In 2008, Zapata Energy boosted cash flow 55% to a record CAD31.2 million or CAD1.83 per share. Net income quadrupled to CAD7.7 million or CAD0.45 per share. This resulted in an average corporate field netback of CAD35.37 per boe.
Zapata Energy’s 2008 capital program of CAD33.1 million added 1.2 million boe of reserves, more than replacing 2008 production. CAD19.4 million was spent on drilling 27 (17.9 net) wells resulting in 12 (6.9 net) gas wells, seven (6.5 net) oil wells, one net abandoned well, two net standing wells and five (1.5 net) wells in progress at year end.
In addition to drilling, CAD8.4 million was spent on tie-ins and facilities. At Silver, the waterflood project received EUB approval in July 2008 and is showing very positive results. An expansion is planned in 2009. Improved recovery factors are expected to add significant reserve additions.
The net present value of Zapata Energy’s proved plus probable reserves (discounted at ten percent) improved from CAD163 million in 2007 to CAD176 million in 2008. Zapata Energy’s reserves were valued at more than CAD10 per share before debt. These reserve numbers do not include any reserves or value for the five (1.5 net) wells that were in progress over year end nor do they account for the full effect of the Silver waterflood. Zapata Energy’s average finding and development costs were CAD22.64 per boe for proved plus probable and CAD25.40 per boe for proved reserves.
The current economy is providing Zapata Energy with opportunity to invest, to acquire, to re-evaluate and to develop better ways of doing things. Zapata Energy’s capital budget for 2009 has been set at CAD14 million. The recently announced drilling incentives by the Alberta government will increase the number of wells Zapata Energy can drill.
Zapata Energy will be commencing an oil drilling program planned for the second half of the year.
