ENCAL ENERGY LTD. QUARTERLY REPORT FOR THE NINE MONTHS ENDED

                           September     30, 1999     CALGARY, Oct. 28 /CNW-PRN/ -                                  Encal Expands                              1999 Capital Program     <<                                      Three months ended    Nine months ended                                         September 30         September 30     ($ thousands except per share      amounts)                          1999     1998         1999     1998     ------------------------------------------------------------------------                                               (Restated)           (Restated)     Financial     Petroleum and Natural Gas Sales   69,597   43,249      168,561   125,386     Cash Flow From Operations         35,365   17,414       81,343    52,166     Per Common Share - Basic            0.33     0.17         0.76      0.50                      - Fully Diluted    0.31     0.15         0.72      0.47     Net Earnings (Loss)                7,912     (350)      12,981       839     Per Common Share - Basic            0.07       -          0.12      0.01                      - Fully Diluted    0.07       -          0.12      0.01     Net Capital Expenditures          84,292   39,597      158,899   130,646     Long Term Debt                   260,508  214,933      260,508   214,933     Weighted Average Outstanding      Shares (thousands)                      - Basic         108,058  105,711      107,344   105,349                      - Fully Diluted 113,926  112,296      113,531   111,205     Shares Outstanding (thousands)   108,242  105,854      108,242   105,854     ------------------------------------------------------------------------     Operations     Production        - Natural Gas (mcf/d)         157,862  145,683      150,532   140,628        - Crude Oil (bbls/d)           10,066    9,272        9,628     9,076        - Natural Gas Liquids (bbls/d)  4,164    3,453        3,729     2,944        - Total (BOE/d) (6:1)          40,540   37,006       38,446    35,458        - Total (BOE/d) (10:1)         30,016   27,293       28,410    26,083     Pricing        - Natural Gas ($/mcf)            2.38     1.92         2.25      1.90        - Crude Oil ($/bbl)             28.61    15.63        22.35     16.48        - Natural Gas Liquids ($/bbl)   22.45    13.20        17.11     14.66     ------------------------------------------------------------------------     Certain comparative figures have been reclassified or restated to conform     with the current financial statement presentation     >>     To Our Shareholders     Highlights     -  1999 capital expenditure program increased to approximately $190        million     -  Wilson Creek pipeline and compression onstream with net sales volume        exceeding 3,600 boepd  by the end of September     -  Net Rigel field production reaches 5,000 boepd level during Q3     -  Encal has added 240,000 net undeveloped acres to its core holdings in        West Central Alberta and Fort St. John, B.C.     -  Active winter drilling program planned in northeast British Columbia     Core Exploration and Development   Encal will increase its 1999 capital expenditure program from its planned $150 million base program to approximately $190 million. The additional capital will fund active fourth quarter drilling and facility construction initiatives in the Company's core areas, plus strategic property, facility and undeveloped land acquisitions which will strengthen local dominance on key projects.  During the first three quarters of 1999, Encal participated in 82 wells (64.6 net), resulting in 50 gas wells (38.4 net) and nine oil wells (7.5 net) yielding a success rate of 72 percent (70 percent net).  West Business Unit  Third quarter activity within the West Business Unit was focussed in the Rigel and Oak areas of northeastern British Columbia. At Rigel, the Company completed full commissioning of water injection facilities for the Cecil `I' pool and successfully re-stimulated seven lower-rate producing wellbores. The resulting production gains have increased the Company's net productive capability from the Rigel field to more than 5,000 barrels equivalent per day. In the Oak area, stepout drilling has confirmed a significant extension to the Cecil `J' light oil pool. At least four more locations are planned for this project over the next several months.  The West Business Unit has increased its undeveloped land inventory by over 100,000 net acres as a result of several small property acquisitions, crown land sales and industry farmins over the past six months.  Encal also commenced the first phase of a multi-well Cecil exploration program during the third quarter. By early October, the Company had completed drilling operations on two wells, with another two underway. Results of this drilling program are being held confidential pending offsetting Crown land sales.  Preparations for the 2000 winter drilling program are proceeding on schedule towards a target of 50 wells during the first quarter. The majority of these wells will be directed towards established plays, including Halfway and Bluesky gas in the Redeye area, plus Cecil oil and Halfway oil in the Fort St. John region. In addition, the first quarter program will selectively test a variety of new plays, including several shallow gas targets in the west and south Redeye areas, as well as shallow and deep gas zones in the west Peace River region.  East Business Unit  Natural gas volumes continued to grow in the East Business Unit during the third quarter as a result of the startup of the Wilson Creek pipeline during August and the commissioning of the Phase I inlet compressor project during September. Sales volumes from this area exceeded 36 million cubic feet equivalent per day by the end of September. As expected, the area will continue to contribute growth throughout the next two quarters with facility expansions, well tie-in, and development drilling.  The Markerville area, which is geologically analagous to the Wilson Creek area, is now evolving to be a significant contributor to mid- and longer-term growth. Approximately seven locations are scheduled to be drilled by Spring of 2000 with facility expansion keeping pace with field productivity.  Encal has added 140,000 net undeveloped acres to its inventory of opportunity on the Mississippian gas trend from Wilson Creek to Markerville through an aggressive crown and freehold acquisition program complimented by industry farm-ins and several small property acquisitions. This play is expected to be actively pursued throughout all of 2000.  Other projects contributing growth in the business unit include the Cherhill gas project and expansion into the Willesden Green area west of Wilson Creek.  New Basin Exploration  In eastern Canada, Encal and partners finished drilling operations on the second and third wells of the 1999 exploration program on Anticosti Island, Quebec. The Saumon and Dauphine wells were drilled to total depths of 1,375 meters and 1,420 meters respectively, but unfortunately, neither well encountered commercial hydrocarbons. By completing this year's program, Encal has fulfilled its earning commitments under the terms of the Company's farm-in agreement with Corridor Resources Inc. As a result, the Company now holds an undivided 50% working interest before payout in approximately 2.4 million gross acres of undeveloped land.  Encal's technical staff is reviewing the data acquired from the 1998-99 exploration program before deciding on future activities, however no capital expenditures are forecast for eastern Canada in the year 2000. Despite the disappointing initial results, Encal remains convinced that the Gulf of St. Lawrence region holds significant discovery potential over the long term.  Encal's strategic plan contemplates spending approximately five percent of the annual capital budget on impact exploration projects. Therefore, the Company is continually evaluating opportunities in both new and proven sedimentary basins across Canada. The Company anticipates that most impact spending over the next several years will be directed towards large gas exploration projects principally within the Western Sedimentary Basin.  Production  For the nine months ended September 30, 1999, natural gas production increased to 150.5 million cubic feet per day from 140.6 million cubic feet per day during the same period of 1998. Increases in natural gas production are attributable to successful exploration and development activity at the Redeye, Markerville and Wilson Creek properties.  Oil and NGL production increased 11 percent to 13,357 barrels per day for the nine months ended September 30, 1999 compared to 12,020 barrels per day for the same period in 1998. The increase in production is a result of successful oil exploration and development activity at Rigel and Westerose combined with increased natural gas liquids production at Redeye and Wilson Creek.  Marketing  Encal's crude oil prices increased 36 percent to average $22.35 per barrel during the nine months ended September 30, 1999 compared to $16.48 per barrel during the same period in 1998. Natural gas prices increased 18 percent averaging $2.25 per thousand cubic feet during the nine months ended September 30, 1999 compared to $1.90 per thousand cubic feet in 1998. Natural gas liquids prices increased 17 percent averaging $17.11 per barrel during the nine months ended September 30, 1999 compared to $14.66 per barrel in 1998.  As a result of OPEC members adherence to pledged production cuts, crude oil prices have improved immensely over the first nine months of 1999. West Texas Intermediate (WTI) oil prices opened the year at close to $US 12.00 per barrel and increased steadily to average $US 21.72 per barrel in the third quarter. The current WTI forward price for the remainder of the year is approximately $US 23.00 per barrel.  Emerging from an unseasonally warm winter only to be faced with a significant storage overhang natural gas prices showed enormous strength by increasing throughout the third quarter. The monthly Henry Hub NYMEX price increased from $US 1.95 per MMBtu in January to $US 2.77 per MMBtu in September. There continues to be strong correlation between NYMEX and Alberta prices. The Alberta AECO/NIT reference price also demonstrated phenomenal strength during the first nine months of 1999 with the price increasing from $2.40 per thousand cubic feet in January to $3.25 per thousand cubic feet in September.  Encal is positioned to take advantage of strong Western Canadian natural gas prices over the coming year. As can be seen from the pie charts below, during 1999 Encal has modified its exposure to take advantage of the higher value Alberta AECO/NIT index.  To reduce pricing risk the Company also enters into fixed price transactions throughout the year. Currently, Encal has 15 million cubic feet per day fixed for winter at $3.35 per thousand cubic feet in Alberta and 10 million cubic feet per day in British Columbia at $2.85 per thousand cubic feet after the deduction for gathering and processing fees.  Financial  Petroleum and natural gas sales for the nine months ended September 30, 1999 totaled $168.6 million compared to $125.4 million reported during the same period in 1998. Royalty rates averaged 17.1 percent during the nine months ended September 30, 1999 compared to 16.5 percent during the same period in 1998. The increase in royalty rates in 1999 is primarily due to increased product pricing. Operating costs averaged $4.41 per barrel of oil equivalent during the nine months ended September 30, 1999 compared to $4.37 per barrel of oil equivalent during the same period in 1998. General and administrative costs decreased five percent, averaging $1.02 per barrel of oil equivalent during the nine months ended September 30, 1999 compared to $1.08 for the same period in 1998.  For the nine months ended September 30, 1999, cash flow from operations were $81.3 million ($0.76 per share) compared to $52.2 million ($0.50 per share) during the same period of the prior year. Earnings were $13.0 million ($0.12 per share) compared to $0.8 million ($0.01 per share) in 1998.  Total capital expenditures for the nine months ended September 30, 1999 were $158.9 million compared to $130.6 million for the same period in 1998. Exploration expenditures during the period inclusive of land, seismic, drilling and completions accounted for $93.7 million with an additional $36.7 million incurred on equipment, gathering systems and facilities. During the nine months ended September 30, 1999 the Company has spent $48.6 million on acquisitions of core properties and received $22.4 million from the disposition of non-core properties.  Long term debt was $260.5 million at September 30, 1999 compared to $223.3 million at December 31, 1998 and $214.9 million at September 30, 1998. The Company currently has credit facilities totalling $350 million. Year-end debt is forecasted to be approximately $300.0 million.  Outlook  With the winter drilling season approaching, Encal has finalized plans for what will prove to be the most active quarter in the company's history. The Company will continue to focus its drilling programs in established core areas, while retaining a balance of exploration and development drilling. The winter-only access region of British Columbia will be the primary area of activity, complemented by drilling in Fort St. John and West Central Alberta.  The strength in commodity prices, compounded by record volumes, has resulted in significantly increased cash flow for Encal during the third quarter. While there may be some uncertainty associated with future world crude oil pricing, it now appears that Canadian natural gas is well positioned to receive improved pricing for the foreseeable future.  Competition for drilling opportunities, people and services may become limiting factors as activity levels increase in western Canada. Encal, based on its past performance, as an active driller focused on internally generated and financed growth, is in a strong position to compete in this environment.        On behalf of the Board     (signed)     David D. Johnson     President and CEO     October 28, 1999     <<     Encal Energy Ltd.     Balance Sheets                                        September 30    December 31     ($ thousands)                         1999            1998     ---------------------------------------------------------------------                                        (unaudited)     Assets     Current     Accounts Receivable                 44,299          28,303     Inventory                            3,462          10,207     ---------------------------------------------------------------------                                         47,761          38,510     Petroleum Property and Equipment   690,296         584,512     Deferred Foreign Exchange Charges    3,497           7,017     ---------------------------------------------------------------------                                        741,554         630,039     ---------------------------------------------------------------------     ---------------------------------------------------------------------     Liabilities and Shareholders' Equity     Current     Accounts Payable                    98,626          59,478     ---------------------------------------------------------------------     Bank Debt                          187,008         146,736     Senior Notes Payable                73,500          76,525     Site Restoration and Reclamation    10,935           9,403     Future Income Taxes                 74,610          61,034     ---------------------------------------------------------------------                                        346,053         293,698     ---------------------------------------------------------------------     Shareholders' Equity     Share Capital                      256,438         249,407     Retained Earnings                   40,437         27,456     ---------------------------------------------------------------------                                        296,875         276,863     ---------------------------------------------------------------------                                        741,554         630,039     ---------------------------------------------------------------------     ---------------------------------------------------------------------     Encal Energy Ltd.     Statements of Earnings     Nine Months Ended September 30 (unaudited,     $ thousands except per share amounts)      1999            1998     ---------------------------------------------------------------------                                                                (Restated)     Revenues     Petroleum and Natural Gas Sales            168,561         125,386     Royalties                                   28,878          20,661     Hedging Charges                              2,739           3,947     ---------------------------------------------------------------------                                                136,944         100,778     ---------------------------------------------------------------------     Expenses     Production                                  34,225          31,082     General and Administrative                   7,943           7,693     Financing Charges                           12,792           9,291     Depletion and Depreciation                  54,740          49,770     ---------------------------------------------------------------------                                                109,700          97,836     ---------------------------------------------------------------------     Earnings Before Taxes                       27,244           2,942     ---------------------------------------------------------------------     Taxes     Future Income Taxes                         13,092           1,086     Capital Taxes                                1,171           1,017     ---------------------------------------------------------------------                                                 14,263           2,103     ---------------------------------------------------------------------     Net Earnings                                12,981             839     ---------------------------------------------------------------------     ---------------------------------------------------------------------     Earnings per Share     Basic                                         0.12            0.01     Fully Diluted                                 0.12            0.01     ---------------------------------------------------------------------     ---------------------------------------------------------------------     Encal Energy Ltd.     Statements of Cash Flows     For the Nine Months Ended September 30 (unaudited,     $ thousands except per share amounts)        1999            1998     ---------------------------------------------------------------------                                                                (Restated)     Cash Flows From Operating Activities     Net Earnings                                12,981             839     Depletion and Depreciation                  54,740          49,770     Future Income Taxes                         13,092           1,086     Amortization of Deferred Foreign       Exchange Charges                             530             471     ---------------------------------------------------------------------     Cash Flows From Operating Activities        81,343          52,166     Change in Non-Cash Working Capital         (27,616)         (2,654)     ---------------------------------------------------------------------                                                 53,727          49,512     ---------------------------------------------------------------------     Cash Flows From Financing Activities     Bank Debt                                   40,272          66,679     Senior Notes Payable                           (35)             16     Common Shares                                7,031           3,476     ---------------------------------------------------------------------                                                 47,268          70,171     ---------------------------------------------------------------------     Cash Flows From Investing Activities     Additions to Petroleum Property and       Equipment                               (132,165)       (113,952)     Acquisitions of Petroleum Property and       Equipment                                (48,606)        (20,401)     Sales of Petroleum Property and       Equipment                                 22,356           3,707     Site Restoration and Reclamation               (93)           (553)     Change in Non-Cash Working Capital          57,513          11,516     ---------------------------------------------------------------------                                               (100,995)       (119,683)     ---------------------------------------------------------------------     Change in Cash                                  -               -     ---------------------------------------------------------------------     ---------------------------------------------------------------------     Cash Flows From Operations per Share     Basic                                         0.76            0.50     Fully Diluted                                 0.72            0.47     ---------------------------------------------------------------------     ---------------------------------------------------------------------     >>   With an eye to using the current technology to its best, Encal has decided to disperse its press releases electronically.  If you wish to receive Encal's Press Releases via the Internet, you may sign onto Canada Newswire's portfolio e-mail service (it's free) at www.newswire.ca.  Indicate that you wish to sign onto Encal's information site and you will receive the Press Releases as soon as they go across the wire.  We will be revising our fax list following this press release so we would ask you to contact us if you wish to continue receiving the press releases by fax as opposed to the Internet. Contact Kathryn Wade by phone (403) 750-3372, e-mail kathryn(at)encal.com or fax (403) 266-3896.  If we do not hear from you by mid-November, we will assume you are going to use the Internet, and we will remove your name from our fax list.  Please visit our website at www.encal.com for full financial and corporate information.    SOURCE Encal Energy Ltd. /CONTACT:  David Johnson, President or Steven Allaire, Vice President, Finance, Tel: (403) 750-3300 or Fax: (403) 266-2337, Website: www.encal.com/        (ENL. ECA)  CO:  Encal Energy Ltd. ST:  Alberta IN:  OIL SU:  ERN     -30-  
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