1999 Annual report

Crestar Energy Inc is a senior Canadian exploration and production company with oil and gas operations in western Canada. In 1999 the company followed a strategy of strengthening the balance sheet by capitalizing on the strength of natural gas markets and hedging a significant portion of productions through the summer and winter months; by electing to sell $ 62 million of non-core properties into what remained a fairly robust property market; and by restricting capital expenditures and applying surplus cash to pay down debt. As a result of these initiatives long-term debt was reduced to $ 571 million, and the forward cash flow ratio for the company was improved from a high of 3.6 in the first quarter of 1998 to 1.3 by the end of 1999. In a second major initiative the company positioned its exploration and development program for a recovery in commodity prices. Over the course of the year a total of 1,021 drilling prospects were developed, The capital program was doubled by mid-year as oil prices strengthened, and increased to $ 250 million by September. 337 new wells were drilled, with a success rate of 88 percent against a historical average of 65 to 70 per cent. Proven reserve additions replaced 121 per cent of production. As a result of asset sales and capital restrictions, production volumes declined during the first half of the year to 73,200 BOE/day; however, during the last four months of the year the trend was reversed and production reached 81,000 BOE/day. In an effort to strengthen the value of the company's shares, the company re-purchased almost four per cent of its outstanding stock by year's end. Average daily sales for the year were 351 MMcf/day of natural gas and 43.300 bbls/day of liquids. The Company had gross production revenue of $ 652.0 million, and net income per share of 94 cents (up from a loss of $ 3.51 per share in 1998)