Kootenay Energy Inc TSX Venture: KTY is pleased to report on its unaudited interim financial and operating results for the six months ended June 30, 2008.
The Corporation participated in the drilling of one well in the second quarter. The 10% working interest oil well drilled in May 2008 was brought on production prior to the end of the quarter at an initial rate of 160 bbls/d (net 16 bbls/d).
Gross revenues were $3,347,000 for the period, up 15% over first quarter of 2008 and up 47% over the same period last year. The increase in oil sales revenues is due to the increases in oil prices. Hedging losses for the quarter were $299,485 or $9.48 per barrel of oil.
Production averaged 351 barrels of oil equivalent per day over the three months ended June 30, 2008, a decrease of 11% over the same period in 2007. A decrease in natural gas production is a result in part to shutting in non operated production for facility reasons. The disruption of the production is temporary and resume early in the third quarter increasing Kootenay's production by 15 - 20 boepd. Temporary production losses in certain fields were a result of scheduled annual plant and facility turnaround and maintenance programs. The Corporation exited the quarter at 375 boe/d.
Operating costs for the three and six month period ended June 30, 2008 were $674,667 and $1,485,039. This includes $104,000 in operating costs that are carried over from non operated operations in the last quarter of 2007. Also included in the operating costs were one time charges for environmental clean up and the conversion of propane powered prime movers to electric prime movers on pump jacks in the Skaro field. When comparing these costs to the first half in 2007, it would appear that the costs have increased dramatically however, operating costs were understated for the first half of 2007. These were a result of one time corrections in underestimating the operating costs relating to prior periods of non-operated properties acquired in December of 2006. Actual billings for these properties arrived in the second half of 2007.
Field netbacks for the second quarter were $67.61 per boe up 72% from the same period last year. The six month period ended June 30 had average netbacks of $54.90 per boe up 40% from the same period in 2007.
On July 16, 2008 Kootenay announced that it had entered into a pre-acquisition agreement with Golden Oil Corporation, a public corporation located in Seoul Korea, to make a cash offer to the shareholders of Kootenay as soon as is practicable, but in any event not later than August 5, 2008.
On August 5, 2008 Kootenay announced that a Take-over Bid Circular of a subsidiary of Golden Oil Corporation and a Directors' Circular of Kootenay had been mailed to Kootenay Shareholders in connection with Golden Oil Corporation previously announced cash offer for the common shares of Kootenay.
The offer price is $0.66 Cdn. per common share, representing an approximate 65% premium to the closing trading price of the common shares of Kootenay on July 15, 2008, the last trading day on which the common shares traded prior to the announcement of the offer. The offer expires on September 10, 2008. The board of directors of Kootenay is unanimously recommending that the shareholders accept the offer.
Golden Oil Corporation has entered into lock-up agreements with certain shareholders (including all directors and officers of Kootenay) who hold an aggregated of 16,025,327 common shares(on a fully diluted basis) representing approximately 70.1% of the outstanding common shares (71.9% on a diluted basis (excluding out of the money options and conversion of convertible debentures). The lockup agreements provide that such shareholders have agreed to tender, and not withdraw, all of their common shares (including any additional common shares they may acquire on exercise of in the money options) to the offer, subject to terms and conditions thereof.
Holders of the convertible debenture have agreed in writing with Golden Oil Corporation, among other things, that subject to completion of the Offer the waive, cancel and surrender all conversion rights under the convertible debentures. -- www.cnxmarketlink.com
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