Encal Energy Ltd. First Quarter Report for the three months


                         ended
    March 31, 2000
    CALGARY, April 26 /CNW/ -
                    ENCAL RECORDS TEN-FOLD EARNINGS GAIN
    <<
    ($ thousands except per share amounts)      2000       1999    % Change
    ------------------------------------------------------------------------
    Financial
    Petroleum and Natural Gas Sales            96,707     47,223      105
    Cash Flow From Operations                  49,602     21,206      134
    Per Common Share    - Basic                  0.46       0.20      130
                        - Fully Diluted          0.43       0.19      126
    Net Earnings                               14,645      1,434      921
    Per Common Share    - Basic                  0.14       0.01    1,300
                        - Fully Diluted          0.13       0.01    1,200
    Net Capital Expenditures                   65,680     52,142       26


Long Term Debt                            306,436    245,580       25 
Weighted Average Outstanding Shares 


     (thousands)
                        - Basic               108,365    106,521        2
                        - Fully Diluted       115,360    113,212        2
    Shares Outstanding (thousands)
       March 31         - Basic               108,466    107,048        1
                        - Fully Diluted       115,446    113,361        2
       April 20         - Basic               108,673    107,167        1
                        - Fully Diluted       115,421    113,446        2
    Operations
    Production
       - Natural Gas (mcf/d)                  171,067    151,101       13
       - Crude Oil (bbls/d)                    11,009      9,531       16
       - Natural Gas Liquids (bbls/d)           4,840      3,461       40
       - Total (BOE/d) (6:1)                   44,360     38,176       16
       - Total (BOE/d) (10:1)                  32,956     28,102       17
    Pricing
       - Natural Gas ($/mcf)                     2.87       2.22       29
       - Crude Oil ($/bbl)                      37.84      15.61      142
       - Natural Gas Liquids ($/bbl)            31.91      11.90      168
    >>
    Highlights
    - Cash flow increased 134 percent from the same period in 1999.
    - Record earnings of $14.6; million an increase of 921 percent over 1999.
    - Production increased 17 percent to average 32,956 BOE/d
    - Major seismic programs completed on the Company's South of the Peace
      River growth initiative
    - Southeast expansion planned for the west central core.
    Financial


Petroleum and natural gas sales for the three months ended March 31, 2000
totaled $96.7 million compared to $47.2 million reported during the same
period in 1999. Royalty rates averaged 19.9 percent during the three months
ended March 31, 2000 compared to 17.5 percent during the same period in 1999.
The increase in royalty rates in 2000 is primarily due to increased natural
gas and natural gas liquids pricing. Operating costs averaged $4.60 per barrel
of oil equivalent during the three months ended March 31, 2000 compared to
$4.35 per barrel of oil equivalent during the same period in 1999. General and
administrative costs decreased seven percent, averaging $0.98 per barrel of
oil equivalent during the three months ended March 31, 2000 compared to $1.05
per barrel of oil equivalent for the same period in 1999. 
Operating netbacks in the first quarter averaged $21.22 per barrel of oil
equivalent compared to $11.05 per barrel of oil equivalent in the first
quarter of 1999. 
For the three months ended March 31, 2000, cash flow from operations was
$49.6 million ($0.46 per share) compared to $21.2 million ($0.20 per share) 
during the same period of the prior year. Earnings were $14.6 million ($0.14
per share) compared to $1.4 million ($0.01 per share) in 1999. 
Total capital expenditures for the three months ended March 31, 2000 were
$65.7 million compared to $52.1 million for the same period in 1999.
Exploration expenditures during the period inclusive of land, seismic,
drilling and completions accounted for $52.5 million with an additional $8.7
million incurred on equipment, gathering systems and facilities. During the 
three months ended March 31, 2000 the Company has spent $4.3 million on
acquisitions of core properties and received $0.4 million from the disposition
of non-core properties. 
Long term debt was $306.4 million at March 31, 2000 compared to $301.4
million at December 31, 1999 and $245.6 million at March 31, 1999. The Company
currently has credit facilities totaling $375 million. 
Production 
For the three months ended March 31, 2000, natural gas production
increased 13 percent to 171.1 million cubic feet per day from 151.1 million
cubic feet per day during the same period of 1999. 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 22 percent to 15,849 barrels per day for
the three months ended March 31, 2000 compared to 12,992 barrels per day for
the same period in 1999. 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, Markerville, Wilson Creek
and Cherhill. 
Marketing 
Encal's crude oil prices increased 142 percent to average $37.84 per
barrel during the three months ended March 31, 2000 compared to $15.61 during
the same period in 1999. Natural gas liquids prices increased 168 percent
averaging $31.91 per barrel during the three months ended March 31, 2000
compared to $11.90 per barrel in 1999. North American crude oil inventories
are at historically low levels as a result of OPEC's adherence to pledged
production cuts over the past year. Refiners historically maximize crude runs
in the second quarter as they gear up for summer when gasoline demand is at
its peak. The combination of low inventories and expected seasonal demand
growth for gasoline has resulted in premiums for spot barrels as evidenced by
the shape of the NYMEX crude oil pricing curves. 
Natural gas prices increased 29 percent averaging $2.87 per thousand
cubic feet during the three months ended March 31, 2000 compared to $2.22 per
thousand cubic feet in 1999. This winter was unseasonably warm for the third
year in a row with temperatures in North America averaging 14% warmer than
normal. Despite the warm winter, US and Canadian storage levels at the end of
March are lower than last year by approximately 10 percent. The strong storage
withdrawal given the warm winter implies a decline in overall production
capability across North America. The market is now focused on increasing
demand for natural gas and the supply available to satisfy that growth. As a
result the NYMEX natural gas price has increased from $2.34 US/MMBtu in
January to $2.93 in April. Alberta prices have followed suit increasing 20%
from $2.98/GJ to $3.59 over the same period. 
Encal's natural gas portfolio is structured to capitalize on anticipated
favourable prices over the remainder of 2000. Encal has over 80% of its
natural gas sales at market pricing which is being positively impacted by
supply and demand fundamentals. Commencement of the Alliance Pipeline in
October is expected to provide additional value for Encals gas. Encal has
currently fixed the price on 18% of its sales for the year using fixed price
physical sales that net the Company $2.95/Mcf in Alberta and British Columbia. 
West Business Unit 
First quarter drilling activity within the West Business Unit was
focussed in the greater Redeye and Rigel-Montney areas of northeastern British
Columbia. In the greater Redeye area, the Company completed its firm
exploratory and development drilling program, adding nine additional
producers. At Rigel, eight additional wells were drilled, including three
horizontal oil producers. This new drilling, combined with ongoing
enhancements to production and water injection facilities, significantly
increased the Company's net productive capability at Rigel to more than 6,500
barrels equivalent per day by the end of the quarter. 
During the quarter, Encal initiated exploration activities within the new
``South of the Peace River'' growth project in northeastern British Columbia.
The Company completed two major 3-dimensional seismic programs, plus 300
kilometers of new 2-dimensional seismic. This data is expected to provide a
mix of shallow and intermediate exploratory gas drilling opportunities,
commencing in the third quarter of 2000. 
For the balance of 2000, the West Business Unit expects to drill 40 more
wells, all within the Company's established core areas of northeastern British
Columbia and the adjacent Peace River arch area of western Alberta. This
program will include ongoing field development activity at Squirrel, Parkland
North and Grande Prairie. Capital expenditures for the West Business Unit core
program are projected to be $105 million for 2000. 
East Business Unit 
As a result of 1999 drilling successes, strong production performance
from Encal's key East Business Unit properties of Wilson Creek, Sylvan Lake
and Markerville yielded average production rates of over 96 million cubic feet
of natural gas equivalent per day for the quarter. A program consisting of
development drilling, well tie-ins and well recompletions at Sylvan Lake,
Markerville, Willesden Green and Westerose resulted in record production
levels from these projects in the first quarter. Drilling and tie-in
initiatives adjacent to Encal's existing facilities and pipeline
infrastructure in west central Alberta will be pursued aggressively in order
to maximize production volumes and efficiencies in this core area. 
An active freehold and crown land acquisition program during the first
quarter resulted in the acquisition of 17,000 gross acres in East Business
Unit core areas with the majority of lands acquired on the Company's
Mississippian gas projects. A further 13,000 gross acres have been acquired 
through a regional farmin with a major producer in the Irricana region, a
southeast extension of the west central core. This area has multi-well
exploration drilling potential for Cretaceous, Missippippian and Wabamun
targets with activity scheduled to commence after spring break-up. Although a
new region for Encal, this expansion area has the potential to become a
substantial exploration area as additional lands are acquired through farmin,
crown sales and property acquisitions. 
Four seismic programs initiated in January and completed in March at
Willesden Green, Markerville, Edson and Violet Grove are expected to provide
up to 25 exploration locations for second and third quarter drilling. A
further six development locations have been identified on Company land which
are scheduled for drilling late in the second quarter, surface access
permitting. At Edson in the Deep Basin region, prospect identification and
land acquisition is underway following an extensive area review.  Drilling of
up to two exploratory test wells in this region is planned for the fourth
quarter. 
For the balance of the year, the East Business Unit expects to drill up
to 45 wells within the defined core area of Alberta with some core area
expansion drilling initiatives being undertaken. Total capital expenditures 
for the year are forecasted to be $120 million for the East Business Unit core
program. 
Outlook 
The industry is experiencing very strong commodity prices, which are
fuelling record cash flow and earnings. The forward view on both crude oil and
natural gas pricing remains bullish as supply and demand imbalances are
forecast. As a result, Encal is well positioned to generate strong 2000
results and combined with its 1999 production exit rates it is well positioned
to meet its production targets for 2000. In addition, the ability to fund its
2000 base capital program of $225 million internally is further solidified. 
Acquisitions providing incremental growth will be considered, however, we
will maintain our investment discipline to ensure that corporate profitability
continues through the mid-point of the commodity price cycle. 
The Company's Annual and Special General Meeting will be held on May 4,
2000 at 3:00 p.m. in the McMurray Room of The Calgary Petroleum Club, Calgary,
Alberta. I hope you will be able to join us at that time to discuss Encal's
results and future endeavours. 


    On behalf of the Board
    (signed)
    David D. Johnson
    President and CEO
    April 26, 2000
    <<
    ENCAL ENERGY LTD.
    Balance Sheets
                                        March 31          December 31
    ($ thousands)                           2000                 1999
    ----------------------------------------------------------------------
                                       (unaudited)
    Assets
       Current
       Accounts Receivable                60,199             58,337
       Inventory                           8,755              7,784
    ----------------------------------------------------------------------
                                          68,954             66,121
       Petroleum Property and Equipment  750,314            706,375
       Deferred Foreign Exchange Losses    2,452              2,048
    ----------------------------------------------------------------------
                                         821,720            774,544
    ----------------------------------------------------------------------
    ----------------------------------------------------------------------
    Liabilities and Shareholders' Equity
       Current
       Accounts Payable                   83,576             69,965
    ----------------------------------------------------------------------
       Bank Debt                         233,761            229,214
       Senior Notes Payable               72,675             72,165
       Site Restoration and Reclamation   12,611             11,959
       Future Income Taxes                94,190             81,818
    ----------------------------------------------------------------------
                                         413,237            395,156
    ----------------------------------------------------------------------
       Shareholders' Equity
       Share Capital                     257,429            256,590
       Retained Earnings                  67,478             52,833
    ----------------------------------------------------------------------
                                         324,907            309,423
    ----------------------------------------------------------------------
                                         821,720            774,544
    ----------------------------------------------------------------------
    ----------------------------------------------------------------------
    ENCAL ENERGY LTD.
    Statements of Earnings and retained earnings
    For the Three Months Ended March 31
    (unaudited, $ thousands except per share amounts)    2000       1999
    ------------------------------------------------------------------------
    Revenues
       Petroleum and Natural Gas Sales                  96,707     47,223
       Royalties                                        19,271      8,264
       Hedging (Gains) Charges                           5,127        (83)
    ------------------------------------------------------------------------
                                                        72,309     39,042
    ------------------------------------------------------------------------
    Expenses
       Production                                       13,809     10,993
       General and Administrative                        2,933      2,653
       Financing Charges                                 5,585      4,087
       Depletion and Depreciation                       22,491     17,815
    ------------------------------------------------------------------------
                                                        44,818     35,548
    ------------------------------------------------------------------------
    Earnings Before Taxes                               27,491      3,494
    ------------------------------------------------------------------------
    Taxes
       Future Income Taxes                              12,372      1,743
       Large Corporation Tax                               474        317
    ------------------------------------------------------------------------
                                                        12,846      2,060
    ------------------------------------------------------------------------
    Net Earnings for the Period                         14,645      1,434
    Retained Earnings, Beginning of Period              52,833     27,456
    ------------------------------------------------------------------------
    Retained Earnings, End of Period                    67,478     28,890
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------
    Earnings per Share
       Basic                                              0.14       0.01
       Fully Diluted                                      0.13       0.01
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------
    ENCAL ENERGY LTD.
    Statements of Cash Flows
    For the Three Months Ended March 31
    (unaudited, $ thousands except per share amounts)     2000       1999
    ------------------------------------------------------------------------
    Cash Flows From Operating Activities
       Net Earnings for the Period                      14,645      1,434
       Depletion and Depreciation                       22,491     17,815
       Future Income Taxes                              12,372      1,743
       Amortization of Deferred Foreign Exchange
        Losses                                              94        214
    ------------------------------------------------------------------------
       Cash Flows From Operating Activities             49,602     21,206
       Change in Non-Cash Working Capital              (26,469)   (12,513)
    ------------------------------------------------------------------------
                                                        23,133      8,693
    ------------------------------------------------------------------------
    Cash Flows From Financing Activities
       Bank Debt                                         4,547     23,384
       Senior Notes Payable                                 12          5
       Common Shares                                       839      2,777
    ------------------------------------------------------------------------
                                                         5,398     26,166
    ------------------------------------------------------------------------
    Cash Flows From Investing Activities
       Additions to Petroleum Property and
        Equipment                                      (61,706)   (56,284)
       Acquisitions of Petroleum Property and
        Equipment                                       (4,340)    (2,840)
       Sales of Petroleum Property and Equipment           366      6,982
       Site Restoration and Reclamation                    (98)        (6)
       Change in Non-Cash Working Capital               37,247     17,289
    ------------------------------------------------------------------------
                                                       (28,531)   (34,859)
    ------------------------------------------------------------------------
    Change in Cash                                           -          -
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------
    Cash Flows From Operations per Share
       Basic                                              0.46       0.20
       Fully Diluted                                      0.43       0.19
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------
    >>



SOURCE Encal Energy Ltd. 
-0-                              04/26/2000 
/CONTACT:  David Johnson, President and CEO, Steven Allaire, Vice
President, Finance and CFO and Corporate Secretary, 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- Apr/26/2000   17:46
EOS   (PRN)    Apr/26/2000    17:46       85
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-0- (PRN) Apr/26/2000   18:00
 
 
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