 | | | Published : August 10th, 2007 | Announces Second Quarter Res =?ISO-8859-1?Q?ults,=20Successful=20Fertile=20Pool=20 |
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August 9, 2007
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Bulldog Resources Announces Second Quarter Results, Successful Fertile Pool
Reduced Well Spacing Pilot Project and Increasing 2007 Capital Budget
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CALGARY, ALBERTA--(Marketwire - Aug. 9, 2007) - BULLDOG RESOURCES INC. (TSX:BD)
Bulldog Resources Announces Second Quarter Results, Successful Fertile Pool Reduced Well Spacing Pilot Project and Increasing 2007 Capital Budget
HIGHLIGHTS
- Increasing 2007 capital expenditure budget by $3 million to $30 million
- Expanded drilling program in Q3/Q4 to include 26 gross (13.75 net) wells
- Fertile Pool - successful reduced well spacing infill drilling pilot project
- Current production as of early July in excess of 1,800 BOE/day
- Achieved "top decile" field net backs of $53.54 per BOE and cash flow of $49.76 per BOE in the second quarter
- Efficient Q2 operations delivered production expenses of $3.95 per BOE
- Drilled 10 gross (6.02) wells resulting in six oil wells (3.27 net), one vertical well awaiting completion (1.00 net), one vertical stratigraphic test well (0.50 net) and two D&A wells (1.25 net) in the second quarter
QUARTERLY SUMMARY
2007 2006
----------------------------- -------------------
Six Six
months months
ended ended
Q2 Q1 June 30 Q2 June 30
----------------------------------------------------------------------------
FINANCIAL (Cdn$000's
except per share amounts)
Revenues $ 10,286 $ 9,652 $ 19,938 $ 3,733 $ 5,465
Cash flow $ 7,461 $ 7,306 $ 14,767 $ 2,829 $ 3,888
Per share - basic $ 0.27 $ 0.27 $ 0.54 $ 0.12 $ 0.17
- diluted $ 0.26 $ 0.25 $ 0.51 $ 0.11 $ 0.16
Net earnings $ 2,989 $ 3,041 $ 6,030 $ 1,635 $ 1,962
Per share - basic $ 0.11 $ 0.11 $ 0.22 $ 0.06 $ 0.08
- diluted $ 0.10 $ 0.11 $ 0.21 $ 0.06 $ 0.08
Capital expenditures $ 6,322 $ 6,468 $ 12,790 $ 3,901 $ 6,477
Working capital
(deficiency) $ (6,555) $ (5,534) $ 6,983
----------------------------------------------------------------------------
----------------------------------------------------------------------------
OPERATIONAL (units
as noted)
Average daily production
Oil (barrels/day) 1,639 1,691 1,665 549 429
Natural gas (mcf/day) 50 39 45 36 32
Combined (BOE/day) 1,648 1,697 1,672 555 435
Average price realization
Oil/barrel ($Cdn.) $ 68.79 $ 63.30 $ 66.01 $ 74.51 $ 69.88
Natural gas/mcf ($Cdn.) $ 7.64 $ 5.70 $ 6.79 $ 4.01 $ 5.47
Combined/BOE ($Cdn.) $ 68.60 $ 63.19 $ 65.87 $ 73.97 $ 69.43
Production expenses
(per Boe) $ 3.95 $ 2.12 $ 3.03 $ 2.36 $ 2.77
Transportation expenses
(per Boe) $ 0.37 $ 0.38 $ 0.37 $ 1.84 $ 1.61
Field netback (per Boe) $ 53.54 $ 51.17 $ 52.34 $ 61.69 $ 56.33
Cash flow (per Boe) $ 49.76 $ 47.83 $ 48.78 $ 56.06 $ 49.40
----------------------------------------------------------------------------
----------------------------------------------------------------------------Report to Shareholders
INCREASING 2007 CAPITAL EXPENDITURES
Due to excellent drilling results and the high cash flow netbacks from our light oil operations, our 2007 capital expenditure budget has been increased by $3 million to $30 million which will include the drilling of 45 gross (24.3 net) wells. In the first six months of 2007, we have spent $12.8 million on exploration and development. The remaining $17.2 million will include the drilling of 26 gross (13.75 net wells). We added a second drilling rig in August.
ON TRACK TO MEET OUR 2007 AVERAGE PRODUCTION TARGET
We are on track to meet or exceed our projected 2007 average production volume of 1,800 BOE per day (99% light oil). Using a projected benchmark WTI oil price of $65.00 per barrel for 2007 (resulting in an estimated realized oil price of CDN $66.66 per barrel), Bulldog's projected cash flow from operations approximates $31 million or $1.13 per share basic ($1.10 per share diluted).
FINANCIAL STRENGTH
Bulldog has a $25 million bank credit facility and the ability to increase the line if we wish. $0.7 million was drawn as of June 30, 2007. As at June 30, 2007 Bulldog had a net debt of $4.0 million. Our net debt to 2007 projected cash flow is less than two months.
FERTILE POOL - LARGE PETROLEUM IN-PLACE AND A SUCCESSFUL REDUCED WELL SPACING INFILL DRILLING PILOT PROJECT
As previously discussed in our first quarter, 2007 report, we engaged GLJ Petroleum Consultants to conduct an assessment of resources and reserves on our Fertile property. Please refer to our Q1 report for further information. One of the objectives of the study was to estimate a range of discovered petroleum initially in place (PIIP) for the pool.
For the total pool gross leases, GLJ has estimated a most likely case of 78.8 MSTB and a high estimate of 140.7 MSTB. The cumulative production from approximately 26 horizontal wells in the pool to April 1, 2007 was approximately 0.9 million barrels.
To-date, the pool has been developed on 150 meter inter well spacing with 33 horizontal wells drilled to July 31, 2007. However, it is our opinion that this pool is an excellent project for reduced well spacing to increase recovery factors and efficiently produce the 36 degree API oil reserves.
Bulldog has recently completed a reduced well spacing (75 meters) infill drilling pilot project at Fertile. Two horizontal wells were drilled between existing horizontal wells that were on 150 meter spacing. The two infill wells have been on production in excess of three months. To-date, no production interference has been observed in the new infill wells or in the off-set wells.
The Fertile pool is a large accumulation of petroleum initially in place. It is a high quality pool with consistent, repeatable drilling results. Fertile has a short production history relative to its reserve life. Longer production history and more producing wells drilled into the pool will provide increased confidence in estimating oil recovery factors. A positive upward revision in recovery factor, which is common with large oil accumulations, would result in higher estimates of contingent resources and reserves.
SUCCESSFUL DRILLING AND OPERATIONS CONTINUED IN Q2, 2007
We commenced drilling after spring break-up in mid-May on our light oil projects in Southeast Saskatchewan. Bulldog drilled 10 gross (6.02 net) wells resulting in 6 gross (3.27 net) oil wells, 1 gross (1.0 net) vertical well awaiting completion, 1 gross (0.5 net) vertical stratigraphic test well and 2 gross (1.25 net) dry and abandoned vertical wells. We drilled 4 gross (2.0 net) horizontal wells and 1 gross (0.5 net) vertical stratigraphic test well at Fertile.
We continue to improve the operational efficiency of the Fertile pool. Construction of a new six inch field gathering line and two new group well headers to service the increasing number of wells was completed in the second quarter. The Enbridge pipeline to our Fertile battery, which became operational in January, 2007, is now transporting approximately 95 % our crude oil production from the property. The remainder of the oil production is trucked directly to the Cromer terminal. In addition, the construction of a gas pipeline was completed and we commenced shipping gas from our Fertile battery to Atco Midstream in May, 2007. Approximately 700 Mcf/day (350 Mcf/day net) of solution gas from the pool is now being conserved.
4A13-11-1B9-10-6-30W1, drilled in July 2005, is Bulldog's oldest producing horizontal well in the Fertile pool. A maintenance workover in May of 2007 restored production to approximately 200 Bbls per day (100 Bbls per day net). 4A13-11 has been on production two years and has produced in excess of 100,000 Bbls of oil to-date.
At our 100% working interested Browning property, we drilled a successful horizontal well which was an extension to a new pool discovery drilled by Bulldog in 2006. Browning is our second most active drilling area with several operated and non-operated wells planned to be drilled in the remainder of 2007.
PRODUCTION GROWTH CONTINUES
Current production as of early July is in excess of 1,800 BOE/day.
Bulldog's second quarter average daily production volumes were 1,648 BOE/day compared to 1,697 BOE/day in Q1, 2007. A portion of our oil volumes were shut-in due to road bans in the second quarter. In addition, an early spring break up suspended our field operations on March 15, 2007.
HIGH CASH FLOW PER BOE
Bulldog's Q2, 2007 cash flow increased to $7.5 million from $7.3 million in Q1, 2007. Bulldog's Q2, 2007 cash flow per share was $0.27 per share which was equivalent to the previous quarter. Our cash flow per BOE continues to be among the highest in our industry at $49.76 per BOE due to Bulldog's high realized oil price ($68.79 CDN. per bbl) and our low cost structure (production and transportation expenses of $4.32 per BOE).
WE WELCOME MR. STEVE BJORNSON TO BULLDOG'S BOARD OF DIRECTORS
We welcome Mr. Steve Bjornson to Bulldog's Board of Directors as the Chairman of the Audit Committee. An experienced Chartered Accountant, Steve has spent the majority of his career in the oil and gas industry. He is currently Senior Vice-President and Chief Financial Officer of Sound Energy Trust. Previously, Steve was Vice-President and Chief Financial Officer of Clear Energy Inc. Prior thereto, he was Vice-President Finance and Chief Financial Officer of Vermilion Resources since 1995. Mr. Bjornson has more than 17 years experience in corporate finance and accounting at Westcoast Petroleum, North Canadian Oils and Winfield Energy.
We look forward to up-dating our shareholders on our progress.
Kenneth D. McKay, P.Geol., President and Chief Executive Officer
August 8, 2007
Management's Discussion & Analysis
ADVISORIES
The intention of Bulldog Resources Inc. ("Bulldog") management's discussion and analysis (MD&A) is to present management's analysis of operational results, current financial position and future prospects. The date of this MD&A is August 8, 2007. This interim MD&A is an update to Bulldog's annual MD&A for the year ended December 31, 2006 that is included in the 2006 Annual Report. Bulldog's 2006 Annual Report is available on SEDAR at www.sedar.com and our website (www.bulldogresources.ca).
Certain statements included in this MD&A constitute forward-looking statements under applicable securities legislation. Forward-looking statements or information typically contain statements with words such as "anticipate", "believe", "expect", "plan", ", "estimate", "propose", or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking statements or information in this MD&A include but are not limited to capital expenditures, business strategy and objectives, net revenue, future production levels, developments plans and the timing thereof, operating and other costs, royalty rates, etc.
Such forward-looking statements or information are based on a number of assumptions which may prove to be incorrect. Although Bulldog believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because Bulldog can give no assurance that such expectations will prove to be correct. Forward-looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by Bulldog and described in the forward-looking statements or information.
Finally, in the presentation of the MD&A, Bulldog uses three terms that are universally applied in analyzing corporate performance within the oil and gas industry as explained below.
- Barrel of Oil Equivalent (BOE) - Our industry commonly expresses production volumes and reserves on a "barrel of oil equivalent" basis (BOE) whereby natural gas volumes are converted at the ratio of six thousand cubic feet to one barrel of oil. The intention is to sum oil and natural gas measurement units into one basis for improved analysis of results and comparisons with other industry participants.
Throughout this MD&A Bulldog has used the 6:1 BOE measure which is the approximate energy equivalency of the two commodities at the burner tip. BOE does not represent a value equivalency at the plant gate which is where Bulldog sells its production volumes and therefore may be a misleading measure if used in isolation.
- Operating Income and Field Netback - Operating income is defined as revenues less royalties, transportation costs and production expenses. Field netback is the term used when these items are expressed on a BOE of production basis.
- Funds Flow from Operations - This measure is commonly referred to as cash flow and is considered critical within our industry both in terms of measuring success in our historical operations and being an indicator of funding sources for on-going efforts to replace production volumes and increase reserve volumes. Canadian generally accepted accounting principles ("GAAP") requires that "cash flow from operating activities" be the measurement focus. This latter term is derived from "funds flow from operations" as defined by Bulldog adjusted for the change in non-cash working capital. Bulldog believes "funds flow from operations" and "funds flow from operations per share" to be more meaningful measures of our performance and therefore have used these terms throughout this MD&A. Accordingly, Bulldog is required to advise the reader that: (a) these are non-GAAP measures for purposes of Canadian accounting standards; and (b) our determinations may not be comparable to those reported by other companies.
CORPORATE ORIGIN
Bulldog is a Calgary based company engaged in the exploration, acquisition, development and production of oil and natural gas reserves in the Western Canadian Sedimentary Basin. Bulldog commenced operations on November 30, 2005 as a result of the Plan of Arrangement between Bulldog Energy Inc. and Crescent Point Energy Trust. The Plan of Arrangement, through a series of transactions resulted in Bulldog Energy shareholders exchanging their shares in exchange for units of Crescent Point and common shares of Bulldog.
BASIS OF PREPARATION
The interim consolidated financial statements include the accounts of Bulldog; its wholly owned subsidiary Bulldog Ventures Ltd., and in conjunction with Bulldog Ventures Ltd., its 100% owned Bulldog Partnership. The interim consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles, which require management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.
EXPLORATION AND DEVELOPMENT CAPITAL EXPENDITURES
2007 2006
----------------------------- -------------------
Six Six
months months
ended ended
($000's) Q2 Q1 June 30 Q2 June 30
----------------------------------------------------------------------------
Land acquisitions and
retentions $ 378 $ 186 $ 564 $ 415 $ 454
Seismic 235 738 973 217 375
Drilling & completions 4,662 3,436 8,098 2,229 3,866
Equipping, tie-ins and
facilities 1,043 2,106 3,149 1,013 1,745
Head office 4 2 6 27 37
----------------------------------------------------------------------------
Total $ 6,322 $ 6,468 $ 12,790 $ 3,901 $ 6,477
----------------------------------------------------------------------------
----------------------------------------------------------------------------In the second quarter of 2007, Bulldog drilled 10 gross (6.02 net) wells resulting in six oil wells (3.27 net), one vertical well (1.00 net) awaiting completion, one vertical stratigraphic test well (0.50 net) and two dry and abandoned wells (1.25 net). Eight of the 10 drilled wells were operated by Bulldog. In the six month period ended June 30, 2007, Bulldog drilled 19 gross (10.55 net) wells resulting in 13 oil wells (6.35 net), two wells waiting on completion (1.45 net), one stratigraphic well (0.50 net) and three dry and abandoned wells (2.25 net).
Equipping, tie-ins and facilities capital expenditures in the six months ended June 30, 2007 included $1.5 million related to a natural gas pipeline at Fertile. The estimated gross cost of the natural gas pipeline is expected to be $3.0 million (Bulldog50% net share is $1.5 million). The natural gas pipeline was completed and commenced operations in May 2007. (See Contractual Obligations).
Bulldog's undeveloped land inventory was 68,328 gross acres (47,099 net) as at June 30, 2007. This represents a 46% increase from Bulldog's December 31, 2006 undeveloped acreage totaling 32,200 net acres.
RESULTS OF OPERATIONS
In our second quarter of 2007 Bulldog continued to grow shareholder value. The following tables summarize Bulldog's operating income, funds flow from operations and net earnings for the second quarter and the six month period in 2007 with comparatives for the 2006.
OPERATING INCOME
2007 2006
----------------------------- -------------------
Six Six
months months
ended ended
($000's) Q2 Q1 June 30 Q2 June 30
----------------------------------------------------------------------------
Oil and gas revenue $ 10,286 $ 9,652 $ 19,938 $ 3,733 $ 5,465
Royalties (1,611) (1,454) (3,065) (408) (686)
Transportation expenses (55) (58) (113) (93) (127)
Production expenses (592) (324) (916) (119) (218)
----------------------------------------------------------------------------
Operating income $ 8,028 $ 7,816 $ 15,844 $ 3,113 $ 4,434
----------------------------------------------------------------------------
----------------------------------------------------------------------------
2007 2006
----------------------------- -------------------
Six Six
months months
ended ended
(Per BOE) Q2 Q1 June 30 Q2 June 30
----------------------------------------------------------------------------
Oil and gas revenue $ 68.60 $ 63.19 $ 65.87 $ 73.97 $ 69.43
Royalties (10.74) (9.52) (10.13) (8.08) (8.72)
Transportation expenses (0.37) (0.38) (0.37) (1.84) (1.61)
Production expenses (3.95) (2.12) (3.03) (2.36) (2.77)
----------------------------------------------------------------------------
Operating income $ 53.54 $ 51.17 $ 52.34 $ 61.69 $ 56.33
----------------------------------------------------------------------------
----------------------------------------------------------------------------
FUNDS FLOW FROM OPERATIONS
2007 2006
----------------------------- -------------------
Six Six
months months
($000's except per BOE ended ended
and per share amounts) Q2 Q1 June 30 Q2 June 30
----------------------------------------------------------------------------
Funds flow from operations $ 7,461 $ 7,306 $ 14,767 $ 2,829 $ 3,888
Per BOE $ 49.76 $ 47.83 $ 48.78 $ 56.06 $ 49.40
Per common share
Basic $ 0.27 $ 0.27 $ 0.54 $ 0.12 $ 0.17
Diluted $ 0.26 $ 0.25 $ 0.51 $ 0.11 $ 0.16
----------------------------------------------------------------------------
----------------------------------------------------------------------------Bulldog's 2007 second quarter funds flow from operations increased marginally from the first quarter mainly as a result of an increase in realized oil prices which was offset by higher production expenses.
Bulldog's 2007 second quarter funds flow from operations increased a multiple of 2.6 times from the first quarter of 2006 as a result of the significant increase in production volumes offset by a $5.72 per barrel reduction in Bulldog's realized oil price.
The reconciling item between "funds flow from operations" in the above table and "cash provided by operations" per the consolidated statement of cash flows is the change in non-cash working capital related to operating activities.
NET EARNINGS
2007 2006
----------------------------- -------------------
Six Six
months months
($000's except per BOE ended ended
and per share amounts) Q2 Q1 June 30 Q2 June 30
----------------------------------------------------------------------------
Net earnings $ 2,989 $ 3,041 $ 6,030 $ 1,635 $ 1,962
Per BOE $ 19.93 $ 19.91 $ 19.92 $ 32.40 $ 24.93
Per common share
Basic $ 0.11 $ 0.11 $ 0.22 $ 0.06 $ 0.08
Diluted $ 0.10 $ 0.11 $ 0.21 $ 0.06 $ 0.08
----------------------------------------------------------------------------
----------------------------------------------------------------------------Bulldog's 2007 second quarter net earnings decreased marginally from the first quarter primarily as a result of Bulldog's higher depletion expenses resulting from the property acquisitions completed in January 2007. Bulldog's 2007 second quarter net earnings increased substantially from the comparable 2006 period as a result of significant volume growth.
Bulldog's 2007 six months net earnings represented a 44 percent annualized rate of return on average shareholders equity. Bulldog expects that its rate of return will continue to rank "top decile" in relation to its peer group.
Production Volumes
2007 2006
----------------------------- -------------------
Six Six
months months
ended ended
Q2 Q1 June 30 Q2 June 30
----------------------------------------------------------------------------
Total Volumes
Oil and NGL's (bbl) 149,188 152,162 301,350 49,927 77,737
Natural gas (mcf ) 4,553 3,510 8,063 3,240 5,850
----------------------------------------------------------------------------
BOE 149,947 152,747 302,694 50,467 78,712
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Daily averages
Oil and NGL's (Bopd) 1,639 1,691 1,665 549 429
Natural gas (mcf per day) 50 39 45 36 32
----------------------------------------------------------------------------
BOE per day 1,648 1,697 1,672 555 435
----------------------------------------------------------------------------
----------------------------------------------------------------------------Bulldog's 2007 second quarter average daily production volumes decreased marginally by 49 BOE per day as a result of an extended spring break up period and road bans which resulted in a portion of our oil volumes being shut in. Bulldog's field operations were shut down in mid March and did not commence until mid May. Approximately 79% of Bulldog's 2007 second quarter production is derived from its Fertile property. Bulldog's 2007 second quarter average daily production volumes was triple the comparable quarter of 2006 as a result of Bulldog's successful drilling programs and the January 2007 property acquisitions.
Oil Prices
2007 2006
----------------------------- -------------------
Six Six
months months
ended ended
Q2 Q1 June 30 Q2 June 30
----------------------------------------------------------------------------
WTI benchmark price
($US per barrel) $ 65.02 $ 58.25 $ 61.64 $ 70.70 $ 67.09
Oil price differential
($US per barrel) 2.17 (0.35) 0.82 (0.71) (2.26)
Exchange ($US /$Cdn) 0.911 0.853 0.882 0.891 0.879
----------------------------------------------------------------------------
Edmonton light ($Cdn per
barrel) $ 73.75 $ 67.86 $ 70.80 $ 78.55 $ 73.75
Cromer and quality
adjustments (4.96) (4.56) (4.79) (4.04) (3.87)
----------------------------------------------------------------------------
Bulldog average oil price
($Cdn ) $ 68.79 $ 63.30 $ 66.01 $ 74.51 $ 69.88
----------------------------------------------------------------------------
----------------------------------------------------------------------------Revenue
Bulldog's oil and gas revenue in the second quarter of 2007 was comprised of $10,214,000 of oil sales, $35,000 of natural gas sales and $37,000 of natural gas liquids. The 2007 second quarter WTI benchmark average oil price increased 12% or $6.77 U.S. per barrel compared to the first quarter of 2007. The increase in Bulldog's second quarter realized oil price results from increased WTI average prices and a positive oil price differential between WTI and benchmark Edmonton light oil prices. These two factors that increased Bulldog's realized oil prices were offset by a stronger Canadian dollar which reduces realized oil prices. Bulldog's oil production is 36 degree API light oil and is priced based on the Cromer benchmark light crude price subject to quality adjustments specific to Bulldog's volumes.
Royalties
2007 2006
----------------------------- -------------------
Six Six
months months
ended ended
($000's except per BOE) Q2 Q1 June 30 Q2 June 30
----------------------------------------------------------------------------
Royalties $ 1,611 $ 1,454 $ 3,065 $ 408 $ 686
Per BOE $ 10.74 $ 9.52 $ 10.13 $ 8.08 $ 8.72
Percentage of revenue 16% 15% 15% 11% 13%
----------------------------------------------------------------------------
----------------------------------------------------------------------------Bulldog's 2007 second quarter royalties as a percentage of revenue was relatively consistent with the first quarter. The horizontal wells at Fertile drilled on Crown lands are eligible for the reduced Crown royalty rate of 2.5 % on the first 37,500 barrels of gross cumulative oil production. After this reduced royalty period, the eligible wells are subject to sliding scale Crown royalties with rates dependent on production volumes. Approximately 52% of Bulldog's second quarter oil production benefited from the reduced crown royalty program (54% for the six month period ended June 30, 2007).
Bulldog's 2007 second quarter royalties as a percentage of revenue increased five percentage points in comparison to the 2006 second quarter. This royalty increase results mainly from a higher portion of Fertile's production being derived from wells which have completed their reduced royalty periods.
Bulldog's revenue is derived from Saskatchewan properties and is subject to a 1.9% Saskatchewan resource revenue surcharge, which is included in the above royalties.
Transportation Expenses
2007 2006
----------------------------- -------------------
Six Six
months months
ended ended
($000's except per BOE) Q2 Q1 June 30 Q2 June 30
----------------------------------------------------------------------------
Transportation $ 55 $ 58 $ 113 $ 93 $ 127
Per BOE $ 0.37 $ 0.38 $ 0.37 $ 1.84 $ 1.61
----------------------------------------------------------------------------
----------------------------------------------------------------------------Bulldog's transportation expenses on a per BOE basis decreased substantially in 2007 in comparison to 2006 as a result of an oil pipeline constructed in December 2006 to transport oil from Bulldog's Fertile battery to a central facility at Alida. The Fertile oil production is subject to an oil pipeline tariff, with the tariff payments reducing Bulldog's oil pipeline liability resulting from the pipeline construction. The oil pipeline also reduced the impact of oil production interruptions which normally occur during the annual spring break up period. Approximately 95% of Fertile's oil production was transported on the oil pipeline in the second quarter compared to 84% in the first quarter (see Contractual Obligations).
Production Expenses
2007 2006
----------------------------- -------------------
Six Six
months months
ended ended
($000's except per BOE) Q2 Q1 June 30 Q2 June 30
----------------------------------------------------------------------------
Production $ 592 $ 324 $ 916 $ 119 $ 218
Per BOE $ 3.95 $ 2.12 $ 3.03 $ 2.36 $ 2.77
----------------------------------------------------------------------------
----------------------------------------------------------------------------Bulldog's 2007 second quarter production expenses increased $ 1.83 per BOE from the first quarter of 2007 and $1.59 per BOE from the comparable quarter of 2006. These increases resulted from anticipated routine maintenance expenses and higher per BOE operating expenses on the properties acquired in January 2007. Bulldog's expects its concentrated and highly efficient operations will continue to result in very low per BOE operating expenses in relation to its peer group.
General and Administrative
2007 2006
----------------------------- -------------------
Six Six
months months
ended ended
($000's) Q2 Q1 June 30 Q2 June 30
----------------------------------------------------------------------------
Gross expenses $ 790 $ 757 $ 1,547 $ 617 $ 1,106
Operator recoveries (81) (92) (173) (60) (101)
Capitalized overhead (235) (222) (457) (213) (380)
----------------------------------------------------------------------------
Net expenses $ 474 $ 443 $ 917 $ 344 $ 625
----------------------------------------------------------------------------
----------------------------------------------------------------------------
2007 2006
----------------------------- -------------------
Six Six
months months
ended ended
(Per BOE) Q2 Q1 June 30 Q2 June 30
----------------------------------------------------------------------------
Gross expenses $ 5.27 $ 4.95 $ 5.11 $ 12.23 $ 14.05
Operator recoveries (0.54) (0.60) (0.57) (1.19) (1.28)
Capitalized overhead (1.57) (1.45) (1.51) (4.22) (4.83)
----------------------------------------------------------------------------
Net expenses $ 3.16 $ 2.90 $ 3.03 $ 6.82 $ 7.94
----------------------------------------------------------------------------
----------------------------------------------------------------------------The increase in Bulldog's second quarter net general and administrative expenses of $31,000 resulted mainly from the costs of an independent engineering assessment of resources and reserves on our Fertile property. The increase in Bulldog's general and administrative expenses in the six month period ended June 30, 2007 in comparison to 2006 relates mainly to employee salaries and office rent. In order to maintain strict cost control during Bulldog's initial start up, Bulldog's four officers accepted reduced salaries throughout 2006 as a result of the smaller initial production base. Bulldog has nine employees who have efficiently managed significant levels of growth. Bulldog anticipates that its 2007 third and fourth quarter general and administrative expenses will be less then $ 2.90 per BOE as a result of expected production volume growth.
General and administrative expenses directly related to exploration and development activities are capitalized and represented 33 percent of general and administrative expenses (net of third party recoveries) in 2007. The portion of administrative expenses capitalized in 2007 decreased from the 38 percent capitalization rate used throughout 2006. The growth in Bulldog's production volumes has resulted in a lower portion of administrative expenses being capitalized.
Interest and Financing Expense (Income)
2007 2006
----------------------------- -------------------
Six Six
months months
ended ended
($000's except per BOE) Q2 Q1 June 30 Q2 June 30
----------------------------------------------------------------------------
Interest expense (income) $ 93 $ 67 $ 160 $ (60) $ (79)
Per BOE $ 0.62 $ 0.44 $ 0.53 $ (1.18) $ (1.00)
----------------------------------------------------------------------------
----------------------------------------------------------------------------Interest expense for the six months ended June 30, 2007 is comprised of bank financing expenses of $120,000 and $40,000 of imputed interest on Bulldog's oil pipeline liabilities. In the comparative quarters of 2006 Bulldog invested its cash balances in short term bankers acceptances and received interest income.
NON-CASH EXPENSES
Stock Based Compensation
2007 2006
----------------------------- -------------------
Six Six
months months
ended ended
($000's except per BOE) Q2 Q1 June 30 Q2 June 30
----------------------------------------------------------------------------
Expenses $ 140 $ 77 $ 217 $ 113 $ 225
Per BOE $ 0.93 $ 0.50 $ 0.72 $ 2.24 $ 2.86
----------------------------------------------------------------------------
----------------------------------------------------------------------------Bulldog has a stock-based compensation plan consisting of performance warrants and stock options. Performance warrants and stock options granted to directors, officers and employees are accounted for in accordance with the fair value method of accounting for stock-based compensation. The fair value of the performance warrants and options granted was based on the Black-Scholes option pricing model and assumptions regarding interest rates, volatility of Bulldog's common shares, and expected life of the performance warrants. Compensation expenses are recognized over the vesting period. For purposes of calculating stock-based compensation expense it was assumed that 100 percent of Bulldog's stock options and performance warrants would vest.
The increase in the 2007 second quarter expense resulted from additional stock options issued in March 28, 2007. In the three and six month periods ended June 30, 2007 Bulldog capitalized $99,000 and $163,000 of stock based compensation consistent with its practice of capitalizing a portion of its general and administrative expenses. Stock based compensation was not capitalized in the comparable periods in 2006.
Depletion, Depreciation and Accretion
2007 2006
----------------------------- -------------------
Six Six
months months
ended ended
($000's except per BOE) Q2 Q1 June 30 Q2 June 30
----------------------------------------------------------------------------
Expenses $ 2,963 $ 2,824 $ 5,787 $ 513 $ 857
Per BOE $ 19.76 $ 18.49 $ 19.12 $ 10.17 $ 10.89
----------------------------------------------------------------------------
----------------------------------------------------------------------------Depletion and depreciation expense is calculated using the unit-of-production method which is based on BOE production volumes in relation to the BOE proven reserves. Bulldog's second quarter depletion, depreciation and accretion expense per BOE has increased $1.27 per BOE from the first quarter of 2007 and $9.59 per BOE from the comparable quarter of 2006. These increases result mainly from the January 2007 property acquisitions. The cost of these property acquisitions per BOE of proven reserves was higher then Bulldog's 2006 reserve finding and development costs.
Bulldog's June 30, 2007 property plant and equipment balance includes a total of $24.4 million related to January 2007 property acquisitions. Of this total $8.4 million has been allocated to unproven reserves and therefore excluded from Bulldog's 2007 second quarter depletable cost base.
As at June 30, 2007 additional land and seismic costs associated with unproven properties that were excluded from costs subject to depletion and depreciation were $5.4 million. The estimated salvage values of $3.1 million as at June 30, 2007 reduced the costs of equipment subject to depreciation. Estimated future development costs on proved reserves of $7.0 million as at June 30, 2007 are included in the calculation of depletion and depreciation.
Income Taxes
2007 2006
----------------------------- -------------------
Six Six
months months
ended ended
($000's except per BOE) Q2 Q1 June 30 Q2 June 30
----------------------------------------------------------------------------
Earnings before income
taxes $ 4,358 $ 4,405 $ 8,763 $ 2,203 $ 2,806
Current income taxes $ - $ - $ - $ - $ -
Future income taxes $ 1,369 $ 1,364 $ 2,733 $ 568 $ 844
Effective tax rate 31% 31% 31% 26% 30%
----------------------------------------------------------------------------
----------------------------------------------------------------------------In 2006 both federal and provincial income tax rates were reduced. These income tax rate reductions resulted in a lower effective tax rate in the second quarter of 2006.
Bulldog does not expect to incur current income taxes in 2007. Bulldog's current income tax horizon after 2007 will be affected by future production volumes, capital expenditures, and the oil price environment at that time.
LIQUIDITY AND CAPITAL RESOURCES
Bulldog continues to have considerable financial strength and a significant undrawn balance in bank debt capacity. The Company's remaining 2007 projected exploration and development capital expenditures program of $17.2 million is expected to be financed by funds flow from operations. Bulldog also has available a $25.0 million bank credit facility with a balance of $0.7 million drawn as at June 30, 2007.
Bulldog's credit facility bears interest at the bank's prime rate plus 0.25 percent or bankers acceptances plus 1.25 percent per annum. Borrowings under Bulldog's bank credit facility are payable on demand. The facility is limited to a borrowing base as determined by the bank and subject to periodic reviews. The next review is scheduled on or before August 31, 2007.
Bulldog's net debt as at June 30, 2007 was $4.0 million (defined as working capital deficiency excluding the current pipeline liabilities and current joint interest pipeline receivable). Bulldog's net debt is less then two months of Bulldog's projected funds from operations.
The oil and gas industry operates within several parameters affecting its liquidity and capital resources:
- It is capital intensive requiring cash infusions on a regular basis as it seeks to grow its business.
- Its inventory of product for sale - its reserves - needs to be constantly replenished and augmented.
- It is a price taker when selling its inventory of oil and natural gas reserves.
Given these constraints, Bulldog plans to finance its capital expenditures primarily through funds flow from operations supplemented as required by bank credit facilities and equity financings. The Company will maintain bank credit facilities to finance incremental exploration and development activities, and acquisitions.
2007 UPDATED GUIDANCE
Bulldog's updated projected 2007 total acquisitions, exploration and development capital expenditure program is $54.4 million. The 2007 updated capital budget includes $24.4 million of property acquisitions that were completed in January 2007. Bulldog's projected exploration and development capital has been increased by $3 million to a total of $30.0 million. Bulldog's projected 2007 average production volumes is 1,800 BOE per day (99% oil). Using a projected 2007 average WTI oil price of U.S. $ 65.00 per barrel and a U.S. to Canadian exchange rate of $0.92 (resulting in an estimated Bulldog realized oil price of CDN $66.66 per barrel), Bulldog's 2007 projected funds flow from operations is $31.0 million or $1.13 per share basic ($1.10 per share diluted).
Bulldog's projected net debt as at December 31,2007 is $5.5 million (defined as working capital deficiency excluding the current pipeline liabilities and current joint interest pipeline receivable). Bulldog is on track to meet this updated 2007 projection and we will update this guidance as our operations progress throughout the remainder of the year.
Three key variables used in projecting Bulldog's 2007 funds flow from operations are production volumes, oil prices and the U.S./Canadian exchange rates. The following table summarizes the sensitivity to Bulldog's projected 2007 funds flow from operations resulting from changes in production volumes, oil prices and exchange for the remaining quarters of 2007:
($000's except per share) Amount Per share
----------------------------------------------------------------------------
50 BOE per day change in average production volumes $ 481 $ 0.02
U.S. $1.00 per barrel change in WTI oil price $ 308 $ 0.01
U.S. $ to Cdn. $1.00 exchange rate of $0.01 $ 216 $ 0.01
----------------------------------------------------------------------------
----------------------------------------------------------------------------
ADDITIONAL DISCLOSURES
SHARE CAPITAL
2007 2006
------------------------------------------------
Three Six Three Six
months months months months
ended ended ended ended
June 30 June 30 June 30 June 30
----------------------------------------------------------------------------
Weighted average shares
outstanding
Basic 27,675,026 27,434,561 24,810,718 23,204,882
Performance warrants 1,242,061 1,242,061 908,505 908,505
Stock options 258,559 258,559 - -
----------------------------------------------------------------------------
Diluted 29,175,646 28,935,181 25,719,223 24,113,387
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Outstanding securities at
June 30,
Common shares 27,809,202 24,959,202
Performance warrants 1,535,000 1,875,000
Stock options 754,500 432,500
----------------------------------------------------------------------------
Total 30,098,702 27,266,702
----------------------------------------------------------------------------
----------------------------------------------------------------------------From the period June 30, 2007 to August 8, 2007 there were no changes in the number of common shares, performance warrants and stock options outstanding.
COMMON SHARE TRADING SUMMARY
2007 2006
----------------------------- -------------------
Six Six
months months
ended ended
($000's except per BOE) Q2 Q1 June 30 Q2 June 30
----------------------------------------------------------------------------
Share prices
High $ 6.70 $ 5.35 $ 6.70 $ 2.74 $ 2.74
Low $ 4.76 $ 4.10 $ 4.10 $ 1.90 $ 1.53
Close $ 6.41 $ 5.29 $ 6.41 $ 2.33 $ 2.33
Trading volume (000's) 6,391 4,563 10,954 2,725 8,740
----------------------------------------------------------------------------
----------------------------------------------------------------------------CRITICAL ACCOUNTING ESTIMATES
In the preparation of the consolidated financial statements, it was necessary for Bulldog to make certain estimates that were critical to determining our assets, liabilities and net earnings. None of these estimates affect the determination of cash flow but do have a significant impact in the determination of earnings. The most critical of these estimates is the reserves estimations and the resulting effect on various income statement and balance sheet measures.
The estimation of the reserve volumes and future net revenues is complex and subject to uncertainties and interpretations. Judgments are based upon engineering data, projected future rates of production, forecasts of commodity prices, and the timing of future expenditures. Inevitably the estimates of reserve volumes and future net revenues will vary over time as new data becomes available. Changes in estimated proved reserves or future development costs have a direct impact on depletion and depreciation expense.
CONTRACTUAL OBLIGATIONS
Bulldog enters into various contractual obligations in the normal course of its operations, including the purchase of various operational services, operating agreements, lease obligations for office space and office equipment. These contractual obligations were entered into in the ordinary course of business and the terms reflect market conditions.
Both an oil and natural gas pipeline have been constructed at Bulldog's Fertile property resulting in net pipeline liabilities totaling $2,593,000 as at June 30, 2007. This balance is comprised of an oil pipeline liability of $1,157,000 and gas pipeline liability of $2,873,000 offset by joint interest pipeline receivable of $ 1,437,000.
The oil pipeline liability will be settled by an oil volume tariff, with a required minimum payment of 20 percent per annum of the original liability. In the three and six month period ended June 30, 2007 Bulldog's oil pipeline tariff payments of $121,000 and $224,000 were applied to and reduced the oil pipeline liability. After the third party who constructed the oil pipeline recovers its capital investment, Bulldog has the option to either continue to use the oil pipeline at a prescribed oil volume tariff or truck its' oil.
The natural gas pipeline liability is being settled by the delivery of natural gas and liquids production "in kind" from the Fertile property over a period not exceeding 18 months. In the second quarter of 2007 Bulldog's "in kind" natural gas and liquids revenue of $ 64,000 was applied to and reduced the gas pipeline liability. Any remaining gas pipeline liability after the 18 months period will be settled by a cash payment.
Bulldog contractual obligations and associated future payments are
summarized by fiscal year as follows:
($000's) 2007 2008 2009 2010 2011 Total
----------------------------------------------------------------------------
Office lease $ 65 $ 134 $ 141 $ 145 $ 73 $ 558
Fertile oil
pipeline $ 248 $ 343 $ 252 $ 193 $ 121 $ 1,157
Fertile natural
gas pipeline(1) $ 479 $ 957 $ - $ - $ - $ 1,436
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) The gas pipeline liability represent Bulldog's 50% share of this
contractual obligation.Other then operating lease commitments relating to its office premises Bulldog has no off balance sheet arrangements.
RELATED PARTY TRANSACTIONS
A director of Bulldog is a partner in a law firm that provides legal services to Bulldog related to administrative activities, property acquisitions and share issue costs which totaled $40,000 and $163,000 for the three and six month periods ended June 30, 2007 respectively ($68,000 and $103,000 for the three and six month periods ended June 30, 2006).
On January 11, 2007 Bulldog acquired, though a series of transactions with another public company, oil and gas assets of a privately held oil and gas company whose President is the Chairman of the Board of Bulldog. The total purchase consideration consisted of 2.5 million Bulldog shares at an ascribed value of $4.47 per share and cash of $8.4 million resulting in a total purchase price of $19.6 million. On January 26, 2007 Bulldog purchased additional working interests in a portion of the above noted oil and gas assets for cash consideration totaling $4.7 million. Of this total $0.7 million was paid to a company controlled by the Chairman of the Board of Bulldog.
Both of the January 11 and January 26 oil and gas asset purchases above were approved by Bulldog's board of directors with the Chairman of the Board abstaining from the vote.
FINANCIAL RISKS
Financial risks that are not within Bulldog's control include the fluctuation in commodity prices and foreign exchange rates, provincial and federal regulations, royalties, taxes and interest rates. Bulldog is exposed to foreign currency fluctuations as crude oil prices received are referenced to U.S. dollar denominated prices. Bulldog is also exposed to floating interest rates on bank borrowings. Bulldog continually monitors its exposure to financial risks. To date, Bulldog has not employed financial instruments to mitigate these risks and presently does not contemplate doing so.
Bulldog endeavors to manage certain risks by focusing on controlling its cost structure and implementing the strategy of focusing on core areas and specific geological targets to control capital exposure risk.
NEW ACCOUNTING PRONOUNCEMENTS
Financial Instruments
In 2006, the CICA issued new accounting standards, CICA Handbook Section 3855, "Financial Instruments Recognition and Measurement", Section 3861 "Financial Instruments- Presentation and Disclosure", Section 3865 "Hedges" and Section 1530 "Comprehensive Income" effective for fiscal years beginning on or after October 1, 2006. These standards prescribe how and at what amount financial assets, financial liabilities and non-financial derivatives are to be recognized on the balance sheet.
The standards prescribe fair value in some cases while cost-based measures are prescribed in other cases. It also specifies how financial instrument gains and losses are to be presented.
Bulldog has not, and currently does not contemplate doing so, entered into financial and non-financial derivative instrument contracts to hedge potential exposures to changes in commodity prices, foreign exchange rates or interest rates. Bulldog's management is not aware of any embedded derivatives. Bulldog has no other comprehensive income. As a result, the adoption of these accounting standards had no effect on Bulldog's 2007 interim consolidated financial statements for the six months ended June 30, 2007.
Accounting Changes
CICA Handbook Section 1506 provides expanded disclosures for changes in accounting policies, accounting estimates and corrections of errors. The recommendations permit voluntary changes in accounting policies only if they result in financial statements which provide more reliable and relevant information. Accounting policy changes are applied retrospectively unless otherwise permitted or where impractical to determine. Corrections of prior period errors are applied retrospectively and changes in accounting estimates are applied prospectively in the period of change. There was no material impact to Bulldog's consolidated financial statements as a result of implementing this standard.
Capital Disclosures
As of January 1, 2008 Bulldog will be required to adopt the CICA Handbook Section 1535 "Capital Disclosures" which will require entities to disclose their objectives, policies and processes for managing capital. In addition, disclosures are to include whether entities have complied with externally imposed requirements. Bulldog intends to comply with any additional financial statement disclosure requirements resulting from this new standard.
DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROLS OVER FINANCIAL REPORTING
There are no changes to disclosure controls and procedures and internal controls over financial reporting from those disclosed in Bulldog's Management Discussion and Analysis for the year ended December 31, 2006. Due to their inherent limitations, disclosure controls and procedures and internal controls over financial reporting may not prevent or detect misstatement or errors. Control systems, no matter how well conceived or operated, can only provide reasonable assurance and not absolute assurance that the objectives of the control systems are meet. Additional information on Bulldog's disclosure controls and internal controls over financial reporting can be obtained in Bulldog's annual MD&A for the year ended December 31,2006 which is available on SEDAR at www.sedar.com.
SELECTED QUARTERLY INFORMATION
($ in thousands except production volumes and per share amounts)
2007 2006
------------------- ---------------------------------------
Q2 Q1 Q4 Q3 Q2 Q1
----------------------------------------------------------------------------
Production volumes
Oil and NGL's
(barrels per day) 1,639 1,691 1,256 1,060 549 309
Gas (mcf per day) 50 39 30 28 36 29
BOE per day 1,648 1,697 1,261 1,064 555 314
Capital
expenditures $ 6,322 $ 6,468 $ 7,966 $ 5,720 $ 3,901 $ 2,576
Revenue $ 10,286 $ 9,652 $ 7,123 $ 7,235 $ 3,733 $ 1,732
Funds flow from
operations $ 7,461 $ 7,306 $ 5,281 $ 5,567 $ 2,829 $ 1,059
Per share
Basic $ 0.27 $ 0.27 $ 0.21 $ 0.23 $ 0.12 $ 0.05
Diluted $ 0.26 $ 0.25 $ 0.20 $ 0.22 $ 0.11 $ 0.05
Net earnings $ 2,989 $ 3,041 $ 2,296 $ 3,012 $ 1,635 $ 327
Per share
Basic $ 0.11 $ 0.11 $ 0.09 $ 0.13 $ 0.06 $ 0.02
Diluted $ 0.10 $ 0.11 $ 0.09 $ 0.13 $ 0.06 $ 0.01
Working capital
(deficiency) $ (5,534) $ (6,555) $ 5,035 $ 6,830 $ 6,983 $ 2,434
Total assets $ 61,427 $ 57,732 $ 36,347 $ 27,984 $ 22,038 $ 12,602
Total
liabilities $ 21,994 $ 21,874 $ 14,861 $ 8,945 $ 6,162 $ 4,270
Shareholder's
equity $ 39,433 $ 35,858 $ 21,486 $ 19,039 $ 15,876 $ 8,332
Common shares
outstanding 27,809 27,474 24,959 24,959 24,959 21,581
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Consolidated Financial Statements
Six months ended June 30, 2007 and 2006
CONSOLIDATED BALANCE SHEETS
(Cdn. $ in thousands) (unaudited)
June 30, December 31,
As at 2007 2006
----------------------------------------------------------------------------
ASSETS
Current assets
Cash and term deposits $ - $ 8,604
Accounts receivable 5,348 3,817
Joint interest pipeline receivable (note 6) 1,078 450
Prepaid expenses 151 185
----------------------------------------------------------------------------
6,577 13,056
Joint interest pipeline receivable (note 6) 359 890
Property, plant and equipment (note 4) 54,491 22,401
----------------------------------------------------------------------------
$ 61,427 $ 36,347
----------------------------------------------------------------------------
----------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 8,796 $ 7,121
Pipeline liabilities (note 6) 2,599 900
Bank debt (note 5) 716 -
----------------------------------------------------------------------------
12,111 8,021
Pipeline liabilities (note 6) 1,431 1,780
Asset retirement obligations (note 7) 1,373 705
Future income taxes (note 8) 7,079 4,355
Shareholders' equity
Share capital (note 9) 25,395 13,684
Contributed surplus (note 10) 771 565
Retained earnings 13,267 7,237
----------------------------------------------------------------------------
39,433 21,486
----------------------------------------------------------------------------
$ 61,427 $ 36,347
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Commitments (notes 6 and 15)
See accompanying notes to the consolidated financial statements.
CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
(Cdn. $ in thousands except per share amounts) (unaudited)
Three months ended Six months ended
June 30, June 30,
2007 2006 2007 2006
----------------------------------------------------------------------------
Oil and gas revenue $ 10,286 $ 3,733 $ 19,938 $ 5,465
Royalties (1,611) (408) (3,065) (686)
Transportation expenses (55) (93) (113) (127)
Production expenses (592) (119) (916) (218)
----------------------------------------------------------------------------
8,028 3,113 15,844 4,434
Other expenses
General and administrative 474 344 917 625
Stock-based compensation (note 10) 140 113 217 225
Interest and financing (income) 93 (60) 160 (79)
Depletion, depreciation and
accretion 2,963 513 5,787 857
----------------------------------------------------------------------------
3,670 910 7,081 1,628
Earnings before income taxes 4,358 2,203 8,763 2,806
Income taxes (note 8)
Future income taxes 1,369 568 2,733 844
----------------------------------------------------------------------------
Net earnings for the period 2,989 1,635 6,030 1,962
Retained earnings (deficit),
beginning of period 10,278 294 7,237 (33)
----------------------------------------------------------------------------
Retained earnings, end of period $ 13,267 $ 1,929 $ 13,267 $ 1,929
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net earnings per share (note 11)
Basic $ 0.11 $ 0.06 $ 0.22 $ 0.08
Diluted $ 0.10 $ 0.06 $ 0.21 $ 0.08
----------------------------------------------------------------------------
----------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Cdn. $ in thousands) (unaudited)
Three months ended Six months ended
June 30, June 30,
2007 2006 2007 2006
----------------------------------------------------------------------------
Cash provided by (used in):
Operations activities
Net earnings for the period $ 2,989 $ 1,635 $ 6,030 $ 1,962
Items not involving cash:
Depletion, depreciation and
accretion 2,963 513 5,787 857
Future income taxes 1,369 568 2,733 844
Stock-based compensation 140 113 217 225
----------------------------------------------------------------------------
7,461 2,829 14,767 3,888
Change in non-cash working capital
(note 14) (14) (216) (700) (539)
----------------------------------------------------------------------------
7,447 2,613 14,067 3,349
Financing activities
Increase (decrease) in bank debt (3,961) - 716 -
Issue of common shares, net of
issue costs - 5,621 - 5,621
Proceeds on exercise of warrants
and options 347 - 362 -
Change in non cash working capital
(note 14) (121) 29 (224) 29
----------------------------------------------------------------------------
(3,735) 5,650 854 5,650
----------------------------------------------------------------------------
Investing activities
Expenditures on property, plant and
equipment (5,874) (3,901) (11,290) (6,477)
Property acquisitions (note 3) - - (13,090) -
Change in non-cash working capital
(note 14) 2,162 904 855 2,172
----------------------------------------------------------------------------
(3,712) (2,997) (23,525) (4,305)
----------------------------------------------------------------------------
Increase (decrease) in cash and term
deposits - 5,266 (8,604) 4,694
Cash and term deposits, beginning of
period - 3,717 8,604 4,289
----------------------------------------------------------------------------
Cash and term deposits, end of
period $ - $ 8,983 $ - $ 8,983
----------------------------------------------------------------------------
----------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements.
Supplementary cash flow information (note 14)
Notes to the Consolidated Financial Statements
For the six months ended June 30, 2007 and 2006
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in Cdn. in $ thousands) (unaudited)1. BASIS OF PRESENTATION
Bulldog Resources Inc. ("Bulldog") was incorporated under the Business Corporations Act (Alberta) on October 24, 2005 and commenced operations on November 30, 2005 upon completion of the Plan of Arrangement ("Arrangement") involving Bulldog Energy Inc. ("Bulldog Energy") and its subsidiaries and Crescent Point Energy Trust. Under the Plan of Arrangement, through a series of transactions, shareholders of Bulldog Energy received units of Crescent Point Energy Trust and common shares of Bulldog.
Bulldog's principal business activity is the exploration, exploitation, development and production of petroleum and natural gas reserves in the Western Canadian Sedimentary Basin.
The consolidated financial statements include the accounts of Bulldog; it's wholly owned subsidiary Bulldog Ventures Ltd. and Bulldog Partnership. These consolidated financial statements have not been audited, have been prepared by management in accordance with Canadian generally accepted accounting principles and follow the same accounting principles and methods as used in the annual audited financials for the year ended December 31, 2006. These interim financials should be read in conjunction with Bulldog's audited financial statements included in Bulldog's 2006 annual report.
Management is required to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The amounts recorded for depletion, depreciation and accretion, stock based compensation and the provision for asset retirement obligations are based on estimates. The calculation of future income taxes is based on various assumptions, which are subject to uncertainty as to timing and tax rates which apply to temporary differences. By there nature, these estimates are subject to measurement uncertainty and the effect on the consolidated financial statements of changes of such estimates in future periods could be significant.
2. CHANGE IN ACCOUNTING POLICIES
a) Financial Instruments and Hedging Activities
On January 1, 2007 Bulldog adopted the four new Canadian accounting standards for financial instruments referred to as CICA Handbook Section 3855 "Financial Instruments-Recognition and Measurement", Section 3861 "Financial Instruments- Presentation and Disclosure", Section 3865 "Hedges" and Section 1530 "Comprehensive Income". Section 3855 requires that all financial assets be classified as "held-for-trading", "available- for-sale", "held-to-maturity" or "loans and receivables". Financial liabilities must be classified as "held-for-trading" or "Other". In accordance with the new standards, all financial instruments including both financial derivatives and non financial derivatives and certain imbedded derivatives qualify as assets or liabilities and need to be recorded on the balance sheet. Embedded derivatives are components within a host contract that have features that are similar to a derivative. Comprehensive income is comprised of net earnings and other comprehensive income.
All of Bulldog's balance sheet assets excluding property plant and equipment are classified as financial assets. All of Bulldog's balance sheet liabilities excluding future income taxes are classified as financial liabilities. The financial assets and financial liabilities recognized on Bulldog's balance sheet approximate their estimated fair value; therefore no adjustments were required upon adoption of the new accounting standards.
Bulldog has not engaged in any hedging activities, derivative instruments or fixed price contracts related to commodity prices, foreign exchange rates or interest rates. Bulldog's management is not aware of any embedded derivatives. Bulldog has no other comprehensive income. As a result the adoption of the above noted January 1, 2007 accounting standards noted above did not impact the consolidated financial statements.
Effective January 1, 2008 Bulldog will be required to adopt two new accounting standards referred to as CICA Handbook Section 3862 "Financial Instruments - Disclosures" and Section 3863 "Financial Instruments- Presentation" which will replace Section 3861 "Financial Instruments- Presentation and Disclosure". The new disclosure standards carry forward the former presentation requirements and also increase the emphasis on the risks associated with both recognized and unrecognized financial instruments and how those risks are managed. Bulldog currently expects no impact from these additional accounting standards on its consolidated financial statements.
b) Accounting Changes
CICA Handbook Section 1506 provides expanded disclosures for changes in accounting policies, accounting estimates and corrections of errors. The recommendations permit voluntary changes in accounting policies only if they result in financial statements which provide more reliable and relevant information. Accounting policy changes are applied retrospectively unless otherwise permitted or where impractical to determine. Corrections of prior period errors are applied retrospectively and changes in accounting estimates are applied prospectively in the period of change. There was no material impact to Bulldog's consolidated financial statements as a result of implementing this standard.
c) Capital Disclosures
As of January 1, 2008 Bulldog will be required to adopt the CICA Handbook Section 1535 "Capital Disclosures" which will require entities to disclose their objectives, policies and processes for managing capital. In addition, disclosures are to include whether entities have complied with externally imposed requirements. Bulldog will comply with any additional financial statement disclosure requirements resulting from this new standard.
3. PROPERTY ACQUISITIONS
On January 11, 2007 Bulldog acquired, though a series of transactions with another public company, oil and gas assets of a privately held oil and gas company whose President is the Chairman of the Board of Bulldog.
The acquisition is accounted for under the purchase method with the operations included from the closing date of the acquisition on January 11, 2007. The estimated fair value of Bulldog's share of the assets acquired and the liabilities assumed is summarized in the table below. Any post closing adjustments to the purchase will be recorded in the period in which they become known.
----------------------------------------------------------------------------
Property, plant and equipment $ 19,682
Future income tax asset 93
Asset retirement obligations (194)
----------------------------------------------------------------------------
Net assets acquired $ 19,581
----------------------------------------------------------------------------
Purchase consideration:
Issue of 2,500,000 common shares (ascribed value
of $4.47 per share) $ 11,175
Cash payment 7,000
Cash payment related to income tax pools and
other adjustments 1,229
Acquisition costs 177
----------------------------------------------------------------------------
Total purchase consideration $ 19,581
---------------------------------------------------------------------------- The Letter of Intent, an agreement detailing the agreed upon business terms of the purchase transaction, was executed on November 24, 2006. Bulldog's common share closing price on November 23, 2006 was $4.00 per share resulting in the implied market value of the 2.5 million common shares to be issued totaling $10.0 million at that time. The ascribed value of Bulldog's common shares of $4.47 per share used in the final calculation of the purchase consideration represents the estimated fair value of these shares as at the December 7, 2006 which was the date of the Definitive Agreement. This ascribed share value was based on Bulldog's weighted average common share trading prices.
On January 26, 2007 Bulldog purchased additional working interests in a portion of the above noted oil and gas assets for cash consideration totaling $4,730,000 consisting of $4,684,000 cash and the assumption of $46,000 of asset retirement obligations. Of this total $681,410 was paid to a company controlled by the Chairman of the Board of Bulldog.
Both of the January 11 and January 26, 2007 oil and gas asset purchases were approved by Bulldog's board of directors with the Chairman of the Board abstaining from the vote.
4. PROPERTY, PLANT AND EQUIPMENT
June 30, December 31,
2007 2006
----------------------------------------------------------------------------
Property, plant and equipment $ 63,809 $ 25,973
Accumulated depletion and depreciation (9,318) (3,572)
----------------------------------------------------------------------------
Net book value $ 54,491 $ 22,401
----------------------------------------------------------------------------
----------------------------------------------------------------------------As at June 30, 2007 a total of $8,428,000 of property acquisition costs allocated to unproven properties acquired in January 2007 were excluded from capitalized costs subject to depletion and depreciation expense (see note 3).
As at June 30, 2007 an additional $5,418,000 related to land and seismic expenditures associated with unproven properties were excluded from capitalized costs subject to depletion and depreciation expense ($1,980,000 as at June 30, 2006). Estimated future development costs on proved reserves of $7,002,000 as at June 30, 2007 are included in the calculation of depletion and depreciation ($2,250,000 as at June 30, 2006). Estimated salvage values of $3,085,000 reduced the costs of equipment subject to depreciation ($966,000 as at June 30, 2006).
During the three and six month periods ended June 30, 2007, Bulldog capitalized general and administrative costs of $235,000 and $457,000 respectively which is included in property, plant and equipment ($213,000 and $380,000 for the three and six month periods ended June 30, 2006). During the three and six month periods ended June 30, 2007 Bulldog capitalized to property, plant and equipment a total of $150,000 and $247,000 respectively which is comprised of $99,000 and $163,000 of stock based compensation and the related future income taxes of $51,000 and $84,000 (nil for the six months ended June 30, 2006).
5. BANK CREDIT FACILITIES
Bulldog's has a $25 million revolving operating loan facility which bears interest at the bank's prime rate plus 0.25 percent or bankers acceptances plus 1.25 percent per annum. Borrowings under these facilities are payable on demand. The assets of Bulldog are pledged as security for these credit facilities pursuant to a general security agreement and a floating charge debenture.
The credit facilities are limited to a borrowing base as determined by the bank and are subject to periodic reviews by the bank. The next review is scheduled on or before August 31, 2007. As at June 30, 2007 $ 0.7 million was drawn on the revolving operating loan facility.
6. PIPELINE LIABILITIES AND JOINT INTEREST PIPELINE RECEIVABLE
(a) Oil pipeline
In the fourth quarter of 2006 a third party constructed for Bulldog and its joint interest partner a pipeline to transport oil from the Fertile battery located in Southeast Saskatchewan. Bulldog recorded in the fourth quarter of 2006 an oil pipeline liability of $ 2,680,000 with a corresponding addition of 50% thereof to joint interest pipeline receivable and the balance was an addition to property plant and equipment. The oil pipeline commenced operations in January 2007. In the second quarter of 2007 Bulldog, its joint interest partner in the oil pipeline and third party pipeline owner entered into an assignment agreement whereby Bulldog's joint interest partner agreed to be directly responsible for its 50% share of all obligations under the third party oil pipeline agreement. As result of this assignment in the second quarter of 2007 Bulldog's joint interest oil pipeline receivable was eliminated and the receivable balance reduced Bulldog's oil pipeline liability. The oil pipeline liability is being settled by an oil volume tariff, with the tariff rate resulting in a minimum annual reduction of 20 percent of the original oil pipeline liability. During the three and six months period ended June 30, 2007 Bulldog paid $121,000 and $224,000 in oil pipeline tariffs.
The following summarizes the estimated remaining reductions by year in
Bulldog's oil pipeline liability over the remaining fiscal years ended
December 31:
----------------------------------------------------------------------------
2007 $ 255
2008 380
2009 299
2010 243
2011 163
----------------------------------------------------------------------------
Total 1,340
Imputed interest (6.5 % per annum) (183)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Oil pipeline liability $ 1,157
----------------------------------------------------------------------------
---------------------------------------------------------------------------- (b) Natural gas pipeline
In August 2006 Bulldog, as operator of the Fertile property, entered into an agreement for the construction of a natural gas pipeline required to transport and market natural gas from its Fertile property located in Southeast Saskatchewan. Bulldog's joint interest partner in the property agreed to be responsible for all terms and conditions of the natural gas pipeline agreement related to their 50% working interest in this property.
The natural gas pipeline was completed in May 2007 with estimated gross costs totaling $3,000,000. The gross cost of the natural gas pipeline has been recorded by Bulldog as a pipeline liability with a corresponding addition of $1,500,000 to joint interest pipeline receivable and an addition of $1,500,000 to property, plant and equipment.
The natural gas pipeline liability is being settled by the delivery of natural gas and liquids production "in kind" from the Fertile property over a period not exceeding 18 months. Any remaining liability after the 18 months period will be settled by a cash payment. Bulldog's share of the production "in kind" is recorded as revenue at the prevailing prices when delivered. The joint interest partner's share of production "in kind" is recorded as a reduction in the joint interest pipeline receivable. During the six months period ended June 30, 2007 Bulldog recorded $64,000 of "in kind" natural gas and liquids revenue.
After the third party recovers its' costs of the pipeline, the third party will retain 20% of all future natural gas production and 50% of all the future liquids production. The remaining 80% balance of the natural gas production and 50% percent of the liquids production will be shared by Bulldog and its' joint interest partner according to their respective working interest in the production.
(c) Joint interest pipeline receivable
The following summarizes Bulldog's pipeline liabilities and the related
joint interest pipeline receivable:
June 30, 2007 December 31, 2006
------------------------------
Oil Gas
pipeline pipeline Total Oil pipeline
----------------------------------------------------------------------------
Third party commitment $ 1,157 $ 2,873 $ 4,030 $ 2,680
Less: current portion (444) (2,155) (2,599) (900)
----------------------------------------------------------------------------
Non-current portion $ 713 $ 718 $ 1,431 $ 1,780
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Joint interest receivable
Third party commitment $ - $ 1,437 $ 1,437 $ 1,340
Less: current portion - (1,078) (1,078) (450)
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Non-current portion $ - $ 359 $ 359 $ 890
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----------------------------------------------------------------------------7. ASSET RETIREMENT OBLIGATIONS
The future asset retirement obligations were estimated based on Bulldog's net ownership in all wells and facilities, the estimated costs to abandon and reclaim the wells and facilities and the estimated timing of the costs to be incurred in future periods. As at June 30, 2007, the total undiscounted amount of the estimated cash flows required to settle the asset retirement obligations is approximately $2.3 million which will be incurred over the next 15 years, with the majority of the expenditures to be incurred by 2018. A credit adjusted risk-free rate of eight percent and an inflation rate of two percent was used to calculate the fair value of the asset retirement obligations.
Changes to asset retirement obligations were as follows:
2007 2006
-------------------------------
Three months Six months Year ended
ended June 30 ended June 30 December 31
----------------------------------------------------------------------------
Balance, beginning of period $ 1,087 $ 705 $ 367
Property acquisitions (note 3) - 240 -
Increase in liabilities 53 174 315
Change in estimates 213 213 (18)
Accretion expense 20 41 41
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Balance, end of period $ 1,373 $ 1,373 $ 705
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8. FUTURE INCOME TAXES
The provision for income taxes differs from the amount which would be
obtained by applying the combined federal and provincial statutory income
tax rate to the earnings as follows:
Three months ended Six months ended
June 30, June 30,
2007 2006 2007 2006
----------------------------------------------------------------------------
Earnings before income taxes $ 4,358 $ 2,203 $ 8,763 $ 2,806
Statutory income tax rate 33.87% 36.72% 33.87% 37.06%
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Expected income tax $ 1,476 $ 809 $ 2,968 $ 1,040
Increase (decrease)
resulting from:
Non-deductible crown
payments - 34 - 77
Resource allowance - (94) - (135)
Stock based compensation 47 40 73 83
Change in statutory income
tax rates (154) (221) (308) (221)
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Future income tax provision $ 1,369 $ 568 $ 2,733 $ 844
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9. SHARE CAPITAL
Authorized:
Unlimited number of Class A preferred shares
Unlimited number of common voting shares
Issued common shares:
Six months ended June 30,
------------------------------------------------
2007 2006
(Cdn$ in thousands except ----------------------- -----------------------
share amounts) Number Amount Number Amount
----------------------------------------------------------------------------
Balance, beginning of
period 24,959,202 $ 13,684 21,581,202 $ 8,655
Changes during the
period:
Property acquisitions
(note 3) 2,500,000 11,175 - -
Private placement, net of
issue costs - - 3,378,000 5,770
Exercise of performance
warrants 340,000 503 - -
Exercise of stock options 10,000 33 - -
Tax effect of 2005
flow-through share issue - - - (741)
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Balance, end of period 27,809,202 $ 25,395 24,959,202 $ 13,684
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----------------------------------------------------------------------------Common shares reserved for issue:
Performance Warrants
On November 29, 2005 Bulldog issued 1,875,000 performance warrants which have a two year vesting period, an exercise price of $1.00, and an expiry date of November 29, 2010. In 2007 a total of 340,000 performance warrants were exercised and exchanged for 340,000 common shares. As at June 30, 2007 a total of 660,000 unexercised performance warrants were vested and exercisable. The remaining balance of 875,000 performance warrants shall vest and become exercisable if the holder continues to be a director, officer or employee as at December 1, 2007.
Stock Options
The 2,780,920 Common Shares authorized for issuance pursuant to the stock option plan of Bulldog as at June 30, 2007 is reduced by the 1,535,000 Common Shares issuable on the exercise of the performance warrants. The stock options granted have a term of five years from the date of grant and vest as to one-third on each of the first, second and third anniversaries from the date of grant.
The following tables summarize stock options outstanding and additional
stock option details as at June 30, 2007:
Weighted Weighted
Number Average Average
of stock Exercise Price Remaining
options per share Life (years)
----------------------------------------------------------------------------
Balance December 31, 2006 432,500 $ 2.19 4.00
Granted March 28, 2007 352,000 4.89 4.75
Exercised (10,000) 2.19
Cancelled (20,000) 2.19
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Balance June 30, 2007 754,500 $ 3.44 4.35
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----------------------------------------------------------------------------As at June 30, 2007 a total of 134,167 of the $2.19 stock options are vested and exercisable and none of the stock options issued on March 28, 2007 are vested and exercisable.
10. STOCK BASED COMPENSATION
Bulldog has recorded stock-based compensation for the performance warrants and stock options granted. For purposes of calculating stock-based compensation expense it was assumed that 100 percent of the stock options and performance warrants would vest. The compensation expense is recognized over the vesting period of the performance warrants and stock options. During the three and six month periods ended June 30, 2007, $239,000 and $380,000 respectively was recognized as stock based compensation (2006 - $113,000 and $225,000).
The per share fair value of the stock options granted on March 28, 2007 was estimated using the Black-Scholes option pricing model with the following assumptions as at the date of the grant:
----------------------------------------------------------------------------
Risk free interest rate (%) 4.28
Expected life (years) 5
Expected volatility (%) 50%
Expected dividends (%) -
Grant-date fair value $ 2.37
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Contributed Surplus
Three months ended Six months ended
June 30, June 30,
2007 2006 2007 2006
----------------------------------------------------------------------------
Balance, beginning of period $ 699 $ 150 $ 565 $ 38
Stock-based compensation
expensed 140 113 217 225
Stock-based compensation
capitalized 99 - 163 -
Exercise of performance
warrants and options (167) - (174) -
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Balance , end of period $ 771 $ 263 $ 771 $ 263
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11. NET EARNINGS PER SHARE
The following table summarizes the weighted average number of common
shares outstanding used in calculating basic and diluted net earnings per
share:
Three months ended Six months ended
June 30, June 30,
2007 2006 2007 2006
----------------------------------------------------------------------------
Weighted average shares
outstanding
Basic 27,675,026 24,810,718 27,434,561 23,204,882
Stock options 258,559 - 258,559 -
Performance warrants 1,242,061 908,505 1,242,061 908,505
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Diluted 29,175,646 25,719,223 28,935,181 24,113,387
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Equity instruments
outstanding at end of
period
Common shares 27,809,202 24,959,202
Stock options 754,500 432,500
Performance warrants 1,535,000 1,875,000
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Diluted common shares 30,098,702 27,266,702
----------------------------------------------------------------------------
----------------------------------------------------------------------------12. RELATED PARTY TRANSACTIONS
A director of Bulldog is a partner in a law firm that provides legal services to Bulldog related to administrative activities, property acquisitions and share issue costs which totaled $40,000 and $163,000 for the three and six month periods ended June 30, 2007 respectively ($68,000 and $103,000 for the three and six month periods ended June 30, 2006).
13. FINANCIAL INSTRUMENTS
(a) Commodity price risk
Bulldog is exposed to fluctuations in crude oil and natural gas prices.
(b) Foreign currency exchange risk
Bulldog is exposed to fluctuations in foreign currency as crude oil prices received are referenced to U.S. dollar denominated prices.
(c) Interest Rate Risk
Bulldog is exposed to fluctuations in interest rates with respect to bank debt that bears interest at floating rates.
There were no financial instruments in place to manage commodity prices, foreign exchange or interest rates during the six months ended June 30, 2007 and 2006.
(d) Credit Risk
Bulldog's accounts receivable and joint interest pipeline receivable are with customers and joint interest partners in the petroleum and natural gas industry and are subject to normal credit risks. Bulldog sells substantially all of its production to one credit-worthy purchaser under normal industry sale and payment terms. Amounts receivable from joint interest partners are recoverable from production and, accordingly, Bulldog views credit risks on these amounts as minimal.
14. SUPPLEMENTAL CASH FLOW INFORMATION
Changes in non-cash working capital were comprised of the following:
Three months ended Six months ended
June 30, June 30,
2007 2006 2007 2006
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Accounts receivable $ (830) $ (648) $ (1,531) $ (1,341)
Prepaid expenses 61 (36) 34 (104)
Accounts payable and
accrued liabilities 2,959 1,401 1675 3,107
Pipeline liabilities (163) - (247) -
----------------------------------------------------------------------------
Net change $ 2,027 $ 717 $ (69) $ 1,662
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Net change by activity:
Operating (14) (216) $ (700) (539)
Financing (121) 29 (224) 29
Investing 2,162 904 855 2,172
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Net change $ 2,027 $ 717 $ (69) $ 1,662
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----------------------------------------------------------------------------Bulldog paid on a cash basis interest expense totaling $74,000 and $122,000 during the three and six month periods ended June 30, 2007 respectively ($60,000 and $79,000 of interest income for the three and six month periods ended June 30, 2006).
15. COMMITMENT
At June 30, 2007 Bulldog had an office space lease commitment through to June 2011 totaling $558,000 (2007- $65,000, 2008- $134,000, 2009- $141,000, 2010 -$145,000 and 2011- $73,000).
Advisories
FORWARD LOOKING INFORMATION
Certain statements included in this interim report and press release constitute forward-looking statements under applicable securities legislation. Forward-looking statements or information typically contain statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking statements or information include but are not limited to capital expenditures, business strategy and objectives, net revenue, future production levels, developments plans and the timing thereof, operating and other costs, royalty rates etc. Such forward looking information involves substantial known and unknown risks and uncertainties. Most of these are beyond Bulldog's control and include: the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, and the availability of qualified personnel and services, stock market volatility, and the access to sufficient capital from internal and external sources.
Such forward-looking statements or information are based on a number of assumptions which may prove to be incorrect. Although Bulldog believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because Bulldog can give no assurance that such expectations will prove to be correct. Forward-looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by Bulldog and described in the forward-looking statements or information.
Finally, in the presentation Bulldog uses three terms that are universally applied in analyzing corporate performance within the oil and gas industry as explained below.
- Meaning of BOE and BOE/day - When used in this interim report and press release, Boe means a barrel of oil equivalent on the basis of 1 Boe to 6 thousand cubic feet of natural gas. Boe/day means a barrel of oil equivalent per day. Boe's may be misleading, particularly if used in isolation. A boe conversion ratio of 1 boe for 6 thousand cubic feet of natural gas is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the well head.
- Operating Income and Field Netback - Operating income is defined as revenues less royalties, transportation costs and production expenses. Field netback is the term used when these items are expressed on a BOE of production basis.
- Cash Flow - This measure is considered critical within our industry both in terms of measuring success in our historical operations and being an indicator of funding sources for on-going efforts to replace production volumes and increase reserve volumes. Canadian generally accepted accounting principles ("GAAP") requires that "funds flow from operating activities" be the measurement focus. This latter term is derived from "cash flow from operations" as defined by Bulldog adjusted for the change in non-cash working capital. Bulldog believes "cash flow", "cash flow per boe" and "cash flow per share" to be more meaningful measures of our performance and therefore have used these terms throughout this interim report and press release. Accordingly, Bulldog is required to advise the reader that: (a) these are non-GAAP measures for purposes of Canadian accounting standards; and (b) our determinations may not be comparable to those reported by other companies.
Shareholder Information
BOARD OF DIRECTORS OFFICERS BANKERS
E. CRAIG LOTHIAN, KENNETH D. MCKAY, NATIONAL BANK
LL.B.(1)(3) P. GEOL. Calgary, Alberta
Chairman of the Board President & Chief
Regina, Saskatchewan Executive Officer AUDITORS
STEVE BJORNSON, C.A.(1) S. BRUCE MCKAY, C.E.T. KPMG LLP
Calgary, Alberta Vice President Chartered Accountants
Production & Chief Calgary, Alberta
CLAUDIO A. GHERSINICH, Operating Officer
P. ENG.(1)(2) SOLICITORS
Calgary, Alberta MICHAEL H. FLANAGAN,
P. LAND HEENAN BLAIKIE LLP
S. BRUCE MCKAY, C.E.T. Executive Vice President Barristers & Solicitors
Calgary, Alberta Land Calgary, Alberta
KENNETH D. MCKAY, ROBERT E. KRAFT, C.A. STOCK EXCHANGE
P. GEOL. Chief Financial Officer
Calgary, Alberta THE TSX EXCHANGE
EVALUATION ENGINEERS Symbol: BD
JAMES M. PASIEKA,
LL.B.(2)(3) GLJ Petroleum TRANSFER AGENT
Calgary, Alberta Consultants Ltd.
Calgary, Alberta OLYMPIA TRUST COMPANY
(1) Members of the Audit Telephone (403) 261-0900
Committee
(2) Members of the
Reserve Committee
(3) Members of the
Governance &
Compensation
Committee
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CONTACT INFORMATION:
Bulldog Resources Inc.
Ken McKay
President & CEO
(403) 266-6902
Fax: (403) 264-7470
or
Bulldog Resources Inc.
Rob Kraft
Chief Financial Officer
(403) 266-6902
Fax: (403) 264-7470
or
Bulldog Resources Inc.
Suite 805, 734 - 7th Avenue S.W.
Calgary, AB, T2P 3P8
Email: info@bulldogresources.ca
Website: www.bulldogresources.ca
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INDUSTRY: Energy and Utilities - Oil and Gas
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Bulldog Resources Inc.
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CODE : BD.TO |
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ProfileMarket
IndicatorsVALUE :
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reportRISK :
Asset profileContact Cpy |
Bulldog is a exploration company based in Canada. Bulldog is listed in Canada, in Germany and in United States of America. Its market capitalisation is CA$ 206.9 millions as of today (US$ 201.8 millions, € 139.1 millions). Its stock quote reached its lowest recent point on December 09, 2005 at CA$ 1.30, and its highest recent level on January 18, 2008 at CA$ 8.50. Bulldog has 27 809 202 shares outstanding. |
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