Calgary-based Canadian Superior reported Friday that in the first quarter, year-over-year oil and gas production grew 179%, revenues were up 127% and cash flow was up 574%, soaring on significant gains in Western Canadian operations, where production averaged 2,594 boe/d.

The producer’s revenue rose to C$9.1 million compared with C$4 million in 1Q2003, while cash flow from operations reached C$4.4 million compared with C$658,000. The quarter’s success came from three core initiatives: the Drumheller area in Western Canada, offshore Nova Scotia and Trinidad.

In the Drumheller area of Western Canada, Canadian Superior’s oil and gas development drilling program successfully drilled four new oil and natural gas wells and tie-ins of wells drilled late in 2003. To date, the company has achieved a 94 % success rate in the drilling of 17 Drumheller area wells. Six locations remain to be drilled to complete the first phase of the area drilling program. Coalbed methane wells are also being planned, with a joint venture well drilled during the first quarter of 2004, to assess the potential for production area landholdings, which are located in the heart of Alberta’s original coal producing area.

The independent also continued to lay the groundwork in the quarter to begin operations at its Trinidad Tradewinds project, a joint venture with the nationally-owned Petroleum Company of Trinidad and Tobago Ltd. The joint venture encompasses two near-shore blocks (55,000 acres) off the east coast of Trinidad, which holds the potential for significant oil and gas reserves, the company said.

Offshore Nova Scotia, Canadian Superior drilled its first Mariner Project deep exploration well, and based on those results, “we remain confident that the results…have established the presence of a significant gas reservoir…”

However, in a statement, Canadian Superior said it would be “remiss if it did not comment briefly on the U.S. class action proceedings” pertaining to the Mariner well. “Specifically, the allegations are that Canadian Superior and certain of its officers and directors, amongst other things, made materially false and misleading statements to the public with regard to the costs and results of the company’s exploration drilling operations offshore Nova Scotia causing investors to suffer damages. Canadian Superior and the individuals involved categorically deny these allegations. Canadian Superior is of the opinion that these allegations are being made by ill-informed U.S. plaintiff lawyers and are groundless, frivolous and a misuse of the United States legal system.”

The various lawsuits state that CEO Greg Noval and other management members issued “positive statements” that failed to disclose and indicate that the Mariner I-85 well was “virtually dry,” that the actual drilling and testing costs exceeded the budgeted costs; that a significant gas reservoir to support a commercial project did not exist; and that the statements had artificially inflated the stock price (see Daily GPI, March 19).

“To date, we have been informed of 13 proceedings that have been threatened or initiated against Canadian Superior and certain of its officers and directors in the U.S. District Court, Southern District of New York,” the company said in a statement. “In the opinion of Canadian Superior these self-serving actions and allegations are contrary to the interests of our shareholders. The media may have you believe that these proceedings are broad-based and constitute a large segment of our shareholders, when in fact, as best we can determine, of the 13 class action proceedings announced to date, the 13 individual plaintiffs involved have total shareholdings of Canadian Superior estimated at less than 90,000 shares, out of the total shareholdings of our company of 107.9 million common shares issued and outstanding as of March 31, 2004. ”

The company said its legal counsel expects the various proceedings and actions will be consolidated into one action and…”shall be dealt with aggressively in court by our legal counsel, if necessary. In our opinion…these actions and allegations are the conduct of self-serving plaintiff lawyers who are nothing more than ‘shakedown artists’ who are trying to intimidate our company.”

Despite the lawsuits, Canadian Superior had a positive outlook for 2004 and beyond. The company said the “stage has been set for our company to achieve a ‘Grand Slam Home Run’ for shareholders” this year and beyond.” It intends to remain focused on Western Canadian production as well as Trinidad and Nova Scotia.

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