ENERNORTH
INDUSTRIES INC.
Form
20-F Annual Report
Table
of Contents
|
PART
I
|
ITEM
1
|
Identity
of Directors, Senior Management and Advisers
|
5
|
A.
Directors and Senior Management
|
5
|
|
B.
Advisers
|
5
|
|
C.
Auditors
|
5
|
|
ITEM
2
|
Offer
Statistics and Expected Timetable
|
5
|
A.
Offer Statistics
|
5
|
|
B.
Method and Expected Timetable
|
5
|
|
ITEM
3
|
Key
Information
|
5
|
A.
Selected Financial Data
|
5
|
|
B.
Capitalization and Indebtedness
|
10
|
|
C.
Reasons for the Offer and Use of Proceeds
|
10
|
|
D.
Risks Factors
|
10
|
|
ITEM
4
|
Information
on the Company
|
22
|
A.
History and Development of the Company
|
22
|
|
B.
Business Overview
|
29
|
|
C.
Organizational Structure
|
30
|
|
D.
Property, Plants and Equipment
|
30
|
|
ITEM
4A
|
Unresolved
Staff Comments
|
37
|
ITEM
5
|
Operating
and Financial Review and Prospects
|
37
|
A.
Operating Results
|
41
|
|
B.
Liquidity and Capital Resources
|
46
|
|
C.
Research and Development, Patents and Licenses
|
47
|
|
D.
Trend Information
|
48
|
|
E.
Off-balance Sheet Arrangements
|
48
|
|
F.
Tabular Disclosure of Contractual Obligations
|
48
|
|
G.
Safe Harbor
|
49
|
|
ITEM
6
|
Directors,
Senior Management and Employees
|
58
|
A.
Directors and Senior Management
|
58
|
|
B.
Compensation
|
61
|
|
C.
Board Practices
|
64
|
|
D.
Employees
|
72
|
|
E.
Share Ownership
|
73
|
|
ITEM
7
|
Major
Shareholders and Related Party Transactions
|
74
|
A.
Major Shareholders
|
74
|
|
B.
Related Party Transactions
|
74
|
|
C.
Interests of Experts and Counsel
|
75
|
|
||
ITEM
8
|
Financial
Information
|
76
|
A.
Consolidated Statements and Other Financial Information
|
76
|
|
B.
Significant Changes
|
79
|
|
ITEM
9
|
The
Offer and Listing
|
79
|
A.
Offer and Listing Details
|
79
|
|
B.
Plan of Distribution
|
81
|
|
C.
Markets
|
81
|
|
D.
Selling Shareholders
|
81
|
|
E.
Dilution
|
81
|
|
F.
Expenses of the Issue
|
81
|
|
ITEM
10
|
Additional
Information
|
81
|
A.
Share Capital
|
81
|
|
B.
Memorandum and Articles of Association
|
82
|
|
C.
Material Contracts
|
84
|
|
D.
Exchange Controls
|
85
|
|
E.
Taxation
|
86
|
|
F.
Dividends and Paying Agents
|
89
|
|
G.
Statement by Experts
|
89
|
|
H.
Documents on Display
|
90
|
|
I.
Subsidiary Information
|
90
|
|
ITEM
11
|
Quantitative
and Qualitative Information about Market Risk
|
90
|
ITEM
12
|
Description
of Securities Other than Equity Securities
|
92
|
A.
Debt Securities
|
92
|
|
B.
Warrants and Rights
|
92
|
|
C.
Other Securities
|
92
|
|
D.
American Depositary Shares
|
92
|
|
PART
II
|
||
ITEM
13
|
Defaults,
Dividend Arrearages and Delinquencies
|
92
|
ITEM
14
|
Material
Modifications to the Rights of
|
|
Security
Holders and Use of Proceeds
|
92
|
|
ITEM
15
|
Controls
and Procedures
|
92
|
ITEM
16
|
Reserved
|
93
|
ITEM
16A
|
Audit
Committee Financial Expert
|
93
|
ITEM
16B
|
Code
of Ethics
|
93
|
ITEM
16C
|
Principal
Accountant Fees and Services
|
93
|
ITEM
16D
|
Exemptions
From the Listing Standards for Audit Committees
|
94
|
ITEM
16E
|
Purchases
of Equity Securities by the Issuer and Affiliated
Purchasers
|
94
|
ITEM
17
|
PART
III
Financial
Statements
|
94
|
ITEM
18
|
Financial
Statements
|
94
|
ITEM
19
|
Exhibits
|
94
|
(Audited)
|
|||||
As
of and for the
Twelve
Month Period Ended June 30,
|
|||||
2002
|
2003
|
2004
|
2005
|
2006
|
|
Statement
of Operations Data:
|
|||||
Financial
INFORMATION:
|
|||||
Oil
and gas revenue
|
$
540,735
|
$
673,573
|
$
765,941
|
$
946,655
|
$
1,169,988
|
Less:
royalties
|
92,272
|
93,824
|
106,485
|
201,172
|
189,720
|
Net
revenue
|
448,463
|
579,749
|
659,456
|
745,483
|
980,268
|
Operating
and transportation
|
260,599
|
279,189
|
292,275
|
399,795
|
394,863
|
Depletion
and accretion
|
376,622
|
416,937
|
458,230
|
691,539
|
729,856
|
Administrative
expenses
|
1,627,838
|
2,023,237
|
1,921,385
|
2,221,343
|
2,198,024
|
Interest
|
4,925
|
5,215
|
4,812
|
2,020
|
6,968
|
Income
(loss) from operations...
|
(1,821,521)
|
(2,144,829)
|
(2,017,246)
|
(2,569,214)
|
(2,349,443)
|
Other
items
|
(1,004,509)
|
5,830,915
|
1,828,360
|
(371,468)
|
1,116,461
|
Income
tax
|
502,000
|
490,578
|
-
|
-
|
(457,159)
|
Net
loss from operations before discontinued operations
|
(1,319,012)
|
(8,466,322)
|
(3,845,606)
|
(2,197,746)
|
(3,008,745)
|
Income
(loss) and gain (loss) on disposition of discontinued operations
(1)
|
187,642
|
418,846
|
1,627,664
|
2,034,997
|
-
|
Net
loss for the year
|
(1,131,370)
|
(8,047,476)
|
(2,217,942)
|
(162,749)
|
(3,008,745)
|
Weighted
average common shares outstanding(2)
|
2,212,795
|
3,806,224
|
4,059,009
|
4,059,009
|
4,099,883
|
Net
loss from continuing operations per share (2)
|
($0.60)
|
($2.22)
|
($0.95)
|
($0.54)
|
($0.73)
|
Net
loss per share (2)
|
($0.51)
|
($2.11)
|
($0.55)
|
($0.04)
|
($0.73)
|
As
of and for the
Twelve
Month Period Ended June 30,
|
|||||
2002
|
2003
|
2004
|
2005
|
2006
|
|
Other
Financial Data:
|
|||||
Cash
flows provided by (used in)
|
|||||
Operating
activities
|
(2,020,541)
|
621,878
|
(3,052,995)
|
4,625,926
|
(789,226)
|
Investing
activities
|
(2,998,503)
|
(896,749)
|
(2,660,646)
|
3,046,194
|
(4,787,912)
|
Financing
activities
|
9,387,044
|
1,393,533
|
(415,329)
|
(2,986,118)
|
358,138
|
Purchase
of oil and gas properties for cash
|
2,759,206
|
354,625
|
1,740,154
|
1,001,743
|
6,535,176
|
Balance
Sheet Information:
|
|||||
Working
capital (deficiency)
|
$7,313,998
|
$777,076
|
$814,985
|
(101,057)
|
(6,915,974)
|
Total
assets
|
25,415,063
|
28,834,961
|
23,262,596
|
15,708,656
|
15,198,471
|
Due
to shareholders, less current portion
|
-
|
-
|
-
|
-
|
-
|
Total
long-term debt, less current portion
|
501,670
|
528,020
|
542,109
|
-
|
152,924
|
Non-controlling
interest
|
-
|
-
|
75,141
|
-
|
-
|
Shareholders'
equity (net assets)
|
18,058,682
|
11,253,606
|
7,089,878
|
7,076,238
|
4,542,157
|
(1)
|
During
fiscal 2005 the Company sold its interests in M&M Engineering Limited
(“M&M”). As a result the Industrial & Offshore Division has been
treated as discontinued operations for accounting purposes, and
prior
years' statements of operations have been
restated.
|
(audited)
|
|||||
As
of and for the
Twelve
Month Period Ended June 30,
|
|||||
2002
|
2003
|
2004
|
2005
|
2006
|
|
Statement
of Operations Data:
|
|||||
Financial
INFORMATION:
|
|||||
Oil
and gas revenue
|
$
540,735
|
$
673,573
|
$
765,941
|
$
946,655
|
$1,169,988
|
Less:
royalties
|
92,272
|
93,824
|
106,485
|
201,172
|
189,720
|
Net
revenue
|
448,463
|
579,749
|
659,456
|
745,483
|
980,268
|
|
|
|
|
||
Operating
and transportation
|
260,599
|
279,189
|
292,275
|
399,795
|
394,863
|
Depletion
and accretion
|
1,420,622
|
416,937
|
1,614,818
|
1,817,442
|
5,566,679
|
Administrative
expenses
|
1,739,009
|
2,023,237
|
1,921,385
|
2,221,343
|
2,198,024
|
Interest
|
160,105
|
5,215
|
4,812
|
2,020
|
8,071
|
Income
(loss) from operations...
|
(3,131,872)
|
(2,144,829)
|
(3,173,834)
|
(3,695,117)
|
(7,187,369)
|
Other
items
|
(1,004,509)
|
5,830,915
|
1,828,360
|
(371,468)
|
(1,347,615)
|
Income
tax
|
502,000
|
490,578
|
-
|
-
|
(457,159)
|
Net
loss from operations before discontinued operations
|
(2,629,363)
|
(8,466,322)
|
(5,002,194)
|
(3,323,649)
|
(5,382,595)
|
Income
(loss) and gain (loss) on disposition of discontinued operations
(1)
|
187,642
|
418,846
|
1,627,664
|
2,034,997
|
-
|
Cumulative
effect of a change in accounting principle
|
2,056,832
|
-
|
-
|
-
|
-
|
Net
loss for the year
|
(2,441,721)
|
(8,047,476)
|
(3,374,530)
|
(1,288,652)
|
(5,382,595)
|
Deemed
dividend on preferred shares
|
-
|
-
|
-
|
-
|
-
|
Net
loss available for common shareholders
|
(2,441,721)
|
(8,047,476)
|
(3,374,530)
|
(1,288,652)
|
(5,382,595)
|
Weighted
average common shares outstanding(2)
|
2,212,795
|
3,806,224
|
4,059,009
|
4,059,009
|
4,099,883
|
Net
loss from continuing operations per share
|
($1.19)
|
($2.22)
|
($1.23)
|
($0.82)
|
($1.31)
|
Net
loss per share
|
($1.10)
|
($2.11)
|
($0.83)
|
($0.32)
|
($1.31)
|
As
of and for the
Twelve
Month Period Ended June 30,
|
|||||
2002
|
2003
|
2004
|
2005
|
2006
|
|
Other
Financial Data:
|
|||||
Cash
flows provided by (used in)
|
|||||
Operating
activities
|
(2,020,541)
|
621,878
|
(3,052,995)
|
4,625,926
|
(789,226)
|
Investing
activities
|
(2,998,503)
|
(896,749)
|
(2,660,646)
|
3,046,194
|
(4,787,912)
|
Financing
activities
|
9,387,044
|
1,393,533
|
(415,329)
|
(2,986,118)
|
358,138
|
Purchase
of oil and gas properties for cash
|
2,759,206
|
354,625
|
1,740,154
|
1,001,743
|
6,535,176
|
Balance
Sheet Information:
|
|||||
Working
capital (deficiency)
|
7,313,998
|
827,688
|
923,635
|
105,530
|
(6,915,974)
|
Total
assets
|
24,270,103
|
27,841,573
|
23,167,056
|
14,534,538
|
11,445,019
|
Due
to shareholders, less current portion
|
-
|
-
|
-
|
-
|
-
|
Total
long-term debt, less current portion
|
501,670
|
528,020
|
542,109
|
-
|
74,267
|
Non-controlling
interest
|
-
|
-
|
75,141
|
-
|
-
|
Shareholders'
equity (net assets)
|
17,014,682
|
10,260,218
|
6,994,338
|
5,902,120
|
867,362
|
(1)
|
During
fiscal 2005 the Company sold its interests in M&M Engineering Limited
(“M&M”). As a result the Industrial & Offshore Division has been
treated as discontinued operations for accounting purposes, and
prior
years' statements of operations have been
restated.
|
2006
|
2005
|
2004
|
2003
|
2002
|
|
Period
End
|
0.82
|
0.82
|
0.75
|
0.75
|
0.66
|
Low
|
0.80
|
0.74
|
0.70
|
0.63
|
0.62
|
High
|
0.91
|
0.85
|
0.78
|
0.75
|
0.66
|
Average*
|
0.86
|
0.80
|
0.75
|
0.67
|
0.64
|
Year
2006
|
September
|
August
|
July
|
June
|
May
|
April
|
March
|
High
|
0.90
|
0.90
|
0.89
|
0.90
|
0.91
|
0.89
|
0.88
|
Low
|
0.88
|
0.88
|
0.87
|
0.88
|
0.89
|
0.85
|
0.85
|
Fiscal
Year
|
Total
(CDN $)
|
2006
|
$1,169,988
|
2005
|
$946,665
|
2004
|
$765,941
|
· |
the
level of consumer product demand;
|
· |
weather
conditions;
|
· |
domestic
and foreign governmental regulations;
|
· |
the
price and availability of alternative
fuels;
|
· |
political
conditions;
|
· |
the
foreign supply of oil and gas;
|
· |
the
price of foreign imports; and
|
· |
overall
economic conditions.
|
Natural
Gas
|
|
|
||
|
Mcf
|
1,000
cubic feet
|
||
|
MMcf
|
1,000,000
cubic feet
|
||
|
Mcf/d
|
1,000
cubic feet per day
|
||
|
Bcf
|
1,000,000,000
cubic feet
|
||
Oil
and Natural Gas Liquids
|
|
|
||
|
Bbl
|
Barrel
|
||
|
Mbbls
|
1,000
barrels
|
||
|
Boe(1)
|
Barrels
of oil equivalent (using a conversion ratio of 6 Mcf to 1 bbl of
oil)
|
||
|
Mboe
|
1,000
boe
|
||
|
Mmboe
|
1,000,000
boe
|
||
|
Bpd
|
Barrels
per day
|
||
|
Boepd
|
Barrels
of oil equivalent per day
|
||
|
Bopd
|
Barrels
of oil per day
|
||
|
NGLs
|
Natural
gas liquids
|
TO
CONVERT
|
||
From
|
To
|
Multiply
By
|
Mcf
|
cubic
meters
|
28.317
|
Meters
|
cubic
feet
|
35.494
|
Bbls
|
cubic
meters
|
0.159
|
Cubic
meters
|
Bbls
|
6.292
|
Feet
|
Meters
|
0.305
|
Meters
|
Feet
|
3.281
|
Miles
|
Kilometers
|
1.609
|
Kilometers
|
Miles
|
0.621
|
Acres
|
Hectares
|
0.405
|
Hectares
|
Acres
|
2.471
|
Oil:
|
Edmonton
Par
|
84.49$/stb
|
Cromer
Medium
|
78.16$/stb
|
|
Natural
Gas:
|
Alberta
AECO-C
|
5.05$/Mcf
|
British
Columbia Average Wellhead
|
4.05$/Mcf
|
|
Natural
Gas by-Products:
|
Propane
|
47.22$/bbl
|
Butanes
|
63.92$/bbl
|
|
Pentanes
Plus
|
83.32$/bbl
|
|
Sulphur
|
40.00$/lt
|
|
Exchange
Rate:
|
0.896$US/$CDN
|
Gas
Reserves (Mmcf)
|
2006
NPV
@10% (CDN
$)
|
2005
NPV
@ 10%
(CDN
$)
|
2004
NPV
@ 10% (CDN $)
|
|||
Proved
Developed Producing
|
886
|
$2,367,000
|
440
|
$1,520,000
|
937
|
$2,175,000
|
Proved
Developed Non-producing
|
24
|
78,000
|
-
|
-
|
-
|
-
|
Proved
Undeveloped
|
22
|
73,000
|
-
|
-
|
215
|
660,000
|
Total
Gas Reserves (Mmcf)
|
932
|
2,518,000
|
440
|
1,520,000
|
1,151
|
2,835,000
|
Natural
Gas Liquids (Mbbl)
|
||||||
Proved
Developed Producing
|
16.8
|
N/A
(2)
|
7.9
|
N/A
(2)
|
5.5
|
N/A
(2)
|
Proved
Undeveloped
|
-
|
N/A
(2)
|
-
|
N/A
(2)
|
0.8
|
N/A
(2)
|
Total
Natural Gas Liquids (Mbbl)
|
16.8
|
N/A
(2)
|
7.9
|
N/A
(2)
|
6.3
|
N/A
(2)
|
Oil
Reserves (Mbbl)
|
||||||
Proved
Developed Producing
|
13.4
|
496,000
|
14.9
|
481,000
|
1.6
|
32,000
|
Proved
Developed
|
-
|
-
|
-
|
-
|
16.1
|
295,000
|
Total
Oil Reserves (Mbbl)
|
13.4
|
496,000
|
14.9
|
481,000
|
17.7
|
327,000
|
Alberta
Royalty Tax Credit
|
||||||
Proved
Developed
|
-
|
136,000
|
-
|
94,000
|
-
|
134,000
|
Proved
Undeveloped
|
-
|
-
|
-
|
-
|
-
|
54,000
|
Total
Alberta Royalty Tax Credit
|
-
|
136,000
|
-
|
94,000
|
-
|
188,000
|
Mbbl
Equivalent in Mboe (4)
|
||||||
Proved
Developed
|
181.8
|
3,078,000
|
96.1
|
2,095,000
|
163.2
|
2,341,000
|
Proved
Undeveloped
|
3.6
|
73,000
|
-
|
-
|
52.6
|
1,008,000
|
TOTAL
PROVED Mboe
|
185.5
|
$3,151,000
|
96.1
|
$2,095,000
|
215.8
|
$3,349,000
|
2006
|
2005
|
2004
|
|
Natural
Gas (Mmcf)
|
78,963
|
87,127
|
78,266
|
Natural
Gas Liquids (Mbbl)
|
3,464
|
3,470
|
2,727
|
Oil
(Mbbl)
|
4,273
|
3,835
|
1,708
|
Total
(BOE)
|
20,897
|
21,826
|
17,479
|
2006
|
2005
|
2004
|
||||
Gross
|
Net
|
Gross
|
Net
|
Gross
|
Net
|
|
Gas
|
23
|
4.46
|
8
|
1.53
|
10
|
3.92
|
Oil
|
5
|
2.38
|
3
|
1.93
|
4
|
1.46
|
for
the
Twelve
Month Period Ended June 30,
|
|||
2006
|
2005
|
2004
|
|
Average
Daily Production
|
|||
Natural
gas (mcf per day)
|
216
|
239
|
214
|
Natural
gas liquids (bbls per day)
|
9
|
10
|
7
|
Crude
oil (bbls per day)
|
12
|
11
|
5
|
Total
(boe per day)
|
57
|
60
|
48
|
Average
Commodity Prices
|
|
||
Natural
gas ($/mcf)
|
$
9.08
|
$
6.86
|
$
6.65
|
Natural
gas liquids ($/bbl)
|
$
48.05
|
$
39.34
|
$
29.16
|
Crude
oil ($/bbl)
|
$
67.01
|
$
55.46
|
$
37.61
|
Total
($/boe)
|
$
55.99
|
$
43.37
|
$
38.16
|
Royalties
|
|
||
Natural
gas ($/mcf)
|
$
1.38
|
$
1.52
|
$
1.04
|
Natural
gas liquids ($/bbl)
|
$
11.27
|
$
11.39
|
$
6.24
|
Crude
oil ($/bbl)
|
$
9.68
|
$
7.68
|
$
4.61
|
Total
royalties ($/boe)
|
$
9.08
|
$
9.22
|
$
6.09
|
Production
costs
|
|
||
Natural
gas ($/mcf)
|
$
3.28
|
$
2.94
|
$
2.93
|
Natural
gas liquids ($/bbl)
|
$
8.22
|
$
6.84
|
$
15.24
|
Crude
oil ($/bbl)
|
$
25.19
|
$
31.20
|
$
12.31
|
Total
production costs ($/boe)
|
$
18.90
|
$
18.32
|
$
16.72
|
Netback
by Product
|
|
||
Natural
gas ($/mcf)
|
$
4.42
|
$
2.40
|
$
2.68
|
Natural
gas liquids ($/bbl)
|
$
28.56
|
$
21.11
|
$
7.68
|
Crude
oil ($/bbl)
|
$
32.14
|
$
16.58
|
$
20.69
|
Netback
($/boe)
|
$
28.01
|
$
15.83
|
$
15.35
|
Leasehold
Acreage
|
|||
2006
|
2005
|
2004
|
|
Total
Leasehold Acreage
Gross
Acres
Net
Acres
|
62,966
17,991
|
21,040
7,229
|
24,880
7,921
|
Developed
Acreage
Gross
Acres
Net
Acres
|
34,775
9,438
|
12,720
3,688
|
12,080
3,638
|
Undeveloped
Acreage
Gross
Acres
Net
Acres
|
28,192
8,554
|
8,320
3,541
|
12,800
4,283
|
Number
of wells drilled
|
2006
|
2005
|
2004
|
|||
Development
wells
|
Gross
|
Net
(%)
|
Gross
|
Net
(%)
|
Gross
|
Net
(%)
|
Producing
|
||||||
Standing*
|
1
|
0.75
|
1
|
0.33
|
-
|
-
|
Abandoned
|
1
|
0.50
|
-
|
-
|
-
|
|
Exploratory
wells
|
||||||
Producing
|
1
|
0.125
|
-
|
-
|
-
|
|
Abandoned
|
-
|
-
|
-
|
1
|
0.24
|
|
Standing
*
|
3
|
1.25
|
-
|
1
|
0.24
|
|
*
Standing wells are pending further evaluation or tie in and pipeline
facilities.
|
Location
|
Gross
Producing
Gas
Wells
|
Net
Producing
Gas
Wells
|
Gross
Non-
Producing
Gas
Wells
|
Net
Non-
Producing
Gas
Wells
|
Gross
Producing
Oil
Wells
|
Net
Producing
Oil
Wells
|
Gross
Non-
Producing
Oil
Wells
|
Net
Non-
Producing
Oil
Wells
|
Alberta
|
9
|
1.65
|
10
|
3.88
|
3
|
1.45
|
1
|
.50
|
Ontario
|
1
|
.1125
|
-
|
-
|
2
|
.93
|
-
|
-
|
British
Columbia
|
-
|
-
|
4
|
2.00
|
-
|
-
|
-
|
-
|
Saskatchewan
|
15
|
2.70
|
11
|
2.20
|
-
|
-
|
-
|
-
|
Current
assets
|
23,673
|
Oil
and gas assets
|
3,235,319
|
Payables
|
(21,167)
|
Future
income tax
|
(859,798)
|
Site
restoration liabilities
|
(26,419)
|
Net
assets acquired
|
2,351,608
|
Current
assets
|
54,493
|
Oil
and gas assets
|
2,850,301
|
Payables
|
(71,785)
|
Future
income tax
|
(656,683)
|
Site
restoration liabilities
|
(26,114)
|
Net
assets acquired
|
2,150,212
|
·
|
volatility
in market prices for oil and natural
gas;
|
·
|
reliance
on third party operators;
|
·
|
ability
to find or produce commercial quantities of oil and natural
gas;
|
·
|
liabilities
inherent in oil and natural gas
operations;
|
·
|
dilution
of interests in oil and natural gas
properties;
|
·
|
uncertainties
associated with estimating oil and natural gas
reserves;
|
· |
new
prospects and exploration activities may have inherent risks;
|
·
|
competition
for, among other things, financings, acquisitions of reserves,
undeveloped
lands and skilled personnel;
|
· |
weather
conditions (See“Item
3.D Rick Factors - Risk Factors Relating to Oil and Gas Exploration,
Development and Production” above).
|
As
of and for the
Twelve
Month Period Ended June 30,
|
|||
2006(1)(2)
|
2005(1)(2)
|
2004(1)(2)
|
|
financial
INFORMATION:
|
|||
Oil
and gas revenue
|
$
1,169,988
|
$
946,655
|
$
765,941
|
Less:
royalties
|
189,720
|
201,172
|
106,485
|
Net
revenue
|
980,268
|
745,483
|
659,456
|
Net
loss from operations before discontinued
operations
|
(3,008,745)
|
(2,197,746)
|
(3,845,606)
|
Income
and gain on disposition of discontinued operations (2)
|
-
|
2,034,997
|
1,627,664
|
Net
loss for the year
|
(3,008,745)
|
(162,749)
|
(2,217,942)
|
Net
loss from continuing operations per share
|
$(0.73)
|
$(0.54)
|
$(0.95)
|
Net
loss per share
|
$(0.73)
|
$(0.04)
|
$(0.55)
|
Total
assets
|
15,198,471
|
15,708,656
|
23,262,596
|
Total
financial liabilities
|
10,656,314
|
8,632,418
|
16,097,577
|
OPERATIONS:
|
|||
Average
Daily Production
|
|||
Natural
gas (mcf per day)
|
216
|
239
|
214
|
Natural
gas liquids (bbls per day)
|
9
|
10
|
7
|
Crude
oil (bbls per day)
|
12
|
11
|
5
|
Total
(boe per day)
|
57
|
60
|
48
|
Average
Commodity Prices
|
|||
Natural
gas ($/mcf)
|
$9.08
|
$
6.86
|
$
6.65
|
Natural
gas liquids ($/bbl)
|
$48.05
|
$
39.34
|
$
29.16
|
Crude
oil ($/bbl)
|
$67.01
|
$
55.46
|
$
37.61
|
Total
($/boe)
|
$55.99
|
$
43.37
|
$
38.16
|
Royalties
|
|||
Natural
gas ($/mcf)
|
$1.38
|
$
1.52
|
$
1.04
|
Natural
gas liquids ($/bbl)
|
$11.27
|
$
11.39
|
$
6.24
|
Crude
oil ($/bbl)
|
$9.68
|
$
7.68
|
$
4.61
|
Total
royalties ($/boe)
|
$9.08
|
$
9.22
|
$
6.09
|
Production
costs
|
|||
Natural
gas ($/mcf)
|
$3.28
|
$
2.94
|
$
2.93
|
Natural
gas liquids ($/bbl)
|
$8.22
|
$
6.84
|
$
15.24
|
Crude
oil ($/bbl)
|
$25.19
|
$
31.20
|
$
12.31
|
Total
production costs ($/boe)
|
$18.90
|
$
18.32
|
$
16.72
|
Netback
by Product
|
|||
Natural
gas ($/mcf)
|
$4.42
|
$
2.40
|
$
2.68
|
Natural
gas liquids ($/bbl)
|
$28.56
|
$
21.11
|
$
7.68
|
Crude
oil ($/bbl)
|
$32.14
|
$
16.58
|
$
20.69
|
Netback
($/boe)
|
$28.01
|
$
15.83
|
$
15.35
|
(1) |
Selected
Financial Data should be read in conjunction with the discussion
below and
“Critical Accounting Principles and Critical Accounting Estimates”
below.
|
|
Fiscal
2006-Unaudited
|
Fiscal
2005 - Unaudited
|
||||||
|
June
30,2006
|
Mar.
31/06
|
Dec.
31/05
|
Sept.
30/05
|
June
30/05
|
Mar.
31/05
|
Dec.
31/04
|
Sept.
30/04
|
|
|
|
|
|
|
|
|
|
Financial
Information:
|
|
|
|
|
|
|
|
|
Net
oil and gas revenue
|
$
200,131
|
$
166,941
|
$
326,114
|
$
287,082
|
$
149,274
|
$
206,044
|
$
226,755
|
$
163,410
|
|
|
|
|
|
|
|
|
|
Income
(loss) from continuing
|
|
|
|
|
|
|
|
|
operations
|
$
(3,213,485)
|
$
368,323
|
$
(158,974)
|
$
(4,609)
|
$
(741,216)
|
$
(771,886)
|
$
(470,909)
|
$
(213,735)
|
Net
income (loss)
|
$
(3,213,485)
|
$
368,323
|
$
(158,974)
|
$
(4,609)
|
$
(891,216)
|
$
1,188,123
|
$
(548,854)
|
$
89,198
|
|
|
|
|
|
|
|
|
|
Income
(loss) from continuing
|
|
|
|
|
|
|
|
|
operations
per share
|
$
(0.76)
|
$
0.09
|
$
(0.04)
|
$
(0.001)
|
$
(0.18)
|
$
(0.19)
|
$
(0.12)
|
$
(0.05)
|
Net
income (loss) per share
|
$
(0.76)
|
$
0.09
|
$
(0.04)
|
$
(0.001)
|
$
(0.22)
|
$
0.29
|
$
(0.14)
|
$
0.02
|
Fully
diluted net income
|
|
|
|
|
|
|
|
|
(loss)
per share
|
$
(0.76)
|
$
0.08
|
$
(0.04)
|
$
(0.001)
|
$
(0.22)
|
$
0.26
|
$
(0.14)
|
$
0.02
|
|
|
|
|
|
|
|
|
|
Operating
Information:
|
|
|
|
|
|
|
|
|
Average
Daily Production
|
|
|
|
|
|
|
|
|
Natural
gas (mcf per day)
|
323
|
123
|
212
|
231
|
270
|
233
|
342
|
171
|
Natural
gas liquids (bbls per day)
|
3
|
4
|
16
|
13
|
10
|
14
|
8
|
5
|
Crude
oil (bbls per day)
|
10
|
15
|
11
|
11
|
13
|
14
|
16
|
1
|
Total
(boe per day)
|
66
|
39
|
62
|
62
|
69
|
66
|
81
|
34
|
|
|
|
|
|
|
|
|
|
Average
Commodity Prices
|
|
|
|
|
|
|
|
|
Natural
gas ($/mcf)
|
$
9.08
|
$
8.71
|
$
12.95
|
$
9.73
|
$
7.41
|
$
7.97
|
$
5.98
|
$
6.07
|
Natural
gas liquids ($/bbl)
|
$
48.05
|
$
48.17
|
$
45.52
|
$
47.01
|
$
41.81
|
$
32.67
|
$
32.14
|
$
37.95
|
Crude
oil ($/bbl)
|
$
67.01
|
$
66.51
|
$
67.28
|
$
68.30
|
$
65.76
|
$
52.71
|
$
42.19
|
$
55.91
|
Total
($/boe)
|
$
55.99
|
$
57.30
|
$
66.32
|
$
57.67
|
$
48.15
|
$
45.68
|
$
36.77
|
$
37.29
|
|
|
|
|
|
|
|
|
|
Royalties
|
|
|
|
|
|
|
|
|
Natural
gas ($/mcf)
|
$
1.38
|
$
1.74
|
$
1.42
|
$
0.98
|
$
1.69
|
$
1.18
|
$
1.48
|
$
1.77
|
Natural
gas liquids ($/bbl)
|
$
11.27
|
$
12.88
|
$
11.39
|
$
10.84
|
$
9.48
|
$
10.03
|
$
11.23
|
$
19.83
|
Crude
oil ($/bbl)
|
$
9.68
|
$
9.33
|
$
8.61
|
$
4.95
|
$
8.55
|
$
9.07
|
$
6.07
|
$
4.92
|
Total
royalties ($/boe)
|
$
9.08
|
$
10.27
|
$
9.38
|
$
6.77
|
$
9.75
|
$
8.07
|
$
8.58
|
$
11.72
|
|
|
|
|
|
|
|
|
|
Production
costs
|
|
|
|
|
|
|
|
|
Natural
gas ($/mcf)
|
$
3.28
|
$
3.89
|
$
3.15
|
$
3.36
|
$
2.80
|
$
1.60
|
$
4.27
|
$
2.77
|
Natural
gas liquids ($/bbl)
|
$
8.22
|
$
16.69
|
$
7.34
|
$
5.71
|
$
7.28
|
$
5.86
|
$
5.71
|
$
10.94
|
Crude
oil ($/bbl)
|
$
25.19
|
$
26.35
|
$
26.49
|
$
24.07
|
$
37.00
|
$
21.12
|
$
34.03
|
$
35.82
|
Total
production costs ($/boe)
|
$
18.90
|
$
23.84
|
$
16.98
|
$
17.81
|
$
19.24
|
$
10.99
|
$
24.93
|
$
16.52
|
|
|
|
|
|
|
|
|
|
Netback
by Product
|
|
|
|
|
|
|
|
|
Natural
gas ($/mcf)
|
$
4.42
|
$
3.08
|
$
8.38
|
$
5.39
|
$
2.92
|
$
5.19
|
$
0.23
|
$
1.53
|
Natural
gas liquids ($/bbl)
|
$
28.56
|
$
18.60
|
$
26.79
|
$
30.46
|
$
25.05
|
$
16.78
|
$
15.20
|
$
7.18
|
Crude
oil ($/bbl)
|
$
32.14
|
$
30.83
|
$
32.18
|
$
39.28
|
$
20.21
|
$
22.52
|
$
2.09
|
$
15.17
|
Netback
($/boe)
|
$
28.01
|
$
23.19
|
$
39.96
|
$
33.09
|
$
19.16
|
$
26.62
|
$
3.26
|
$
9.05
|
Schedule
of Contractual Obligations (CDN $)
|
June
30, 2006
|
||||
Less
than 1 year
|
1-3
years
|
3-5
years
|
more
than 5
years
|
|
|
||||
Operating
leases
|
$7,404
|
$8,100
|
$
-
|
$
-
|
Debt
interest and principal repayments
|
$38,182
|
$127,045
|
$63,523
|
$
-
|
$45,586
|
$135,145
|
$63,523
|
$
-
|