $ 0.31
Weighted average
shares outstanding:
Basic 4,916,315 3,621,219
Diluted 4,930,655 3,621,219
----------------------------
Three months ended March 31,
----------------------------
2001 2000
----------------------------
(unaudited)
Cash flows from operating
activities before working
capital changes $ 5,859 $ 1,731
Cash flows from operating
activities 3,404 1,559
Cash flows from
investing activities (2,127) (373)
Cash flows from
financing activities
-- (1,676)
EBITDA(a) 8,542 1,902
(a) EBITDA is defined as income or loss before interest, income
taxes, depreciation, depletion and amortization and impairment.
----------------------------
Three months ended March 31,
----------------------------
2001 2000
----------------------------
(unaudited)
Oil production (MMBls) 43 47
Natural gas production
(MMcf) 1,685 887
Gas equivalent
production (MMcfe) 1,944 1,167
Average oil price
(per Bbl) before
hedging contract
settlements $ 25.37 $ 22.73
Adjustment for hedging
contract settlements -- (3.49)
---------- ----------
Average oil price (per Bbl) $ 25.37 $ 19.24
========== ==========
Average gas price
(per Bbl) before
hedging contract
settlements $ 6.81 $ 2.35
Adjustment for hedging
contract settlements (0.74) .11
---------- ----------
Average gas price
(per Mcf) $ 6.07 $ 2.46
========== ==========
Average gas equivalent
price (per Mcfe) before
hedging contract
settlements $ 6.47 $ 2.70
Adjustment for hedging
contract settlements (0.64) (0.06)
---------- ----------
Average gas equivalent
price (per Mcfe) $ 5.83 $ 2.64
========== ==========
Operating Costs (per Mcfe):
Lease operating expense $ 0.56 $ 0.37
Production taxes 0.43 0.22
General and administrative
expense 0.56 0.46
Depreciation, depletion and
amortization - oil and
gas properties 0.87 0.53
------------------------------
March 31, December 31,
2001 2000
------------------------------
(unaudited)
ASSETS
Cash and cash equivalents $ 7,759 $ 6,482
Other current assets 9,922 7,671
---------- ----------
Total current assets 17,681 14,153
---------- ----------
Property and equipment, net 71,834 71,432
Other assets 171 188
---------- ----------
Total assets $ 89,686 $ 85,773
========== ==========
LIABILITIES and STOCKHOLDERS' EQUITY
Current liabilities 4,760 4,964
Long-term debt 33,964 33,964
Deferred income
tax liability 10,721 10,514
Fair value of
derivative instruments 471 --
Stockholders' equity 39,770 36,331
---------- ----------
Total liabilities and
stockholders' equity $ 89,686 $ 85,773
========== ==========
MBbls - thousand barrels
Mcf - thousand cubic feet
Mcfe - thousand cubic feet equivalent MMcf - million cubic feet
MMcfe - million cubic feet equivalent