Powermax Energy Inc. (PWR:TSX-V)
QUICK FACTS SHEET
HIGHLIGHTS:
* recent drilling success has led to a 40% increase in production to 350 boepd
* 2003 first quarter cash flow of $632,556 or $0.075 per share ($0.30 annualized)
* expected 2003 cash flow of $2.0 to $2.5 million or $0.25 to $0.30 per share (trading at only 2.0 to 2.5 times)
* estimated net asset value of $1.10 to $1.30 per share (trading at 0.48 to 0.68 times)
* debt free (debt net of working capital position as at March 31, 2003)
Powermax is an emerging company engaged in the exploration, development, and production of petroleum and natural gas in western Canada. The Company has demonstrated tremendous growth in the past 6 months, going from a corporation burdened with debt and generating negative cash flow and earnings, to a company with no debt, significant financial growth, and numerous projects.
Powermax has recently tied-in a number of new wells raising net production to about 350 barrels of oil equivalent per day. Approximately 70% of current production is comprised of natural gas. The Company plans to drill up to 6 wells over the balance of 2003, and to exit this year with production of over 500 boepd.
At its core area of Galahad, Powermax has identified 3 to 6 multi-zone development drilling locations. Another 3 wells in the area are categorized as ideal recompletion candidates, which provide the potential for incremental production.
The Company’s newly acquired Peace River Arch property has the potential for significant oil and natural gas additions and has the added benefit of accessibility to infrastructure. The area offers numerous shallow drilling opportunities. In particular, a 50% interest well is expected to be drilled in 2003, targeting a zone that blew out in the early 1900’s at rates approaching 10 mmcf/d of natural gas.
Powermax has entered into an agreement with Western Petrochemicals Corp. to explore and develop a shale bed methane gas play in the Pasquia Hills region of eastern Saskatchewan. Powermax can earn a 100% working interest in 188,000 acres in exchange for completing a $625,000 work program over a period of 30 months. In addition to completing the work obligations, the corporation made an initial payment of $50,000, and will issue 50,000 common shares. Powermax also recently acquired exploration permits covering a contiguous 106,000 acre parcel of land in the Moose Jaw region of Saskatchewan which is prospective for natural gas.
Production and Projects…
Galahad, Alberta
# multiple drilling locations
# 3 wells planned for 2003
# 93% average working interest
# gas targets in the Ellerslie and Glauconite zones
# immediate potential for production through the Powermax operated pipeline system
Eagle Butte, Alberta
# exploration project surrounded by production
# seismic and geological work to delineate property underway
# 2004 project development proposed
# 100% interest for oil targets in Sawtooth, Mannville, gas targets in Bow Island and 2nd White Secs zones
# potential for phased development in 2004-2005
Exploration Projects…
Peace River/Cadotte, Alberta
# exploration project backed by seismic and geology
# one well planned for 2003
# 50% working interest
# shallow gas prospects
# nearby infrastructure including services, roads, and pipelines
# potential for commercial development in 2004
Saskatchewan
# 188,000 acres prospective for shale gas
# 106,000 acres of historical gas
# preliminary geological and seismic work for 2003-2004
# historical gas shows to be delineated
# 50% working interest
# future development potential
FINANCIAL AND OPERATIONAL SUMMARY
BALANCE SHEET
(As at March 31, 2003)
Current Assets $ 1,352,662
Total Assets 4,240,789
Current Liabilities 1,349,881
Long-Term Debt nil
Shareholders' Equity 2,775,914
FINANCIAL & PRODUCTION
3 months ended March 31 Year ended December 31
2003 2002 2002 2001
FINANCIAL
Revenues $ 1,000,794 $ 408,632 $ 2,279,978 $ 2,033,193
Cash Flow 632,556 (13,742) 924,907 693,625
per share 0.075 (0.002) 0.143 0.114
Net Income 430,403 (177,742) 64,675 146,103
per share 0.051 (0.028) 0.010 0.024
PRODUCTION
Natural Gas (mcf/d) 1,600 636 998 719
Oil & NGLs (bpd) 73 124 103 81
Boepd (6:1) 334 229 270 201
SHARES OUTSTANDING (As at March 31, 2003)
Basic: 8,405,100 *
Fully-diluted: 11,402,900 *
* Investors should take note that the official number of common shares (9,722,300) is presently subject to revision. This total includes 1,047,200 shares which are subject to performance escrow. The position of Powermax is that the conditions for release of these shares were not satisfied and that the share certificate evidencing their issue should be cancelled. The Company is currently taking steps to effect this cancellation. In addition, 270,000 common shares purchased pursuant to an issuer bid are also subject to cancellation at this time.* management and insiders own approximately 38% of the total shares issued and outstanding
CONTACT INFORMATION:
Suite 1000, 330 - 5th Ave. SW, Calgary, AB, T2P 0L4
Phone: (403) 237-5535
Fax: (403) 264-3734
Email: kingma@powermaxenergy.net
Website: www.powermaxenergy.net
Contact: Johannes (Jo) Kingma
QIS CAPITAL COMMENTS:
Powermax Energy has come a long way in the past 12 months and now appears poised to show considerable growth and gain increased attention from the investment community. While the Company underwent some restructuring to reduce debt and streamline costs during the first half of 2002, new banking arrangements and the appointment of a professional staff have now positioned Powermax to exploit its vast potential. It should also be noted that the Company has an untapped $2.1 million line of credit as well as a $1 million acquisition line of credit.
The first quarter of 2003 is the first real indication of the positive financial outlook for Powermax. Annualized first quarter cash flow is approximately $0.30 per share based on a production base of about 330 boepd. The Company anticipates this production to continue to increase with a year-end target rate of 500 boepd. Ignoring this potential production increase, Powermax’s shares are trading at just over 2 times annualized cash flow, at a significant discount to net asset value, and the Company is debt free. This enviable financial position should enable Powermax to capitalize on its aggressive growth plans. |
