news!FOR: OILEXCO INCORPORATED
TSX VENTURE, AIM SYMBOL: OIL
MARCH 31, 2005 - 19:57 ET
Oilexco's 2004 Year End Results Show Rapid Growth
CALGARY, CANADA--(CCNMatthews - March 31, 2005) - Oilexco Incorporated
("Oilexco" or the "Company") (TSX VENTURE:OIL) (AIM:OIL) is pleased to
announce its 2004 year end financial results, a year that Oilexco
evolved substantially due to its activities in the UK North Sea. High
levels of activity in the United Kingdom have caused significant changes
in the financial status and trends of the Company over the 2003
comparative year. During 2004, Oilexco drilled seven wells and fourteen
boreholes, inclusive of sidetracks, on its 100% owned Licences P.1042
and P.1157 covering Blocks 15/25b and 15/25e in the Outer Moray Firth of
the Central UK North Sea. This program fully appraised the "Brenda" oil
find made by Oilexco's initial test well 15/25b-6 completed in January
2004. Oilexco was able to achieve this level of activity by having a
semi-submersible offshore drilling rig under contract for the majority
of the year, as well as having access to capital through the equity
markets in the United Kingdom, by virtue of the Company's listing on the
AIM Market of the London Stock Exchange. To continue its UK North Sea
program in 2005 the Company has contracted the semi-submersible offshore
drilling rig Sedco 712 from the end of March 2005 to the end of March
2006. This will allow Oilexco to undertake its 2005 UK North Sea
exploration/appraisal program in addition to the drilling of production
wells at Brenda. This was a strategic decision made by Oilexco amid a
tightening rig market in October 2004, as there is a finite supply of
these UK capable drilling units available. Currently all worthy
semi-submersible drilling units in the North Sea have been contracted
through to the second quarter 2006, reflecting rapid increases in
Industry activity levels due to high world crude oil prices. The Company
is progressing towards its goal of bringing its Brenda Field in the UK
to production, and remains confident that it will remain on budget and
on schedule for first oil in 2006.
Oilexco exited 2004 in excellent financial condition. The Company
maintained high Cash balances at year end 2004 of $19,045,429 and
$20,892,264 in 2003, reflecting Oilexco's equity financings in these
periods. Cash balances are expected to remain high in 2005 and 2006 due
to the Company's access to project financing facilities for Brenda
development, as well as increases from future equity issues when deemed
necessary. The dramatic increase in Capital Assets in 2004 to
$122,747,357 was due to a substantial increase in funds expended in
2004. These funds were expended on Brenda appraisal drilling, and on the
acquisition of the Balmoral/Glamis Field producing interests in the UK
North Sea. This contrast is most apparent when compared to Oilexco's
capital assets of $6,657,866 in 2003. Similar increases in Capital
Assets are forecast for 2005 due to the Company maintaining activity at
2004 levels in the UK North Sea. The substantial increase in Current
liabilities $21,670,945 at year end 2004 compared to $3,128,905 at year
end 2003 reflects accrued payables at year end from the 2004 UK North
Sea drilling program, which was completed in December. This level of
activity had no comparison in 2003. The Company expects levels of
Current Liabilities to be similar at year end by maintaining 2004 levels
of UK exploration/appraisal drilling in 2005. Increases in Share
Capital, Shareholder Equity, and Common Shares outstanding in 2004, and
2003 reflect $95,300,000 in equity financings completed by the company
in 2004, and $30,103,000 in equity financings completed by the company
in 2003 to fund its UK North Sea appraisal program, which commenced in
the 4th quarter 2003, and continued throughout 2004. Oilexco expects to
access the equity markets to raise additional capital in 2005.
Increased levels of activity in the UK North Sea in 2004 also caused
significant changes in the year over year trends in Oilexco's operating
results. Oil and gas revenues in 2004 increased to $2,715,587,
significantly higher than $1,519,688 in the comparable period in 2003.
Increases in 2004 oil and gas revenues were due to substantially higher
prices, and the acquisition of the Balmoral/Glamis oil production
interests in September. Oilexco forecasts oil and gas revenues to
increase in 2005 due to production enhancements at Balmoral/Glamis. In
addition, the Company forecasts its benchmark crude oil prices to
average $50 US per barrel. Oil and gas operating costs increased
substantially in 2004 to $1,598,899 over $217,806 in the comparative
2003 period due to the acquisition of the Balmoral/Glamis production
interests. Further increases in operating costs are expected by the
Company in 2005 due to inflationary price increases in oilfield
services, onshore and offshore, in the current high oil price
environment. General and Administrative expenses increased in 2004 to
$2,917,781, compared to $1,163,218 in 2003, due to the Company's
intensified activity in the UK North Sea which necessitated its opening
of an office in Aberdeen, Scotland. General and Administrative expenses
will increase in 2005 as employment levels increase, reflecting an
increase in staffing in the Aberdeen office. Increased levels of General
and Administrative expense in 2005 will also be due to higher salary
levels needed to attract and maintain professional staff. Oilexco has
not experienced difficulties in attracting well qualified staff due to
the Company's compensation policy of combining share options with
competitive salary and benefit packages. Share Incentive Compensation
Expense levels increased dramatically in 2004 to $8,456,000 from
$1,165,000 in 2003, as the Company issued share options to its
employees, consultants and new hires for compensation in times of
increased prices for Oilexco's common shares. The Company expects Share
Incentive Compensation expense to remain high in 2005 as the Company
will continue to issue options to key employees as well as new hires in
key positions.
In 2004 the Company experienced a substantial net loss of $9,993,820
primarily due to accounting for increased Share Incentive Compensation
expenses. High levels of Share Incentive Compensation expenses were also
primarily responsible for the high net loss in 2003 of $2,508,597. The
Company expects high Net Losses to continue in 2005 due to the expensing
of Share Incentive Compensation. Losses reflecting this expense item
also will continue until 2006 when oil production at Brenda in the UK
North Sea is expected to commence. In 2004 funds flow was "to the
company" (negative funds flow) in the amount of $663,057, compared to
negative funds flow of $149,995 in 2003. This negative funds flow was
due to the Company's high expenditures related to the intense level of
activity in the UK North Sea in 2004. As levels of activity are forecast
to remain the same, or possibly increase for 2005 along with increased
General and Administrative expenses, funds flow may continue to be "to
the Company" (negative), even after forecasting a full year of stable,
to enhanced oil production at Balmoral/Glamis with comparable 2004
average oil prices.
In 2004 Oilexco pursued an intense appraisal program in the UK North
Sea, ending the year with positive working capital $2,700,000. Oilexco
financed its 2004 UK North Sea appraisal drilling program from the
equity markets because the Company lacked internally generated cash flow
to finance the program. Oilexco intends to finance the Company's 2005 UK
North Sea exploration/appraisal program from the equity markets because
the Company continues to lack the internal cash flow to finance these
activities. Oilexco is currently negotiating a Project Financing
Facility with the Royal Bank of Scotland to finance the Brenda Field
development program. The Company hopes to finalize these agreements in
the 2nd quarter 2005.
Forward Looking Statements
This disclosure contains certain forward-looking estimates that involve
substantial known and unknown risks and uncertainties, certain of which
are beyond Oilexco's control, including: the impact of general economic
conditions in the areas in which the Company operates, civil unrest,
industry conditions, changes in laws and regulations including the
adoption of new environmental laws and regulations and changes in how
they are interpreted and enforced, increased competition, the lack of
availability of qualified personnel or management, fluctuations in
commodity prices, foreign exchange or interest rates, stock market
volatility and obtaining required approvals of regulatory authorities.
In addition there are risks and uncertainties associated with oil and
gas operations, therefore Oilexco's actual results, performance or
achievement could differ materially from those expressed in, or implied
by, these forward-looking estimates will transpire or occur, or if any
of them do so, what benefits, including the amounts of proceeds, which
Oilexco will derive therefrom. All statements included in this press
release that address activities, events or developments that Oilexco
expects, believes or anticipates will or may occur in the future are
forward-looking statements. These statements include future production
rates, completion and production timetables and costs to complete well.
These statements are based on assumptions made by Oilexco based on its
experience perception of historical trends, current conditions, expected
future developments and other factors it believes are appropriate in the
circumstances.
Oilexco is listed on the Alternative Investment Market of the London
Stock Exchange plc ("LSE-AIM") and the TSX Venture Exchange ("TSX-V"),
trading under the symbol OIL.
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FOR FURTHER INFORMATION PLEASE CONTACT:
Oilexco Incorporated
Arthur S. Millholland
President
(403) 262-5441
or
Oilexco Incorporated
Brian L. Ward
Chief Financial Officer
(403) 262-5441
Website: www.oilexco.com
The TSX Venture Exchange has not reviewed nor accepts responsibility for
the adequacy or accuracy of this News Release.