EX-99.2 4 chaparral8k3132006exh992.txt PRESS RELEASE Exhibit 99.2 Chaparral Resources, Inc For Immediate Release: Monday, March 13, 2006 CHAPARRAL RESOURCES ANNOUNCES UNAUDITED PRELIMINARY 2005 RESULTS AND UPDATE TO PROVED RESERVES White Plains, New York, March 13, 2006 - Chaparral Resources, Inc. (OTCBB: CHAR), an exploration and development company operating in Kazakhstan, today releases its unaudited preliminary operating results for the year ended December 31, 2005. HIGHLIGHTS: Financial o 92% increase in total revenue - $150.6 million for the year ended December 31, 2005 (2004: $78.5 million) o 262% increase in net income - $30.8 million ($0.77 per share on a fully diluted basis) for the year ended December 31, 2005, compared to $8.5 million ($0.22 per share) for year ended December 31, 2004. Operational o Record annual production - An increase of 25% to 3,534,000 barrels, net of royalties, from 2,835,000 barrels net in 2004. o 12% increase in proved reserves to 45.3 million barrels of oil, net of royalties (as at December 31, 2005) o Total well stock at December 31, 2005 rises to 80 including 61 producers and nine water injection wells. Commenting on the annual results for Chaparral, Boris Zilbermints, CEO of Chaparral said: "During 2005 Chaparral has increased production to over 12,000 barrels per day from the Karakuduk field by the year end and plans to continue to invest in the Karakuduk field throughout 2006. As previously reported, however, the suspension of drilling activities, resulting from the decision by Oil and Gas Drilling and Exploration of Krakow ("OGEC") to terminate its drilling contract has led to a delay in the Company's proposed capital investment program in 2006. This will have an adverse effect on the production levels previously anticipated during the forthcoming year" The Company has benefited from a 20% increase in sales volumes and the general rise in oil prices over 2005. This has led to a 92% increase in net revenues to $151 million in 2005 from $78 million in 2004 and a 186% increase in income from operations to $80 million for the year ended December 31, 2005 from $28 million in 2004. Cumulative returns on the Karakuduk field have now reached a level that requires ZAO Karakudukmunay to pay Excess Profits Taxes. As a result the Company has made a provision of $3.2 million in the quarter ended December 31, 2005. The Company is unable to quantify the expected effect on the results for 2006 due to the significant impact that small fluctuations in the oil price will have on the calculation of Excess Profits Tax. The Company drilled 15 wells during 2005 and at December 31, 2005 the total well fund stood at 80 wells. During 2006 the Company intends to drill a further 12 wells. Following the demobilization of the drilling rig by OGEC, a new tender was conducted and there were eight companies that submitted their proposals. The Company anticipates that a new drilling contractor will be selected in time for the drilling program at the Karakuduk field to recommence in the third quarter of 2006. The Company is also constructing a rail rack to transport Karakuduk crude oil to the Kazakhstan port of Aktau. This will increase our average revenue per barrel by ensuring that the high quality crude oil from Karakuduk is not mixed with lower quality, high sulfur oil in the KTO pipeline system the Company currently uses. The total capital cost of this project is over $13 million. Chaparral Resources, Inc. Page 2 March 13, 2006 For further information, please contact: ---------------------------------------- Boris Zilbermints, CEO Tel: +7 3172 591 100 Chaparral Resources, Inc. Charles Talbot, CFO Tel: +44 20 7495 8908 Chaparral Resources, Inc. Investor Relations Olav Svela, Vice President Tel: +1 416-868-1079 Cavalcanti Hume Funfer Inc. (CHF Inc.) Fax: +1 416-868-6198 olav@chfir.com -------------- Notes: Chaparral Resources, Inc. is an independent oil and gas exploration and development company. It has a total net 60% interest in ZAO Karakudukmunay ("KKM") that holds a governmental licence to develop the Karakuduk field in western Kazakhstan. The financial statements included herewith are unaudited and preliminary only. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted. Reference should be made to the relevant notes to the Company's financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31,2004.The unaudited information furnished herein was taken from the books and records of the Company. However, such information reflects all adjustments which are, in the opinion of management, normal recurring adjustments necessary for the fair statement of the results for the interim periods presented. Readers are cautioned that the preceding statements and information may include certain estimates, assumptions and other forward-looking information. The actual future performance, developments and/or results of the corporation may differ materially from any or all of the forward-looking statements, which include current expectations, estimates and projections, in all or part attributable to general economic conditions and other risks, uncertainties and circumstances partly or totally outside the control of the corporation, including oil prices, imprecision of reserve estimates, drilling risks, future production of gas and oil, rates of inflation, changes in future costs and expenses related to the activities involving the exploration, development, production and transportation of oil, hedging, financing availability and other risks related to financial activities, and environmental and geopolitical risks. Discussion of the various factors that may affect future results is contained in the corporation's recent filings with the SEC. The corporation disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
Chaparral Resources, Inc. Page 3 March 13, 2006 CHAPARRAL RESOURCES, INC. Unaudited Condensed Consolidated Balance Sheets As at December 31, 2005 and 2004 Expressed in thousands of U.S. dollars 2005 2004 ---- ---- Assets Current assets Cash and cash equivalents 20,995 9,611 Accounts receivable and prepaid expenses 29,472 7,002 Crude oil inventories 596 36 -------- -------- Total current assets 51,063 16,649 Oil and gas properties 100,624 94,966 Property, plant and equipment 6,904 6,514 Other non-current assets 10,201 5,574 -------- -------- Total assets 168,792 123,703 ======== ======== Liabilities Current liabilities Accounts payable 8,497 8,540 Accrued liabilities and other current liabilities 3,246 9,753 Income and excess profit taxes payable 3,283 2,052 Current portion of long term debt 24,679 19,778 -------- -------- Total current liabilities 39,705 40,123 Long-term debt 7,333 12,000 Minority interests 34,164 12,099 Other long term creditors 2,081 4,789 -------- -------- Total liabilities 83,283 69,011 -------- -------- Shareholders' equity Share capital 107,230 107,230 Accumulated deficit (21,721) (52,538) -------- -------- Total shareholders' equity 85,509 54,692 -------- -------- -------- -------- Total liabilities and shareholders' equity 168,792 123,703 ======== ======== Chaparral Resources, Inc. Page 4 March 13, 2006 CHAPARRAL RESOURCES, INC. Unaudited Condensed Consolidated Statement of Operations For the Years Ended December 31, 2005 and 2004 Expressed in thousands of U.S. dollars, except per share amounts Year ended Year ended December 31, 2005 December 31, 2004 ----------------- ----------------- Revenue Crude Oil 150,584 78,451 Costs and expenses 70,102 50,280 -------- -------- Income from operations 80,482 28,171 Other income/(expenses) (4,706) (5,065) Minority interest (22,064) (7,464) -------- -------- Income from continuing operations before income taxes 53,712 15,642 Income taxes (22,895) (7,120) -------- -------- Net income 30,817 8,522 ======== ======== Basic earnings per common share $ 0.81 $ 0.22 Fully diluted earnings per common share $ 0.77 $ 0.22 Chaparral Resources, Inc. Page 5 March 13, 2006 CHAPARRAL RESOURCES, INC. Unaudited Condensed Consolidated Statements of Cash Flows For the Years Ended December 31, 2005 and 2004 Expressed in thousands of U.S. dollars 2005 2004 ---- ---- Cash flows from continuing operations Net income 30,817 8,522 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 25,375 18,180 Minority interest 22,064 7,464 Other items (30,828) 10,925 ------- ------- Net cash provided by/(used in) operating activities 47,428 45,091 ------- ------- Cash flows from investing activities Capital expenditure on oil and gas properties and property plant and equipment (31,429) (33,324) Investment in amterials and supplies inventory (2,844) (2,459) ------- ------- Net cash used in investing activities (34,273) (35,783) ------- ------- Cash flows from financing activities Loans received 59,000 7,000 Loans paid (58,988) (9,000) Other non-current assets (1,783) (336) ------- ------- Net cash provided by financing activities (1,771) (2,336) ------- ------- Net increase in cash and cash equivalents 11,384 6,972 Cash and cash equivalents at beginning of year 9,611 2,639 ------- ------- Cash and cash equivalents at end of year 20,995 9,611 ======= ======= Chaparral Resources, Inc. Page 6 March 13, 2006 CHAPARRAL RESOURCES, INC. Reserves estimates, production and sales data Expressed in thousands of barrels Reserves at December 31, Reserves at December 31, 2005 2004 Total proved reserves (net of royalties) 45,331 40,555 Minority interest (18,132) (16,222) Net Chaparral interest in proved reserves 27,199 24,333 Production 3,534 2,835 Sales 3,297 2,758 - ENDS -