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Attention Business/Financial Editors
Dual Exploration Inc. files first quarter results
/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED STATES./
CALGARY, May 15 /CNW/ - Dual Exploration Inc. ("Dual") today filed with
Canadian securities authorities its First Quarter Financial Statements and
Management's Discussion And Analysis for the period ending March 31, 2006.
Copies of the filed documents may be obtained through www.sedar.com, Dual's
website www.dualexp.com or by emailing Dual at admin@dualexp.com.
First Quarter Summary
- Daily production averaged 1,113 barrels oil equivalent per day
("boe/d");
- Increased corporate average daily production by 23% over the prior
quarter;
- Lowered Operating expenses by 21% over the prior quarter;
- Drilled 6 domestic wells (1.53 net) in the first quarter, with a Net
74% success rate; and.
- Capital Expenditures were $2,679,253 resulting in production adds at
a cost of $14,000 per producing boe.
Financial highlights are for the period between January 1, 2006 and
March 31, 2006.
<<
For the Period,
Three Months Ending March 31, 2006 Q3/05 Q4/05 Q1/06
FINANCIAL (000's except per share data)
Net earnings (loss) 27 (873) (1,064)
Per share ($) - Basic 0.00 (0.03) (0.04)
Per share ($) - Diluted 0.00 (0.03) (0.04)
Cash flow from operations 1,101 1,713 1,301
Per share ($) - Basic 0.05 0.06 0.04
Per share ($) - Diluted 0.04 0.06 0.04
Corporate debt
Bank debt and capital leases (total) 7,199 10,360 15,212
Working capital deficiency (surplus) (4,192) 3,278 155
Net debt 3,007 13,631 15,057
Debt to equity 0.24 0.32 0.51
Debt to cash flow (annualized) 1.63 1.51 2.92
Net debt to cash flow (annualized) 0.68 1.99 2.89
Interest coverage (using cash flow) 6 17 8
SHARE CAPITAL (000's except per share data)
Common shares outstanding (end of period) 26,977 28,077 28,077
Weighted average Common shares outstanding
(Basic) 24,356 27,209 28,077
Fully Diluted Common shares 25,831 29,720 30,014
Price range ($ per share)
High 3.00 2.73 2.40
Low 1.85 1.65 1.75
Close 2.59 2.25 2.22
Volumes traded 8,892 2,229 4,358
OPERATING
Daily sales volumes
Natural gas (mcf/d) 1,578 1,509 2,779
Light/Medium Oil (bbl/d) 122 294 374
Heavy Oil (bbl/d) 226 296 252
Liquids (bbl/d) 31 40 22
Corporate (boe/d) 642 882 1,113
Netbacks ($/boe)
Field 30.79 27.97 20.87
Cash flow 18.64 20,82 12.99
Corporate 0.45 (4.97) (10.62)
Note: Barrels of oil equivalent derived by converting gas to oil in the
ratio of six thousand cubic feet of gas to one barrel of oil (6 Mcf: 1 bbl)
boe may be misleading, particularly if used in isolation. A boe conversion
ratio of 6 Mcf:1 bbl is based on an energy equivalency conversion method
primarily applicable at the burner tip and does not represent a value
equivalency at the wellhead.
OPERATIONS
Dual continued to generate growth in the first quarter with an increase
in average daily production of 23% over the prior quarter with an average of
1,113 boe/d. This increase was partly attributed to a pair of acquisitions of
155 boe/d in aggregate, that were predominantly oil. As well, the Gold Creek
drilling program resulted in two (net 0.8) more successful wells that
commenced production in March. However this additional production was offset
by regulatory production restrictions in Gold Creek (approximately 80 boe/d
throughout the quarter) and the loss of an average of 20 boe/d for the period
in Cadotte, due to mechanical problems. The Cadotte facility problems have
since been remedied and it is back in operation at full production.
Natural gas contributed 42% of Dual's production volumes during the first
quarter, with light and medium oil and natural gas liquids at 35% and heavy
oil rounding out Corporate volumes with 23%. As a result Cash Flow from
operations was $1,301,222 in the first quarter and less than anticipated due
to lower realized price for natural gas and heavy oil. As a result of these
lower prices and higher depletion costs, the Corporation posted a Net Loss of
($1,064,399). Going forward, additional production that came on stream in
March, the expected strengthening of natural gas and heavy oil prices and
further facility optimization are expected to impact Cash Flow positively.
Net operating expenses were $11.26 on a per boe basis and 21% lower than
the prior quarter. This reduction was mainly due to the impact a pipeline
connection and facility consolidation completed in January 2006, in the
Hays/Enchant area, that significantly reduced trucking charges and other
operating costs. Going forward, the per boe expense is expected to decline
further, as the Corporation adds production and continues to optimize in other
lower cost areas.
Capital Expenditures for the period amounted to $2,679,191, 42% of which
was attributed to the drilling of 6 (1.53 net) wells with net success rate of
74%. The new production that came on stream in March and the expected
production from three (0.33 net) wells yet to be tied in, will have been
achieved at a cost of $14,000 on a producing boe basis. Although respectable,
management expects the per boe costs to decrease even further with the
continuation of these drilling projects and once all the wells are on
production.
OUTLOOK
Our vision for 2006 is based on an expected average production rate of
1,450 boe/d (split 50% natural gas and 50% liquids). Our projected cash flow
of $11.5 million dollars was revised in May to reflect the lower natural gas
prices we are currently experiencing. We plan to reinvest in our current
position by drilling approximately 26 gross wells in the coming year. Included
in these drilling plans is the continuation of the drilling program in
Gold Creek and the future development of South Cadotte, a heavy oil project,
both in northern Alberta. Dual and its partners have identified a number of
follow-up drilling locations with multizone potential for both light oil and
natural gas, some of which have already been surveyed. The South Cadotte heavy
oil project located in the Peace River Oilsands area is expected to be kicked
off in late August with the first observation wells being drilled and a test
facility constructed.
At an Annual and Special Meeting to be held on May 23rd, 2006, Dual is
proposing a corporate reorganization that will split Dual's international
assets from Dual's domestic assets. If the Arrangement is completed, there
will be a distribution of shares in a new separate entity called DualEx Energy
International Inc. ("DualEx") that will be listed and posted for trading on
the TSX Venture Exchange. All existing shareholders of Dual will receive a
half share in DualEx for each share of Dual that they currently own, and will
continue to own their existing shares of Dual. The transaction will allow
shareholders to participate either separately or on a combined basis in the
growth potential of Dual's domestic assets and the portfolio of international
assets of DualEx. Dual believes that the post-transaction structure better
aligns risks and returns from each asset class with the division of the
Corporation's domestic and international projects.
The DualEx spinout would be accomplished through a plan of arrangement
under the Business Corporations Act (Alberta). The transaction is conditional
upon, among other things, approval by the shareholders of Dual, the Court of
Queen's Bench of Alberta and regulatory authorities.
Future Endeavors
- Spinout of international assets to DualEx Energy International Inc.
- 2006 capital budget of $11.5 Million
- 26 drilling locations proposed for 2006
- Forecasting a 2006 year end exit rate of 1,750 boe/d and 2006 average
production rate of 1,450 boe/d.
DUAL EXPLORATION INC. is a publicly traded Canadian energy company
involved in the exploration, development and production of oil, natural gas
and liquids in western Canada. Dual's current exploration and development
activities are concentrated on Company operated properties in Alberta, British
Columbia, Saskatchewan and the Northwest Territories. The Company trades on
The Toronto Stock Exchange under the symbol "DLX".
Forward-Looking Statements
Certain information set forth in this document, including managements'
assessment of the future plans and operations of Dual contains forward looking
statements. By their nature, forward-looking statements are subject to
numerous risks and uncertainties, some of which are beyond Dual control,
including the impact of general economic conditions, industry conditions,
volatility of commodity prices, currency fluctuations, imprecision of reserve
estimates, environmental risks, competition from other industry participants,
the lack of availability of qualified personnel or management, stock market
volatility and ability to access sufficient capital from internal and external
sources. Readers are cautioned that the assumptions used in the preparation of
such information, although considered reasonable at the time of preparation,
may prove to be imprecise and, as such, undue reliance should not be placed on
forward looking statements. The actual results, performance or achievement of
Dual could differ materially from those expressed in, or implied by, these
forward-looking statements and, accordingly, no assurance can be given that
any of the events anticipated by the forward looking statements will transpire
or occur, or if any of them do so, what benefits that Dual will derive
therefrom. Dual disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
Boe's may be misleading, particularly if used in isolation. A BOE
conversion ratio of 6 Mcf: 1 Bbl is based on an energy equivalency conversion
method primarily applicable at the burner tip and does not represent a value
equivalency at the wellhead.
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy the securities in any jurisdiction. The common
shares of Dual will not be and have not been registered under the United
States Securities Act of 1933 and may not be offered or sold in the
United States absent registration or applicable exemption from the
registration requirements.
This press release is reproduced on Dual's website at www.dualexp.com.
For this and other information about Dual Exploration Inc., please visit the
website.
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/For further information: If anyone requires additional information
please contact Marty Cheyne (President) at (403) 233-7778 ext. 226; or
Brad Porter (Chief Operating Officer) at (403) 233-7778 ext. 222/
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