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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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First Calgary | LSE:FPL | London | Ordinary Share | CA3193843016 | COM SHS NPV |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 175.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
International Exploration First Calgary Petroleums Ltd._2002_Annual Report First Calgary Petroleums Ltd. is a Calgary based oil and gas company actively engaged in exploration and development activities internationally. Exploration activity on well positioned blocks in Algeria and Yemen provides the basis for near term growth. Common shares of First Calgary Petroleums Ltd. trade on the Toronto Stock Exchange under the symbol FCP and the London Stock Exchange (AIM) under the symbol FPL. Table of Contents President's Report to 1 Shareholders Algeria Operations 4 Management's Discussion & 9 Analysis Financial Statements 14 Corporate Information IBC Annual Meeting The Annual Meeting of Shareholders will take place on Wednesday, June 11, 2003 at 3:00 pm in the Devonian Room at the Calgary Petroleum Club, 319 - 5 Avenue SW, Calgary, Alberta. All shareholders are welcome to attend. If unable to, shareholders are encouraged to fill out the form of proxy and return it to Computershare. President's Report to Shareholders I am pleased to report on the Company's activities during 2002 and, as importantly, outline the plans going forward. 2002 was the year both management and shareholders have been working towards. With energies focused on its two hydrocarbon licences in Algeria, the Company's major achievements included: * Listed the common shares on the London Stock Exchange (AIM segment) * Completed a $25 million equity financing at $1.25 per share in July 2002 * Acquired seismic on both Algeria blocks and identified drill locations * Drilled MLE-2, a major gas and condensate discovery, on Ledjmet Block 405b Subsequent to year-end, the Company also: * Completed a $35 million equity financing at $2.35 per share in February 2003 * Appointed an international figure to the Board of Directors * Production tested the MLE-2 well at 44,300 barrels of oil equivalent per day OPERATIONS Algeria With hydrocarbon rights over approximately 500,000 acres in the prolific Berkine Basin, FCP has an outstanding base upon which to grow. LEDJMET BLOCK 405B The Ledjmet Block 405b production sharing contract came into effect December 30, 2001. The Company commenced its 2002 activities with the acquisition and interpretation of 110 km2 of 3D seismic data covering the MLE structure situated on the eastern side of the Block. During the 4th quarter, FCP drilled the MLE-2 gas and condensate well. The well production tested 44,300 barrels of oil equivalent per day (boe/d), comprising 189 million cubic feet of gas per day (mmcf/d) and 12,874 barrels of condensate per day (bc/d). MLE-2 is the first appraisal well to the MLE-1 gas and condensate discovery for which FCP also holds rights pursuant to the production sharing contract. The MLE-1 well production tested 8,900 boe/d, comprised of 43 mmcf/d and 1,745 bc/d. Combined production tests for the two MLE wells total 53,200 boe/d. The MLE-2 well is a milestone in the Company's growth. The MLE pool is emerging as a giant gas and condensate field far exceeding any of FCP's original expectations. The Company's interpretation of the 3D seismic over the MLE structure indicates the field size to be in excess of 100 km2. FCP is moving quickly to firm up further locations on the MLE structure and will conduct additional appraisal drilling in 2003. FCP has also commenced preliminary engineering work to assess optimal MLE field development and timing of production. In addition to the MLE appraisal and development planning, the Company is equally excited about the exploration potential of the remaining Block 405b lands. A 600 km2 3D seismic program to define drilling locations on two large structures to the west of the MLE pool will commence during the second quarter of 2003. YACOUB BLOCK 406A Exploration activity progressed on the Yacoub Block 406a during the year with the acquisition of 239km2 of 3D seismic in the north west corner of the Block. This was followed by the drilling of the YCB-1 well in the first quarter of 2003. The well was abandoned but did provide valuable information and does not dissipate management's optimism for a future commercial discovery on the Block. Yacoub Block 406a is a large land holding covering approximately 251,000 acres and its geographic proximity to other reserves and geologic trends in the Berkine Basin make it an ideal area to explore. A number of strong structural leads have been mapped which are being further defined by a 240 km 2D seismic program. A second exploration well is planned for 2003. Yemen BLOCK 43 Joint venture partner DNO ASA of Norway is undertaking the work program for the second phase of a five year exploration agreement on Block 43. DNO has carried out geophysical studies and plans to drill three wells in 2003. FCP has retained a 10% interest in the Block. Financial The Company has been very active during the year managing its capital as it continues to finance operations with equity and third party joint ventures. FCP took a major step towards expanding its investor base and access to the world's capital markets by listing its common shares on the Alternate Investment Market (AIM) of the London Stock Exchange. A $25 million public offering, priced at $1.25 (£0.52) per share, was closed in conjunction with the AIM listing during July 2002. This financing was completed during very adverse market conditions. In addition, the Company received $8 million from the exercise of share purchase warrants and options in 2002. The Company followed its July financing with a $35 million public share offering in February 2003, priced at $2.35 (£0.95) per share. This financing, combined with the year end working capital, positions FCP to move ahead with an active 2003 seismic and drilling program. Outlook Management is pleased with the progress of FCP and extremely optimistic about the Company's future. FCP, a TSE listed `shell' when management assumed control in 1997, is now firmly established in one of the most prolific on-shore hydrocarbon basins in the world. The two large concessions held with Sonatrach, the Algeria national oil company, provide the Company significant growth opportunities. The common shares are now listed on both the London and Toronto stock exchanges and, since June 2002, the Company has received approximately $68 million in new equity. The shareholder base has been strengthened with institutional investors in the UK and the United States. With the appointment of Mr. Yuri Shafranik, the Board of Directors welcomes an individual of international prominence both in the oil industry and politics. My sincere thanks to the dedicated staff and directors for their contribution to FCP's success to date. While we welcome the following of new shareholders, I wish to thank the loyal shareholders who continue to support the Company. It is with great enthusiasm we look forward to continued growth. On Behalf of the Board of Directors Richard G. Anderson President and Chief Executive Officer April 15, 2003 Algeria Operations ALGERIA Since the mid-1950's Algeria, a member of OPEC, has become a major supplier of oil and gas, particularly for the rapidly expanding markets in Europe. Algeria has the largest reserves of gas in Africa (146.5 TCF) and third largest oil reserves (15.4 billion bbls). Exploration success rates are among the highest in the world, particularly within the Berkine Basin. Drilling densities remain very low, averaging only 15 wells per 10,000 km2 compared with a world average of 95 and North America's mature basins at 500. Its proximity to Europe provides Algeria a growing export market for its oil and gas production. Two gas pipelines connect Algeria to southern Europe under the Mediterranean. Sonatrach is looking into the expansion of these pipelines and a third export pipeline to Spain is planned to commence construction in 2003. European gas markets look to Algeria to provide approximately 29% of the continent's imported gas needs. European consumption of natural gas is projected to increase approximately 46% by 2010 while Algeria is looking to increase its production capacity by 40% by 2005. Algeria's energy sector has become one of the most sophisticated in the world with the latest production and drilling technology available. LEDJMET Block 405b * 1,108 km2 (255,000 acres) * MLE-1, MLE-2, MZL-1 * MLE-2 test rates of 189 mmcf/d and 12,874 bc/d * Multi-zone potential * Highly strategic block for regional gas development * Very strong structural leads in west YACOUB Block 406a * 1,091 km2 (251,000 acres) * Multi-zone oil potential * Giant oil fields to west, north and northwest * Well situated for oil generation and migration into structural traps * Excellent seals * Tight grid of high quality seismic data * Strong exploration leads across the block The Berkine Basin has emerged as one of the most prolific onshore hydrocarbon trends. In the past twelve years more than 5 billion barrels of recoverable oil have been discovered in the basin, trapped in several giant field accumulations. Throughout the basin production is from multiple geological horizons. Flow rates for oil wells average 8,000 barrels per day but can exceed 20,000 barrels per day. The basin becomes more gas prone to the south where a number of wells, including MLE-2, have tested high rates of gas and condensate. The geological reasons for this success are clear: a world-class petroleum system with excellent source rocks, reservoirs, seals and faulted traps. Recent advances in seismic exploration technology, particularly 3D, allow structures to be targeted with a higher degree of precision. In the past three years more than 300,000 bbls per day of oil production have been added from the Berkine Basin with substantial increments planned over the coming months. The Ledjmet Block 405b covers 1,108 km2 (255,000 acres). FCP drilled its first well in Algeria, MLE-2, on Block 405b in the fourth quarter of 2002. MLE-2 is an appraisal well to the MLE-1 discovery. Production testing was completed in the first quarter of 2003. Production liner was set to a depth of 4,390 meters and multi-rate production tests were conducted over 147 meters (480 feet) of net pay in the Triassic TAGI, Carboniferous, and Upper and Lower Devonian zones. Six geological horizons were production tested yielding a cumulative rate of 44,300 barrels of oil equivalent per day (boe/d), comprising 189 million cubic feet of gas per day (mmcf/d) and 12,874 barrels of condensate per day (bc/d), at 2,000 psi flowing tubing head pressure. Production rates such as these are extremely rare and indicate MLE-2 to be a world class hydrocarbon discovery. The MLE-1 well production tested 8,900 boe/d comprised of 43 mmcf/d and 1,745 bc/d from three zones. Combined production tests for the two MLE wells total 53,200 boe/d. The abundance of new geological and geophysical data provided by the 3D seismic and MLE-2 has allowed FCP's geologists and geophysicists to re-map the field and derive more accurate assessments of ultimate field size. The geological picture emerging is that MLE is a hydrocarbon accumulation extending over more than 100 km2 on FCP's acreage. The MLE structure, which involves multiple geologic horizons, has substantial complexity which will be further understood with each well drilled. FCP will conduct additional drilling on the MLE structure in 2003 and is currently planning the MLE-3 well. Engineering feasibility studies of the total field development and production have also been initiated. Notwithstanding the activity undertaken so far on the eastern side of the Block, there exists a large land base to the west that remains to be tested with exploratory drilling. FCP acquired a grid of 2D seismic covering the Block and in 2003 will be supplementing this data with a 600 km2 3D seismic program. A number of leads exist on this portion of the Block, providing the potential for further discoveries. The Yacoub Block 406a covers 1,091 km2 (251,000 acres). Immediately offsetting Block 406a are the giant oil fields of Hassi Berkine, Ourhoud and RKF. After interpretation and reprocessing the 2D seismic data acquired with the Block, several structural leads were identified covering much of the northern and eastern portions of the Block. A 239 km2 3D seismic program was acquired in 2002. This survey focused on the northwest corner for two main reasons: closeness to an oil recovery in the RKFN-1 well and proximity to existing producing fields. In 2003, FCP drilled YCB-1, its first well on the Block, to a depth of 3,750 meters. No commercial oil was encountered and the well was abandoned. Analysis of the YCB-1 data showed that local geological variations led to the replacement of the sandstone reservoir by non-prospective shales. FCP's view of the overall prospectiveness of Block 406a remains optimistic. Towards the east side of the Block reservoir thicknesses are seen to increase and there is strong support from the 2D seismic data indicating faults and structures. Additional seismic is being acquired to further define a second drilling location on Block 406a in 2003. PERSONNEL FCP is expanding its core team of professionals to ensure that all the demands of international exploration and operations are met. The Company uses the latest computer applications for databases, mapping, seismic interpretation, log analysis and business systems. In Hassi Messaoud an operations base has been established for FCP personnel and in Algiers an administrative office assists with in-country communication and liaises with Sonatrach. Management's Discussion and Analysis First Calgary Petroleums Ltd. ("FCP") has established itself as an international petroleum and natural gas exploration company with the drilling of the MLE-2 gas and condensate well. FCP's 2002 operations were centered in the Berkine Basin of Algeria where the Company partners with Sonatrach, the national oil company of Algeria, in the Ledjmet Block 405b and the Yacoub Block 406a. On Block 405b, FCP drilled its first commitment well, MLE-2, during the fourth quarter. MLE-2 was completed subsequent to year end and production tested 44,300 barrels of oil equivalent per day consisting of 189 million cubic feet of gas per day and 12,874 barrels of condensate (light oil) per day. Although additional drilling is required to delineate and confirm the ultimate recoverable reserves, management is confident the structure provides FCP a major reserve base to develop. On the Yacoub Block 406a, FCP acquired 239 km2 of 3D seismic and prepared the access road and surface location for the first well, YCB-1. This exploration well was drilled during the first quarter of 2003. Notwithstanding the well was abandoned, the Company remains optimistic as to the Block's hydrocarbon potential and will continue its exploration activities. To expand its exposure to capital markets beyond Canada and The Toronto Stock Exchange, FCP was listed on the Alternate Investment Market ("AIM") of the London Stock Exchange. The Company tapped into these equity markets raising $30 million in new equity and subsequent to year end, raised additional equity totaling $33 million. Projects and Capital Commitments Algerian oil and gas law requires all foreign oil companies to partner with Sonatrach, which represents the interest of the state in oil and gas projects. Pursuant to hydrocarbon agreements with Sonatrach, FCP operates and holds 100 percent of the foreign company interest in the Ledjmet Block 405b and the Yacoub Block 406a. The Ledjmet Block 405b provides the Company both exploration potential and the right to appraise and develop the MLE reserves. The Yacoub Block 406a is exploratory in nature but is located adjacent to established oil production. FCP also holds a 10 percent working interest in Block 43 in Yemen. Activity on this exploration block during the year has been funded and operated by an industry partner pursuant to a joint venture farmout concluded in 2001. The Algeria and Yemen hydrocarbon contracts require the foreign companies to conduct certain exploration activities, as a minimum, over periods of time. The Algeria contracts provide FCP five years, divided into two periods, to explore the blocks. The first period is for three years. The Company then has the option to enter a second exploration period of two years. In Yemen, FCP and its partner are currently in the second exploration period of Block 43. ALGERIA Effective December 2001, the Company entered into a production sharing contract to explore and appraise the Ledjmet Block 405b which covers approximately 255,000 acres. As at December 31, 2002, FCP's remaining first exploration period minimum work commitment on the Block includes the acquisition of seismic and the drilling of two additional wells, including at least one exploration well, prior to December 2004. If the Company fails to satisfy the minimum work obligation, the rights, other than for which an exploitation permit has been granted or requested, will be returned and the Company will be liable to pay Sonatrach a penalty of US$20 million. The work commitment for the optional two year second exploration period includes acquiring additional seismic and drilling one exploration well, the estimated cost of which is currently US$8 million. As part of the Ledjmet Block 405b production sharing contract, FCP has the right to appraise and develop the MLE pool discovered with the MLE-1 well drilled in 1995 by a prior holder of the lands. For the access right to the MLE discovery, FCP is committed to pay Sonatrach a fee of US$0.25 per barrel oil equivalent calculated upon the total estimated recoverable MLE reserves. This access fee will be payable as a deduction from Sonatrach's share of the MLE development expenditures. The Company's Ledjmet Block 405b 2003 capital program currently includes the completion and production testing of the MLE-2 well during the first quarter, drilling the MLE-3 well on the MLE structure and acquiring 600 km2 of 3D seismic to further evaluate the lands west of the MLE structure. The projected cost of the Ledjmet Block 405b 2003 capital program is US$16 million. Following the 2003 capital program, the Company's outstanding work commitment for the first exploration period will be the drilling of one exploration well prior to December 2004. The Company's rights to explore the Yacoub Block 406a, which also covers approximately 251,000 acres, commenced in November 2000. As at December 31, 2002, FCP's remaining first exploration period work commitment included drilling two exploration wells prior to November 2003. If the Company fails to satisfy the minimum work obligations, the rights, other than for which an exploitation permit has been granted or requested, will be returned and the Company will be liable to pay Sonatrach a penalty of US$18.25 million. The work commitment for the optional two year second exploration period includes acquiring additional seismic and drilling two exploration wells. The estimated cost of this work is currently US$11 million. In the first quarter of 2003, the Company drilled YCB-1, the first commitment well, on the Yacoub 406a Block. For the balance of 2003, FCP plans to conduct a 2D seismic program and drill the second commitment well on the Block. The projected cost for the 2003 work program is US$9 million. The Company incurred capital expenditures of $19.8 million on its Algeria blocks during 2002 of which $13.4 million was attributed to drilling, $1.6 million to Algeria administrative costs, $4.3 million to seismic and $0.5 million to annual training bonuses. Of this total, $13.8 million was incurred in the fourth quarter and related principally to the drilling of MLE-2 and the YCB-1 access road and surface costs. The well location, surface condition and depth are all factors impacting the drilling costs. Based upon the Company's experience drilling the MLE and YCB wells, the Company expects ongoing drilling costs will range between US$4 and US$5 million for the Yacoub 406a wells and between US$6 and US$7million for the Ledjmet 405b wells. YEMEN Effective August 2001, the Company brought an industry partner into Block 43 to finance the ongoing exploration costs and the companies jointly entered the production sharing agreement's second exploration period that extends to February 2004. Pursuant to the joint venture agreement, the partner was appointed operator of the block and is responsible for funding all exploration activity until it has incurred US$7.5 million in expenditures or made a commercial discovery. The partner is also responsible for funding the annual bonuses and the letter of credit until its earning obligations are satisfied. Thereafter, FCP will be responsible for 11.8 percent of ongoing costs, if any. During 2002, the Block 43 minimum work commitment was amended to increase the number of exploration wells to three from two and reduce the original seismic commitment. The minimum expenditure commitment for the second exploration period remains at US$7.5 million. The Block 43 operator's efforts during 2002 concentrated on interpreting the existing seismic and well information to develop its prognosis of the Block's geology and hydrocarbon sources. For 2003, it is planning the acquisition of a small 2D seismic program and the drilling of three exploration wells, the first of which is proposed for the second quarter. The operator's current planned total expenditures for the 2002 and 2003 work programs are approximately US$9.5 million. Operating Results The Company sustained a loss for 2002 in the amount of $3.6 million and for 2001, incurred a loss of $1.3 million. FCP's activities over this period have focused on securing international exploration and development projects and conducting activities thereon. The annual losses are primarily attributed to general and administrative and stock based compensation expenses. The Company holds certain minor Canadian working and royalty interests carried over from its former activities. Ongoing, these non-operated properties generate an insignificant amount of cash for the Company. The 2001 production revenue and expenses related primarily to a property that was sold during 2001 and reflect adjustments reported by the operator prior to the sale. FCP has assembled geological, geophysical, engineering and financial professionals having international exploration and development experience. The Company has expanded this team as work progressed on the Algerian blocks and the associated operational requirements dictated. Further expansion is expected throughout 2003. The 2002 general and administrative expenses totaled $3.3 million compared with the prior year amount of $1.5 million. Approximately $900 thousand of the increase related to costs associated with the AIM listing. The remaining increased costs are primarily attributed to travel, investor relations and personnel costs. The 2002 fourth quarter general and administrative expenses totaled $841 thousand versus $534 thousand for the comparative period. The increase is also attributed to travel, investor relations and personnel costs. The Company's 2002 operating results include $636 thousand of stock- based compensation expense resulting from the adoption of accounting standards requiring the measurement and expensing of the fair value of stock options granted to non-employees in exchange for services. The Company does not expense the fair value of stock options granted to employees and directors. If the Company elected to do so, an additional $634 thousand of stock-based compensation expense would have been recorded. Liquidity and Capital Resources Without an existing revenue base, the Company utilizes equity and third party joint ventures to fund its operations. In 2002, FCP raised $30 million net of expenses from private and public equity placements, the exercise of share purchase warrants and the exercise of employee stock options. In exchange, the Company issued 32.4 million common shares. Of these totals, the Company received $2.9 million pursuant to the exercise of 4.7 million share purchase warrants and employee stock options during the fourth quarter. At December 31, 2002, FCP had working capital of $10.5 million compared with working capital of $3.2 million at the prior year end. The increase in accounts payable and accrued liabilities at December 31, 2002 versus the prior year related to Algerian drilling costs incurred in the fourth quarter. Subsequent to December 31, 2002, the Company raised additional funding totaling $33 million net of expenses from a public equity placement, the exercise of share purchase warrants and the exercise of employee stock options. In exchange, the Company issued 15.9 million common shares increasing the current outstanding common shares to 124.5 million. There are also 10.5 million common share purchase warrants and stock options currently outstanding. The Algerian blocks encompass a large area to explore. International oil and gas projects of this magnitude are capital intensive and to thoroughly explore the land base will require capital in excess of the Company's existing working capital. In addition to the exploratory activity, the Company will proceed with the development of the MLE reserves which will also require significant capital. The recent equity financing provides FCP the funds to proceed with its 2003 capital program. With access to additional capital, the scope and timing of both exploration and development activities could be increased and accelerated. Potential sources of additional capital include equity, debt, farm-outs or a combination thereof. The Company believes that equity and/or farm-outs are the prudent sources of capital for funding exploratory expenditures. For development expenditures, the sources of capital are expected to include debt financing. However, there is no assurance that additional financing will be available upon terms acceptable to the Company. Business Risks The Company's business is subject to risks inherent in oil and gas exploration and development operations. In addition, there are risks associated with its development stage of operations and the foreign jurisdictions in which it operates. The Company has identified certain risks pertinent to its business including: exploration and reserve risk, drilling and operating risks, costs of material and services, requirement for additional capital, loss of or changes to production sharing, joint venture and related agreements, economic and sovereign risks, possibility of less developed legal systems, reliance on strategic relationships, market risk, volatility of future oil and gas prices and foreign currency risk. FCP attempts to monitor, assess and mitigate certain of these risks by retaining an experienced team of highly skilled professionals and using state-of-the-art technology. Further, the Company has focused its activities in known hydrocarbon basins in jurisdictions that have previously established long term oil and gas ventures with foreign oil and gas companies, existing infrastructure and reasonable proximity to markets. The Company also retains consultants resident in the jurisdictions in which it operates to monitor economic and political developments and assist with the operating, administrative and legal matters. There are certain of these risks, however, over which the Company has little or no control. Outlook Algeria is the focus for the Company with its hydrocarbon rights covering in excess of 500,000 acres in the Berkine Basin. This basin has an established infrastructure for services and transportation. Based upon the MLE well results FCP has a potential major gas and condensate field on the Ledjmet Block 405b. For additional growth, the Company will continue to explore the Ledjmet Block 405b and Yacoub Block 406a. Similar with any company in an exploration or development stage of operations, financing the ongoing activity is critical to achieving success and presents a continuing challenge. Competition for new equity is intense. FCP believes the MLE reserve base, combined with the potential of its exploration acreage, allows FCP to compare very favorably with its peer group of companies and that it can successfully compete in the capital markets. In addition, FCP is optimistic that if desired, industry joint ventures will also be an available source of funding for the Company's initiatives. Pending Accounting Changes New asset retirement obligation standards require recognition of the fair value of future restoration and abandonment obligations as a liability on the balance sheet. The future liability is to be capitalized as part of the cost of the related capital assets and amortized to expense over the life of the asset. This new standard is effective for fiscal years beginning after January 1, 2004. Adoption of this standard will result in an increase in property, plant and equipment and future site restoration on the balance sheet. Although it is not yet determinable, the change is not expected to have a material impact on future earnings. There are also draft standards proposing that the fair value of stock-based compensation granted to employees be expensed. As the Company uses stock options as part of its remuneration package for employees and does not currently recognize compensation expense on the issuance of these options, the adoption of the proposed change would reduce future reported net earnings. Management's Report to the Shareholders Management is responsible for the integrity and objectivity of the information contained in this annual report and for the consistency between the financial statements and other financial operating data contained elsewhere in the report. The accompanying financial statements have been prepared by management in accordance with accounting principles generally accepted in Canada using estimates and careful judgement, particularly in those circumstances where transactions affecting a current period are dependent upon future events. The accompanying financial statements have been prepared using policies and procedures established by management and reflect fairly the Company's financial position, results of operations and changes in financial position, within reasonable limits of materiality and within the framework of the accounting policies outlined in the notes to the financial statements. Management has established and maintains a system of internal control which is designed to provide reasonable assurance that assets are safeguarded from loss or unauthorized use and the financial information is reliable and accurate. The financial statements have been examined by external auditors. Their examination provides an independent view as to management's discharge of its responsibilities insofar as they relate to the fairness of reported operating results and financial condition of the Company. The Audit Committee of the Board of Directors has reviewed in detail the financial statements with management and the external auditors. The financial statements have been approved by the Board of Directors on the recommendation of the Audit Committee. Richard G. Anderson Kenneth C. Rutherford President and Chief Executive Officer Vice President, Finance April 15, 2003 Auditors' Report to the Shareholders We have audited the consolidated balance sheets of First Calgary Petroleums Ltd. as at December 31, 2002 and 2001 and the statements of operations and deficit and cash flows for the years then ended. These consolidated financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the company as at December 31, 2002 and 2001 and the results of its operations and its cash flows for the years then ended in accordance with Canadian generally accepted accounting principles. Chartered Accountants Calgary, Canada April 15, 2003 Consolidated Balance Sheets December 31, 2002 2001 ASSETS Current assets: Cash and short-term deposits (note 4) $ 19,587,570 $ 4,444,230 Accounts receivable 91,067 23,340 Deposits and prepaid expenses 143,180 17,284 19,821,817 4,484,854 Property, plant and equipment (note 5) 29,744,160 9,892,628 $ 49,565,977 $ 14,377,482 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities (note $ 9,351,460 $ 1,242,973 6) Provision for future site restoration costs 35,491 35,491 Shareholders' equity: Capital stock (note 7) 63,664,285 33,582,732 Contributed surplus (note 7) 636,432 - Deficit (24,121,691) (20,483,714) 40,179,026 13,099,018 Operations and commitments (note 3) Subsequent events (note 11) $ 49,565,977 $ 14,377,482 See accompanying notes to consolidated financial statements. Approved by the Board: Richard G. Anderson Raymond P. Antony Director Director Consolidated Statements of Operations and Deficit Years ended December 31, 2002 2001 Revenue: Petroleum and natural gas sales, less royalties $ 32,350 $ 256,070 Interest and other income 233,791 42,230 266,141 298,300 Expenses: Production 11,809 46,025 General and administrative 3,263,021 1,545,251 Stock-based compensation (note 7) 636,432 - Foreign exchange losses (gains) (32,785) 15,416 Depreciation 25,641 20,000 3,904,118 1,626,692 Loss for the year (3,637,977) (1,328,392) Deficit, beginning of year (20,483,714) (19,155,322) Deficit, end of year $ (24,121,691) $ (20,483,714) Loss per share, basic and diluted (note 7) $ (0.04) $ (0.02) See accompanying notes to consolidated financial statements. Consolidated Statements of Cash Flows Years ended December 31, 2002 2001 Cash provided by (used in): Operations: Loss for the year $ (3,637,977) $ (1,328,392) Items not involving cash: Depreciation 25,641 20,000 Stock-based compensation 636,432 - (2,975,904) (1,308,392) Change in non-cash working capital 41,857 (360,888) (2,934,047) (1,669,280) Financing: Proceeds on warrant and share issues 25,676,016 14,051,300 Proceeds on exercise of warrants 6,914,000 - Proceeds on exercise of stock options 283,472 43,417 Issue costs (2,791,935) (1,067,106) 30,081,553 13,027,611 Investing: Capital expenditures (19,877,173) (4,926,450) Proceeds on sale of petroleum and natural - 142,492 gas properties (19,877,173) (4,783,958) Change in non-cash working capital 7,873,007 (2,141,627) (12,004,166) (6,925,585) Increase in cash 15,143,340 4,432,746 Cash and short-term deposits, beginning of 4,444,230 11,484 year Cash and short-term deposits, end of year $ 19,587,570 $ 4,444,230 See accompanying notes to consolidated financial statements. Notes to Consolidated Financial Statements 1 SIGNIFICANT ACCOUNTING POLICIES (a) Principles of consolidation The consolidated financial statements include the accounts of First Calgary Petroleums Ltd. (the "Company") and its wholly owned subsidiaries. (b) Petroleum and natural gas operations The Company follows the full cost method of accounting for petroleum and natural gas operations, whereby all costs of exploring for and developing petroleum and natural gas reserves are capitalized and accumulated in country-by-country cost centres. Such costs include land acquisition costs, geological and geophysical costs, carrying charges on non-producing properties, costs of drilling both productive and non-productive wells, interest costs on major development projects and overhead charges directly related to acquisition, exploration and development activities. The costs (including exploratory dry holes) in cost centres from which there has been no commercial production are not subject to depletion until commercial production commences. The capitalized costs are periodically assessed to determine whether it is likely such costs will be recovered in the future. To the extent there are costs which are not likely to be recovered in the future, they are written off. The costs in cost centres from which there is production, together with the cost of production equipment, are depleted and depreciated on the unit-of-production method based on the estimated proved reserves after royalties. Petroleum and natural gas reserves and production are converted into equivalent units based upon estimated relative energy content. Costs of acquiring and evaluating significant unproved properties are excluded from depletion calculations. These unevaluated properties are assessed periodically to ascertain whether impairment in value has occurred. When proved reserves are assigned or the value of the property is considered to be impaired, the cost of the property or the amount of the impairment is added to costs subject to depletion. The capitalized costs less accumulated depletion, depreciation and future site restoration, in each cost centre from which there is production, are limited to an amount equal to the estimated future net revenue from proved reserves (based on prices and costs at the balance sheet dates) plus the cost (net of impairments) of unproved properties less estimated future site restoration costs. The total capitalized costs of all cost centres, less accumulated depletion and depreciation, future site restoration and future income taxes, are further limited to an amount equal to the estimated future net revenue from proved reserves of all cost centres, plus the cost (net of impairments) of unproved properties, less estimated future site restoration costs, general and administrative expenses, financing costs and taxes. Estimated future removal and site restoration costs are provided for using the unit-of-production method and remaining proven reserves. Costs are estimated based on current regulations, costs, technology and industry standards. The annual charge is included in the provision for depletion and depreciation and the related accumulated provision is separately disclosed. Removal and site restoration expenditures are charged to the accumulated provision account as incurred. Proceeds from the sale of petroleum and natural gas properties are applied against capitalized costs, with no gain or loss recognized, unless such a sale would significantly alter the rate of depletion and depreciation. Substantially all of the Company's exploration, development and production activities are conducted jointly with others and accordingly these financial statements reflect only the Company's proportionate interest in such activities. (c) Foreign currency translation All operations are considered financially and operationally integrated. Results of operations are translated to Canadian dollars using average rates for revenues and expenses, except depreciation and amortization which are translated at the rate of exchange applicable to the related assets. Monetary items denominated in foreign currencies are translated to Canadian dollars at exchange rates in effect at the balance sheet date and non-monetary items are translated at rates in effect when the assets were acquired or obligations incurred. Foreign exchange gains and losses are included in the determination of income. (d) Stock-based compensation The Company accounts for stock options granted to non-employees after January 1, 2002 using the fair value method. Under this method, compensation expense is measured at fair value at the grant date using the Black-Scholes option pricing method and recognized over the vesting period with a corresponding credit to contributed surplus. No compensation expense is recognized for stock options granted to employees; the Company discloses the pro forma effect of accounting for these awards using the fair value method. (e) Income taxes The Company provides for income taxes using the asset and liability method. Under this method current income taxes are recognized for the estimated income taxes payable for the current year. Future income taxes are recognized for temporary differences between the tax and accounting bases of assets and liabilities and for the benefit of losses available to be carried forward for tax purposes that are likely to be realized. Future income tax liabilities and assets are measured using tax rates expected to apply in the years in which temporary differences are expected to be recovered or settled. Any change to the net future income tax assets and liabilities is included in operations in the year it occurs. (f) Derivative financial instruments Realized and unrealized gains and losses on derivative financial instruments acquired to manage financial risks such as interest rates, commodity prices and foreign exchange rates are included in income in the same period as when the underlying asset, liability or anticipated transaction affects income. The Company links all derivatives to specific firm commitments of forecasted transactions and does not enter into derivative financial instruments for trading or speculative purposes. (g) Measurement uncertainty and use of estimates The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses including depletion and depreciation, future site restoration and abandonment costs of properties. The cost recovery ceiling test is also based upon estimates of the market value of unproved properties, proved reserves, petroleum and natural gas prices, future costs and other assumptions. These estimates are subject to measurement uncertainty and the effect on the financial statements of changes in such estimates could be significant. (h) Earnings per share Basic earnings per share are computed by dividing net earnings by the weighted average shares outstanding during the reporting period. Diluted amounts are computed using the "treasury stock" method of accounting. The treasury stock method assumes that proceeds received from the exercise of options and warrants where market price exceeds the exercise price are used to repurchase shares at the average market rate for the period. (i) Comparative figures Certain prior year balances have been reclassified to conform to the current year's presentation. 2 CHANGE IN ACCOUNTING POLICY Effective January 1, 2002 the Company adopted a new Canadian accounting standard for stock-based compensation and other stock-based payments to recognize as an expense the value of stock-based grants to non-employees. As a result of this change in accounting policy, the Company recorded $636,432 ($ (0.01) per share) in stock-based compensation expense in 2002. 3 OPERATIONS AND COMMITMENTS The principal operations include oil and gas exploration in Algeria and Yemen. The Company has contracts with Sonatrach, the national oil company of Algeria, to explore and develop two blocks, Yacoub Block 406a and Ledjmet Block 405b. The Company also holds an interest in a contract with the Yemen Minister of Mineral Resources to explore and develop Block 43. These contracts are structured such that the Company has committed to conduct certain minimum exploration activities over a period of time and in return earns an interest in commercial discoveries. The Company does not have a sustainable revenue base and therefore will require additional funding in the form of equity, debt, joint ventures or some combination thereof to complete the work obligations. Failure to satisfy its minimum work commitments on a timely basis could cause the Company to forfeit its interest in some or all of its properties and subject it to financial penalties. (a) Algeria In 2000 the Company entered into a joint venture agreement with Sonatrach to explore Yacoub Block 406a in the Berkine Basin. The remaining minimum work obligation at year-end is to drill two exploration wells prior to November 2003, the end of the first exploration period. The estimated cost of this work is U.S.$9,000,000. If the Company fails to satisfy the minimum work obligation, the rights, other than for areas for which an exploitation permit has been granted or requested, will be forfeited and the Company will be liable to pay Sonatrach a penalty of U.S.$18,250,000. The joint venture agreement also provides the Company with the option to enter a second exploration period that would extend for two years through to November 2005. The minimum work obligation for the second exploration period is to conduct a seismic program and drill two exploration wells. The estimated cost of this work is U.S.$11,000,000. In addition to the minimum work commitments, the Company is obligated to pay an annual training bonus in the amount of U.S.$150,000 for the duration of the contract. In 2001 the Company entered into a production-sharing contract with Sonatrach to explore and appraise Ledjmet Block 405b in the Berkine Basin. The remaining minimum work obligation at year-end is to conduct a seismic program and drill two wells at an estimated cost of U.S. $18,000,000. This work must be completed prior to December 2004, the end of the first exploration period. If the Company fails to satisfy the minimum work obligation, the rights, other than for areas for which an exploitation permit has been granted or requested, will be forfeited and the Company will be liable to pay Sonatrach a penalty of U.S.$20,000,000. In addition, the contract provides the Company with the right to appraise and develop the MLE field previously discovered on the block. Should the Company exercise this right, a reserve-based access fee of $0.25 per barrel oil equivalent will be owed to Sonatrach on the commercialization of the field. The contract also provides the Company with the option to enter a second exploration period that would extend through to December 2006. The minimum work obligation for the second exploration period is to conduct a seismic program and drill one exploration well. The estimated cost of this work is U.S.$8,000,000. In addition to the minimum work commitments, the Company is obligated to pay an annual training bonus in the amount of U.S.$150,000 for the duration of the contract. (b) Yemen In 1998 the Company entered into a production-sharing contract with the Yemen Ministry of Minerals to explore Block 43 in Yemen. The Company completed the first exploration work commitments through a farmout. In 2001 the Company entered a farmout with another industry partner and the companies have entered the second exploration period which extends to February 2004. The minimum expenditure commitment is U.S. $7,500,000 for the second exploration period and pursuant to a 2002 revision, includes a seismic program and the drilling of three exploration wells. The production sharing agreement requires an irrevocable letter of credit be lodged in the amount of U.S. $7,500,000. Pursuant to the farmout, the partner assumed operatorship of the block and is responsible for funding all exploration expenditures until such time as it has incurred U.S.$7,500,000 in expenditures or made a commercial discovery. In addition to the work commitment, the production-sharing contract requires bonus payments totaling U.S.$600,000 per annum during the second exploration period and U.S.$500,000 per annum for the duration of the contract. (c) Other The Company is committed to office and equipment leases over the next three years as follows: 2003 $ 248,907 2004 252,239 2005 238,016 4 CASH AND SHORT-TERM DEPOSITS Deposits in banks, certificates of deposit and short-term investments with original maturities of three months or less are classified as cash and cash equivalents. The major components of cash and cash equivalents are as follows: 2002 2001 Cash on deposit Canadian dollars $ 156,709 $ 4,377,533 British pounds 259,992 - U.S. dollars 27,955 66,697 Algerian dinars 368,064 - Bank term deposits at rates of interest varying between 0.375% and 3.75% Canadian dollars 4,710,500 - British pounds 6,550,545 - U.S. dollars 7,513,805 - $ 19,587,570 $ 4,444,230 5 PROPERTY, PLANT AND EQUIPMENT Accumulated depletion and Net book 2002 Cost depreciation value Petroleum and natural gas $ 29,617,798 $ - $ 29,617,798 properties Office furniture and equipment 256,624 130,262 126,362 $ 29,874,422 $ 130,262 $ 29,744,160 2001 Petroleum and natural gas $ 9,801,707 $ - $ 9,801,707 properties Office furniture and equipment 195,542 104,621 90,921 $ 9,997,249 $ 104,621 $ 9,892,628 At December 31, 2002 petroleum and natural gas properties include costs of proven and unproven properties of $28,560,423 in Algeria (2001 - $8,746,950) and unproven properties of $1,057,375 in Yemen (2001 - $1,054,757). In 2002, the Company capitalized $1,640,000 (2001 - $294,000) of overhead charges relating directly to the exploration and development activities in Algeria and Yemen. At December 31, 2002, the Company had estimated future site restoration costs of $100,000 (2001 - $nil) that will be accrued over the remaining proven reserves. 6 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 2002 2001 Trade payables: Canadian dollars $ 359,880 $ 504,443 British pounds 100,903 - U.S. dollars 6,489,579 - Algerian dinars 101,320 - Capital accrual: U.S. dollars 2,069,350 478,530 Algerian dinars 230,428 - Due to a shareholder U.S. dollars (note 7 (b) (i)) - 260,000 $ 9,351,460 $ 1,242,973 At December 31, 2002 a bank has issued letters of credit totaling US$800,000 to guarantee payment for services. The Company pledged cash as security for the letters of credit. 7 CAPITAL STOCK (a) Authorized share capital Unlimited number of common shares without nominal or par value Unlimited number of preferred shares without nominal or par value (b) Issued share capital Number of shares Amount Common shares: Balance, December 31, 2000 48,764,602 $ 20,555,121 Issued on exercise of share purchase 170,000 110,500 warrants Issued units (i) 400,000 200,000 Issued on exercise of special warrants (ii) 6,000,000 3,000,000 Issued units (iii) 14,000,000 7,000,000 Issued on exercise of share purchase 6,680,000 3,740,800 warrants (iv) Issued on exercise of stock options 195,307 43,417 Issue costs - (1,067,106) Balance, December 31, 2001 76,209,909 33,582,732 Issued on exercise of share purchase 3,400,000 2,210,000 warrants (i)(ii) Issued on exercise of share purchase 8,400,000 4,704,000 warrants (v) Issued on public offering (vi) 20,014,850 25,676,016 Issued on exercise of stock options 604,967 283,472 Issue costs - (2,791,935) Balance, December 31, 2002 108,629,726 $63,664,285 (i) In March 2001 a shareholder acquired 400,000 units at $0.50 per unit. Each unit consisted of one fully paid common share and one common share purchase warrant exercisable into one common share at a price of $0.65 per share until March 23, 2002. A director of the Company was a director of the purchaser of the units. In January 2002 the 400,000 common share purchase warrants were exercised and the Company paid $260,000 for settlement of an outstanding claim of the shareholder in the amount of US$185,000. (ii) In May 2001, 6,000,000 special warrants were issued at $0.50 per special warrant. Each special warrant consisted of one fully paid common share and one half common share purchase warrant exercisable into one common share at a purchase price of $0.65 per share until November 8, 2002. In November 2002, 3,000,000 common shares were issued pursuant to the exercise of the common share purchase warrants. (iii) In June 2001, 7,000,000 units were issued at $0.50 per unit. Each unit consisted of one fully paid common share and one common share purchase warrant exercisable at a purchase price of $0.56 per share until December 29, 2001. In conjunction with the sale, the Company issued to the agent 700,000 common share purchase warrants exercisable at a purchase price of $0.56 per share until December 29, 2002. In September 2001, 7,000,000 units were issued at $0.50 per unit. Each unit consisted of one fully paid common share and one common share purchase warrant exercisable at a purchase price of $0.56 per share until June 13, 2002. In conjunction with the sale, the Company issued to the agent 700,000 common share purchase warrants exercisable at a purchase price of $0.56 per share until March 13, 2003. (iv) In December 2001, 6,680,000 common shares were issued on the exercise of 6,680,000 common share purchase warrants at $0.56 per share. In conjunction with this issuance, the Company issued to the agent 668,000 common share purchase warrants exercisable at a purchase price of $0.56 per share until June 29, 2003. (v) In June 2002, 7,000,000 common shares were issued pursuant to the exercise of 7,000,000 common share purchase warrants at $0.56 per share having an expiry date of June 13, 2002. In connection with this issuance, the Company issued to the agent 700,000 common share purchase warrants exercisable at a purchase price of $0.56 per share until December 13, 2003. In October 2002, 700,000 common shares were issued pursuant to the exercise of 700,000 common share purchase warrants at $0.56 per share having an expiry date of December 29, 2002. In October and November 2002, 700,000 common shares were issued pursuant to the exercise of 700,000 common share purchase warrants at $0.56 per share having an expiry date of March 13, 2003. (vi) In July 2002 the Company issued 20,014,850 common shares for gross proceeds of $25,676,016 (5,132,250 common shares at $1.25 per share and 14,882,600 common shares at £0.52 per share). (c) Employee stock options Pursuant to the stock option plan, the Company can reserve for issuance and grant stock options to a maximum of 8,796,727 common shares on a cumulative basis. Stock options granted under the plan have a term of five years and generally vest one-third on the date of grant and one-third on each of the first and second anniversary dates of the grant. The exercise price of each option is equal to the market price of the shares on the date of the grant. At December 31, 2002 employees held stock options to purchase 7,110,033 common shares at prices ranging from $0.25 to $1.90 per share. The options expire at various times from November 2003 to December 2007. Number of Weighted average options exercise price Outstanding, December 31, 2000 3,415,307 $ 0.86 Granted 3,065,000 0.59 Exercised (195,307) 0.22 Cancelled (100,000) 0.70 Outstanding, December 31, 2001 6,185,000 0.76 Granted 1,530,000 1.18 Exercised (604,967) 0.47 Outstanding, December 31, 2002 7,110,033 $ 0.88 Exercisable, December 31, 2002 5,101,700 $ 0.87 The following table summarizes information about the options outstanding and exercisable at December 31, 2002: Options outstanding Options exercisable Weighted Weighted Weighted average average average Range of Common remaining exercise Common exercise exercise prices shares contractual price shares price life $0.25 - 0.50 1,736,999 3.6 years $0.47 1,167,000 $0.46 $0.60 - 0.85 2,231,334 3.3 years $0.74 1,659,667 $0.73 $0.95 - 1.06 1,191,700 2.4 years $1.04 1,025,033 $1.04 $1.23 - 1.90 1,950,000 3.4 years $1.28 1,250,000 $1.29 7,110,033 3.2 years $0.88 5,101,700 $0.87 (d) Common share purchase warrants At December 31, 2002, 1,718,000 common share purchase warrants were outstanding: Outstanding Exercise Price Expire 668,000 $ 0.56 June 29, 2003 700,000 $ 0.56 December 13, 2003 350,000 $ 1.11 June 9, 2007 1,718,000 (e) Stock-based compensation and payments In January 2002 the Company entered into agreements with two consultants to provide services relating to the financing of its operations. Pursuant to the agreements, the Company granted the two consultants options to acquire 900,000 common shares at a price of $0.70 per share. The options have a five-year term and vest as to one third in each of the next three years. In addition, as partial compensation for the Company's nominating and broker advisors respecting services rendered to list the common shares on AIM of the London Stock Exchange, the Company issued warrants to purchase 350,000 common shares at $1.11 per share exercisable until June 2007. The Company recognized $636,432 of stock-based compensation expense in the year ended December 31, 2002 with a corresponding increase in contributed surplus. The expense represents the estimated fair value of the above-noted options and warrants being accrued over the vesting period. The Company continued with its policy of not recognizing compensation expense on the issuance of employee stock options and recording consideration received from employees or directors on the exercise of stock options as a capital transaction. If the Company had elected to use the fair value method of accounting for employee stock options, the reported 2002 loss and loss per share would have been the pro forma amounts below: Loss for the year As reported $(3,637,977) Pro forma (4,271,684) Loss per share (basic and As reported (0.04) diluted) Pro forma (0.05) The fair value of options and warrants granted, estimated on the date of the grant using the Black-Scholes option pricing model (expected volatility of 95%, risk-free interest rate of 5% and expected lives of 5 years) ranged from $0.52 to $1.41. (f) Per share amounts The loss per share is based on the weighted average shares outstanding for the year. The weighted average shares outstanding for 2002 were 90,007,229 (2001 - 57,284,269). In computing the dilutive effect of the warrants and options, 7,965,153 shares (2001 - 983,592) were added to the weighted average number of shares outstanding. Outstanding warrants and options had no dilutive effect for 2002 or 2001. 8 INCOME TAXES The income tax provision differs from the amount which would be obtained by applying the Canadian basic federal and provincial income tax rate to the loss for the year as follows: 2002 2001 Loss for the year $ (3,637,977) $ (1,328,392) Statutory tax rate 42.1% 42.6% Expected income tax recovery at statutory $ (1,531,588) $ (565,895) tax rate Non-deductible stock-based compensation 267,938 - expenses Losses, the benefit of which have not been 1,262,600 552,433 recognized Other 1,050 13,462 $ - $ - The components of the net future income tax asset at December 31, 2002, no portion of which has been recorded in these financial statements, are summarized as follows: Canada Operating losses $ 2,316,098 Property, plant and equipment 4,147,316 Other tax pools 3,228,539 Less: Valuation allowance (9,691,953) $ - The operating loss carryforwards expire as follows: 2004 $ 715,000 2005 417,000 2006 564,000 2007 450,000 2008 327,000 2009 2,999,000 9 FINANCIAL INSTRUMENTS The Company is exposed to foreign currency fluctuations on its exploration activities as these obligations are generally denominated in U.S. dollars. There are no contracts in place to fix the exchange rate. The fair value of other financial instruments, including cash and short-term deposits, accounts receivable and accounts payable and accrued liabilities approximate their carrying values. 10 SEGMENTED INFORMATION The Company's activities are conducted in three geographic segments: Canada, Algeria and Yemen. All activities relate to exploration and development of petroleum and natural gas. 2002 Canada Algeria Yemen Total Revenue $ 266,141 $ - $ - $ 266,141 Expenses (3,879,118) (25,000) - (3,904,118) Loss for the year $ (3,612,977) $ (25,000) $ - $ (3,637,977) Capital $ 61,082 $ 19,813,473 $ 2,618 $ 19,877,173 expenditures Assets $ 19,580,115 $ 28,928,487 $ 1,057,375 $ 49,565,977 2001 Canada Algeria Yemen Total Revenue $ 298,300 $ - $ - $ 298,300 Expenses (1,601,692) (25,000) - (1,626,692) Loss for the year $ (1,303,392) $ (25,000) $ - $ (1,328,692) Capital $ 26,447 $ 5,743,542 $ (986,031) $ 4,783,958 expenditures Assets $ 4,575,775 $ 8,746,950 $ 1,054,757 $ 14,377,482 11 SUBSEQUENT EVENTS In February 2003 the Company issued 14,893,620 common shares for gross proceeds of $34,946,889 (10,807,620 common shares at $2.35 per share and 4,086,000 common shares at £0.95 per share). The share issue costs are estimated to be $2,600,000, including the agent's 6% commission. In conjunction with the sale, the Company issued to the agents 893,617 common share purchase warrants exercisable at a purchase price of $2.60 per share until February 12, 2004. In addition, the Company issued 1,023,805 common shares for a total cash consideration of $645,680 pursuant to the exercise of 668,000 common share purchase warrants at $0.56 per share, 81,472 common share purchase warrants at $1.11 per share and 274,333 employee stock options at prices ranging from $0.25 to $1.06 per share. Corporate Information SENIOR MANAGEMENT CORPORATE HEADQUARTERS First Calgary Petroleums Ltd. Richard G. Anderson Suite 900, 520 - 5 Avenue SW President & CEO Calgary, Alberta T2P 3R7 Martin G.J. Layzell tel: (403) 264-6697 Vice President, Exploration fax: (403) 264-3955 Kenneth C. Rutherford email: info@fcpl.ca Vice President, Finance web site: www.fcpl.ca Roger D. Whittaker AUDITORS Manager of Geosciences KPMG LLP Ken M. Topolinsky Calgary, Alberta Operations Manager BANK David J. Murphy Royal Bank of Canada Senior Exploration Advisor Calgary, Alberta Mike J. Brusset LEGAL COUNSEL Engineering Manager Burnet, Duckworth & Palmer LLP Gary R. Bugeaud Calgary, Alberta Corporate Secretary REGISTRAR AND TRANSFER AGENT DIRECTORS Inquiries regarding change of address, registered shareholdings, stock transfers or lost certificates should be directed to: Richard G. Anderson Computershare Trust Company of Canada President & CEO Suite 600, 530 - 8 Avenue SW Raymond P. Antony Calgary, Alberta T2P 3S8 Chartered Accountant Attn: Stock Transfer Department Alastair J. Beardsall tel: (403) 267-6800 Oil and Gas Consultant STOCK EXCHANGE LISTINGS Darryl J. Raymaker, Q.C. Toronto Stock Exchange - Symbol: FCP Solicitor London Stock Exchange - Symbol: FPL Yuri K. Shafranik OIL AND GAS ABBREVIATIONS Independent Businessman bbls barrels of oil bbls/d barrels of oil per day ACTIVE SUBSIDIARY bc/d barrels of condensate per day EURL FCP Algerie OPCO BCFe billion cubic feet of gas equivalent (6 mcf/bbl conversion) boe/d barrels of oil equivalent per day mcf thousand cubic feet of gas mcf/d thousand cubic feet of gas per day mmcf million cubic feet of gas mmcf/d million cubic feet of gas per day psi per square inch TCFe trillion cubic feet equivalent First Calgary Petroleums Ltd Suite 900 520 - 5 Avenue SW Calgary, AB T2P 3R7 tel: (403) 264-6697 fax: (403) 264-3955 email: info@fcpl.ca web site: www.fcpl.ca Further Exploration END
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