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CALGARY, March 31 /CNW/ - Heritage Oil
Corporation (TSX: HOC) announced today its full year
results for 2004. (All figures reported in U.S.
dollars unless otherwise indicated.)
The highlights for 2004 are as follows:
- Earnings of $28.4 million (Cdn$34.2)
- Basic net earnings per share of $1.33 (Cdn$1.60)
- Proved and probable reserves valued at plus $50.8
million
(Cdn$61.3 million), at a discount rate of 10%, 18%
higher than the
previous year-end after excluding the overriding
royalty sold in
June 30, 2004
- Petroleum and natural gas revenues: increased from
$4.5 million in
2003 to $5.6 million in 2004
- Estimated net asset value per share: $5.55
(Cdn$6.68)
- The sale of the overriding royalty in the Congo
for up to
$41.6 million in June 2004 generated a gain of $26.3
million
- 154% increase in share price during 2004, with
record highs following
year-end
- Strategic joint venture
entered into in Iraqi Kurdistan to appraise
opportunities in Northern Iraq
- Turaco-3 discovers a new petroleum system in
Uganda
- Cash holdings of $16.2 million at the year-end,
which have been
increased by over $12 million since the year-end
- The Company was debt free throughout 2004
The following summarizes the full-year results
(for the 12 months ended December 31, 2004 compared
with the 12 months ended December 31, 2003):
Petroleum and natural gas revenue was $5,592,721
compared with $4,517,108
Total revenue was $6,596,982 compared with
$5,002,683
Net earnings were $28,364,368 compared with
$2,566,564
Adjusted net earnings were $3,030,026 compared with
$1,433,269(*)
Basic net earnings per share of $1.33 compared with
$0.13
(*) Excludes a gain on sale of petroleum and natural
gas interests of
$26,269,113 in 2004, gain on the sale of investment
in 2003 of
$1,186,733 and write-down of unproved petroleum and
natural gas
interests of $934,771 and $53,438 in 2004 and 2003
respectively
"We are extremely pleased with the 2004 results,"
said Heritage Chairman and CEO Micael Gulbenkian.
"Net earnings totalled $28.4 million and net assets
and proved and probable reserves all increased,
further strengthening the balance sheet."
Mr. Gulbenkian added: "the sale of the overriding
royalty, which was received as partial consideration
from the sale of the Kouilou permit, generated total
sales proceeds of up to $77.9 million (Cdn$105
million), more
than 15 times the level of costs spent on the
permit, creating significant shareholder value."
Heritage reported total revenues of $6,596,982
(petroleum and natural gas revenues of $5,592,721,
interest income of $560,926 and other of $443,335)
in the latest year compared to $5,002,683 (petroleum
and natural gas revenue of $4,517,108, interest
income of $388,674 and other of $96,901) in 2003.
Net earnings of $28,364,368, which included the gain
on the sale of the overriding royalty in the Congo
of $26,269,113, were substantially higher than
$2,566,564 in 2003.
During 2004, Heritage made huge strides in its goal
of participating in the oil and gas industry of Iraq
by the incorporation of Heritage Erbil Oil Limited
("Heritage Erbil") with Eagle Group.
Heritage Erbil in turn has
incorporated K Petroleum Company ("KPC"), a wholly
owned subsidiary of Heritage Erbil, in Iraq and
registered KPC in both Baghdad and Erbil (in the
Autonomous Region of Kurdistan). Heritage and Eagle
Group shall each hold a 42.5% share interest in KPC,
while Turkish investors will hold the remaining
15%. This has only been possible through the
Gulbenkian family's centuries-old historical
connections with Iraq.
The oil potential of Iraq is huge, with estimated
proven reserves of more than 112 billion barrels of
oil and 100 trillion cubic feet of natural gas. It
is reported that fields in Northern Iraq contain
estimated reserves of 36 billion barrels, and less
than 10% of the Region has been explored. As a
result, management considers that KPC has the
ability to transform Heritage Oil Corp. in the short
to medium term. The Company continues to focus on
new acquisitions, Mr. Gulbenkian added. "We believe
there are tremendous opportunities in world-class
hydrocarbon basins in Africa, the Middle East,
Russia and the CIS. With our Company's treasury and
network of contacts, Heritage will continue to
evaluate opportunities, particularly strategic joint
ventures, to increase shareholder value through 2005
as well."
Scott Pickford, an ECL Group company, recently
completed its independent reserves evaluation of the
Company's properties as at December 31, 2004. Scott
Pickford valued the proved and probable reserves at
$50.8 million (Cdn$61.3 million) at a discount rate
of 10%, an increase of 18% if the overriding royalty
was excluded from the 2003 reserves valuation. In
Uganda, the Turaco-3 well was drilled to a total
depth of 2,850
metres, logged and tested in 2004. Two potential
hydrocarbon-bearing zones containing a stacked
sequence of sands and shales over a gross pay of
approximately 350 metres were identified. Net pay of
84 metres with an average porosity of 24% was
calculated from logs. Three through-casing Drill
Stem Tests were run on three separate sand units,
which resulted in flow rates of between 8 to 12
million standard cubic feet of gas per day (mmcf/d),
achieved at variable choke settings between 20/64
and 28/64 inches and wellhead flowing pressures of
1,200 to 1,600 psi. The flow rates of the well were
constrained by the surface test equipment and, under
production conditions, were extrapolated to be
approximately 60 mmcf/d. However, the gas contained
very high concentrations of carbon dioxide and as a
consequence the well is not believed to be
commercially viable.
Mr. Gulbenkian stated, "the Turaco-3 well has all
the hallmarks of a new hydrocarbon system in the
license area: a world-class reservoir, an effective
seal and mature hydrocarbon source rocks. In spite
of the presence of carbon dioxide, the basin remains
highly prospective for oil. The 2005 work program
will focus on substantial prospects mapped on Lake
Albert, which could contain oil resources of several
billions of barrels."
Heritage is an international oil and gas
corporation, with principal properties situated in
the Republic of Congo, Oman, and Uganda. Heritage is
currently evaluating opportunities in the Autonomous
Region of Iraqi Kurdistan through a recently
incorporated subsidiary, K Petroleum Company.
Heritage's registered office is located in Calgary,
Alberta. The Company's Common Shares trade on the
Toronto Stock Exchange under the symbol HOC.
If you would prefer to receive press releases via
email contact Heather Colpitts (heather@chfir.com)
and specify "Heritage press releases" in the subject
line
FORWARD-LOOKING STATEMENTS: Except for
statements of historical fact, all statements in
this news release - including, without limitation,
statements regarding production estimates and future
plans and objectives of Heritage - are
forward-looking statements that involve various
risks and uncertainties. There can be no assurance
that such statements will prove to be accurate;
actual results and future events could differ
materially from those anticipated in such
statements.
<<
HERITAGE OIL CORPORATION
Consolidated Balance Sheets
December 31, 2004 and 2003 (U.S. dollars)
-------------------------------------------------------------------------
2004 2003
-------------------------------------------------------------------------
(Restated)
Assets
Current assets:
Cash and cash equivalents $ 16,235,523 $ 24,168,872
Accounts receivable 4,640,802 1,046,461
Note receivable 4,280,161 -
Prepaid expenses 272,168 57,124
Inventories 94,483 267,288
-------------------------------------------------------------------------
25,523,137 25,539,745
Property and equipment 54,083,097 22,289,308
Deferred development costs 1,013,012 270,446
-------------------------------------------------------------------------
$ 80,619,246 $ 48,099,499
-------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 6,397,247
$ 3,032,315
Asset retirement obligations 328,553 153,599
Shareholders' equity:
Share capital and warrants 21,434,168 20,829,215
Contributed surplus 24,421 -
Retained earnings 52,434,857 24,084,370
-------------------------------------------------------------------------
74,893,446 44,913,585
-------------------------------------------------------------------------
$ 80,619,246 $ 48,099,499
-------------------------------------------------------------------------
HERITAGE OIL CORPORATION
Consolidated Statements of Earnings and Retained
Earnings
Years ended December 31, 2004 and 2003
(U.S. dollars)
-------------------------------------------------------------------------
2004 2003
-------------------------------------------------------------------------
(Restated)
Revenue:
Petroleum and natural gas $ 5,592,721 $ 4,517,108
Interest 560,926 388,674
Other 443,335 96,901
-----------------------------------------------------------------------
6,596,982 5,002,683
Expenses:
Operating 1,442,016 1,286,340
Royalties 345,656 425,487
General and administrative 2,633,667 2,623,198
Foreign exchange gains (1,488,026) (1,655,473)
Depletion, depreciation and accretion 633,643
889,862
Write-down of unproved petroleum and
natural gas interest 934,771 53,438
-----------------------------------------------------------------------
4,501,727 3,622,852
-------------------------------------------------------------------------
Earnings before the undernoted 2,095,255 1,379,831
Gain on sale of property and equipment 26,269,113 -
Gain on sale of investment - 1,186,733
-------------------------------------------------------------------------
Net earnings 28,364,368 2,566,564
Retained earnings, beginning of year 24,028,812
21,874,255
Effect of change in accounting for:
Asset retirement obligations 55,558 49,880
Stock-based compensation (13,881) -
Premium on redemption of common shares - (406,329)
-------------------------------------------------------------------------
Retained earnings, end of year $ 52,434,857 $
24,084,370
-------------------------------------------------------------------------
Net earnings per share:
Basic $ 1.33 $ 0.13
Diluted $ 1.31 $ 0.12
-------------------------------------------------------------------------
HERITAGE OIL CORPORATION
Consolidated Statements of Cash Flows
Years ended December 31, 2004 and 2003
(U.S. dollars)
-------------------------------------------------------------------------
2004 2003
-------------------------------------------------------------------------
(Restated)
Cash provided by (used in):
Operating:
Net earnings $ 28,364,368 $ 2,566,564
Items not involving cash:
Gain on sale of property and equipment (26,269,113)
-
Depletion, depreciation and accretion 633,643
889,862
Foreign exchange gains (1,004,661) (487,899)
Stock-based compensation 10,540 356,448
Gain on sale of investment - (1,186,733)
Write-down of unproved petroleum and
natural gas interests 934,771 53,438
Changes in non-cash operating working
capital 102,462 807,394
-----------------------------------------------------------------------
2,772,010 2,999,074
Financing:
Shares issued for cash 604,953 1,797,016
Redemption of common shares - (740,630)
-----------------------------------------------------------------------
604,953 1,056,386
Investing:
Property and equipment expenditures (37,318,136)
(7,065,603)
Proceeds on sale of property and equipment
16,400,000 -
Repayment of note receivable 10,724,500 2,500,000
Acquisition (285) -
Development expenditure (210,957) (270,446)
Proceeds on sale of investment - 7,492,238
Changes in non-cash investing working capital
(905,434) (788,959)
-----------------------------------------------------------------------
(11,310,312) 1,867,230
-------------------------------------------------------------------------
Increase (decrease) in cash and cash
equivalents (7,933,349) 5,922,690
Cash and cash equivalents, beginning of year
24,168,872 18,246,182
-------------------------------------------------------------------------
Cash and cash equivalents, end of year $ 16,235,523
$ 24,168,872
-------------------------------------------------------------------------
Supplementary information:
Interest received $ 556,897 $ 520,204
-------------------------------------------------------------------------
>>
%SEDAR: 00010129E
For further information: please contact:
Investors Relations Contacts:
Cathy Hume, Cavalcanti Hume Funfer Inc. (CHF Inc.),
Tel (416) 868-1079 x231
(cathy@chfir.com); Olav Svela, Cavalcanti Hume
Funfer Inc. (CHF Inc.), Tel
(416) 868-1079 x242, Fax (416) 868-6198 (olav@chfir.com);
Heritage,
European Contact Details: Micael Gulbenkian,
Chairman and CEO, Tel
+44 870 011 5555, Fax +44 20 7629 3863; Canadian
Contact Details: John McLeod,
Director, Tel (403) 234-9974, Fax (403) 261-1941
www.newswire.ca
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