Alberta Energy Company (AEC) reported rapid gas production growth last week and record earnings. The company is on the fast track to becoming one of the largest gas companies in North America. Within the last year, AEC’s gas production has increased by nearly 500 MMcf/d and new drilling prospects are expected to continue that growth.

Due to its sizeable Ladyfern natural gas discovery in northeast British Columbia, AEC said it is increasing its 2001 gas sales forecast by an average of 75 MMcf/d for the entire year. It expects Ladyfern to begin flowing to market within weeks. Production from Ladyfern is expected to average from 100 to 150 MMcf/d during the last half of 2001. The company’s new gas sales forecast for 2001 is between 1.4 Bcf/d and 1.5 Bcf/d, and if it achieves even the middle of this range, it would result in a 35% rise over 2000 gas sales. AEC also announced a gas sales target for 2002 of between 1.55 and 1.65 Bcf/d, representing a two-year average growth rate of 22%.

Following its announcement of record quarterly financial results and rapid gas production growth last week, AEC’s board boosted its dividend by 50%. The dividend of $90 million reflects the company’s rise to a new level of financial performance and a very strong future outlook, AEC said.

The company reported record first quarter earnings, cash flow, gas and oil sales and midstream results. Exploration and development success during the winter drilling season is expected to further boost production this spring, resulting in a year-over-year increase of 35% in gas sales and a 21% rise in oil production. AEC achieved first quarter earnings of $383 million, or $2.40 per share diluted, which is more than triple the $121 million profit, or 81 cents per share diluted, in the first quarter of 2000. Net earnings before acquisition amortization were $417 million during the first quarter of 2001, which is up 198% from $140 million in the first three months of 2000. Cash flow was $809 million, or $5.13 per share diluted, a 120% increase. Quarterly gross revenues were $2.4 billion, up from $1.2 billion a year earlier.

“Shareholders are now reaping the benefits of our determined, six-year strategy to be a Canadian and North American leader in the natural gas business. We are Canada’s largest and rank among the continental leaders in gas production. We’ve consistently added more reserves than production. We’ve also assembled large blocks of exploration acreage and built a strategic network of gas storage facilities that adds value,” said Gwyn Morgan, AEC’s CEO.

“Between the start of 2000 and this summer, our daily gas production will have increased a spectacular 50%, from 1 Bcf/d to 1.5 Bcf/d. That illustrates AEC’s growth, value and performance — a philosophy that continues to deliver for shareholders.” AEC’s first-quarter natural gas sales averaged 1,221 MMcf/d, a 27% increase from 1Q2000.

The company has established three strong growth platforms in Western Canada, the U.S. Rockies and Ecuador. In 2000, the company set a target to double production from existing assets within five years. AEC is Canada’s largest natural gas producer and one of North America’s largest independent oil and gas producers. In 2001, daily production is expected to exceed 380,000 barrels of oil equivalent. The company also is looking to establish additional growth platforms through new exploration ventures in Alaska, the Mackenzie Delta, Australia, Congo and Azerbaijan.

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