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. 
-0-                              10/28/1999 
/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-


-0- Oct/28/1999   18:16
EOS   (PRN)    Oct/28/1999    18:16       85
â
-0- (PRN) Oct/28/1999   18:31
 
 
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