Monday, Churchill Energy Inc. (CEI.V), a junior oil and natural gas company, reported wider loss for the fourth quarter, hurt primarily by accounting loss, non-cash impairment write-down and reduced the demand for oil and natural gas. Further, the company said that economic slow down caused a sharp decline in commodity prices in the fourth quarter of 2008 and into 2009.
Calgary-based Churchill posted a loss of C$5.65 million or C$0.16 per share for the quarter, wider than C$0.6 million or C$0.02 per share in the comparable period a year ago. Net loss for the recent quarter included a C$9.3 million accounting loss on the Smoky property disposition and a C$6.4 million non-cash impairment write-down on the company's oil and natural gas properties.
Funds from operations dipped to C$0.04 million or breakeven per share, from C$0.67 million or C$0.02 per share in prior-year quarter. Funds from operations for the quarter included a severance payment of C$0.19 million and a prior period adjustment to operating costs of C$0.06 million.
Quarterly oil and gas revenues before royalties declined to C$1.17 million from C$1.97 million in the same period last year.
Production averaged 289 barrels of oil equivalent or boe/day in the quarter, down from 479 boe/day in the year-ago quarter as a result of the Smoky property disposition.
Average product price for crude oil and NGLs in the quarter was C$47.15, down from C$60.65 in the comparable period last year. Natural gas price averaged at C$6.72, compared to C$6.28 a year ago.
Commenting on the operations, Kelly Cowan, chief executive officer, said, "With the addition of a new light oil waterflood property at Brazeau through the Welton transaction and the progress the Company made in 2008 on the Grand Forks waterflood project we have increased our exposure to oil by almost doubling our proved plus probable oil reserves from December 31, 2007. Both of these events are of significance as we have strengthened our balance sheet and added a second core oil property to our asset base."
For fiscal 2008, Churchill reported a loss of C$13.31 million or C$0.37 per share, wider than C$2.39 million or C$0.08 per share in the previous year. However, funds from operations rose 32% to C$3.35 million or C$0.09 per share from C$2.53 million or C$0.08 per share a year ago.
Churchill's oil and gas revenues before royalties increased 14% year-on-year to C$8.66 million from C$7.57 million last year.
Churchill's net asset value as on December 31, 2008 based on GLJ's January 1, 2009 price forecast and discounted 10% is C$0.68 per share. On a combined basis, using GLJ's March 1, 2009 price forecast and discounted 10% for Welton's proved plus probable reserve value, net asset value amounts to C$0.83 per share.
Churchill's Board of Directors approved a capital budget of C$1.2 million, which includes drilling five wells in Grand Forks and Alexander.
Going forward, Churchill intends to focus on optimizing its two waterflood projects and continue to evaluate opportunities to grow by way of merger or acquisition. Oil prices are expected to be much lower in 2009 as compared to 2008. Further, Churchill expects 2009 average production to be 429 boe/d, up 18% from 362 boe/d in 2008 and expects to exit 2009 with production of approximately 475 boe/d.
CEI.V is trading unchanged at C$0.07 on a volume of about two thousand shares.
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