WHITE PLAINS, NY, May 11 /PRNewswire-FirstCall/ -- Chaparral Resources, Inc. (OTCBB: CHAR) (the "Company") today announced its financial results for the first quarter 2006. The Company reported net income of $9.86 million, or 26 cents per share, for the quarter ended March 31, 2006, compared to $3.83 million, or 10 cents per share, for the quarter ended March 31, 2005. The $6.02 million increase in Chaparral's net income primarily relates to higher revenues as a result of higher prices and higher sales volumes achieved during the first quarter of 2006. Revenues were $53.45 million for the first quarter of 2006 compared with $24.33 million for the first quarter of 2005. The $29.12 million increase is the result of higher crude prices achieved during the first quarter of 2006 as compared to the same period of 2005, and also due to higher sales volumes. During the first quarter of 2006, we sold approximately 962,000 barrels of crude oil, recognizing $53.45 million in revenue, or $55.56 per barrel after quality differential losses. Comparably, we sold approximately 679,000 barrels of crude oil, recognizing $24.33 million in revenue, or $35.82 per barrel, for the first quarter of 2005. The result is a positive price variance of $18.98 million and a favorable volume variance of $10.14 million. The increase in revenues for the quarter was offset by increased transportation costs, administrative costs, minority interests and tax charges. The Company has also incurred $4.43 million of Excess Profits Tax payable in the Republic of Kazakhstan in the quarter ended March 31, 2006. There was no corresponding charge in the first quarter of 2005. The Company's development of the Karakuduk Field requires substantial cash expenditures for drilling, well completions, workovers, oil storage and processing facilities, pipelines, gathering systems, water injection facilities, plant and equipment (pumps, transformer sub-stations etc.) and gas utilization. We have invested approximately $190 million in the development of the Karakuduk Field as at March 31, 2006. Total capital expenditures for the first quarter of 2006 were approximately $5 million. Capital expenditures are estimated to be approximately $170 million from 2006 through 2010, including the drilling of approximately 60 more wells over this period. We anticipate 2006 capital expenditures of approximately $53 million. During 2006, the Company expects to increase production by drilling 12 new wells, converting further wells to artificial lift and adding further water injection wells. On January 24, 2006 the Company announced a temporary suspension of drilling activities at the field, following the decision of the previous drilling contractor to demobilize their rig. Having conducted a competitive tender we have now identified a further two rigs and are currently negotiating commercial terms. It is hoped that two rigs will be operating at the field from early in the third quarter of the year. Production for the first quarter of 2006 was 994,000 barrels, equivalent to approximately 11,000 barrels of oil per day ('bopd"), compared to 1,106,000 barrels, or approximately 12,000 bopd, in the final quarter of 2005 and 8,700 bopd for the first quarter of 2005. The small reduction in production since the final quarter of 2005 is due, in part, to the suspension of drilling activities and, in part, due to the reduction of water injection into the reservoir. An average daily oil production rate of approximately 13,400 barrels per day is expected in 2006. During winter the weather at the field was very much colder than is usual and this adversely impacted all operations and field production. As previously reported drilling was also suspended in January. As a result, for the first quarter of 2006, the Company completed only two wells. The total well count is now 81 wells, with 61 producing wells, nine water injection wells and eleven wells temporarily shut-in. The Company will continue with the development of the Karakuduk Field throughout the remainder of 2006. By the end of the third quarter we hope to have two, possibly even three drilling rigs operational at the field. The Company forecasts that up to 10 further wells will be drilled, with a total program of some 38,400 meters expected to be drilled during the year. Boris Zilbermints, Chief Executive Officer of Chaparral, commented, "The positive results of the first quarter reflect the hard work and technical expertise of our staff as well as the global increase in oil prices. On the other hand, the harsh winter weather as well as the delays with our drilling program and imposition of the Kazakh Excess Profits Tax has adversely impacted our results." Chaparral Resources, Inc. is an oil and gas development and production company. The Company's only operating asset is its participation in the development of the Karakuduk Field, in the Republic of Kazakhstan, through KKM, which is the operating company. The Company has directly and indirectly a 60% ownership interest in KKM with the other 40% ownership interest being held by Caspian Investments Resources Limited ("Caspian"). Caspian, an indirect subsidiary of OAO LUKOIL ("LUKOIL"), holds a majority interest in the Company. LUKOIL is one of the world's leading vertically integrated oil & gas companies. The main activities of LUKOIL are exploration and production of oil & gas, production of petroleum products and petrochemicals, and marketing of these outputs. Most of the LUKOIL's exploration and production activity is located in Russia, and its main resource base is in Western Siberia and most of the production is sold on the international market. LUKOIL petroleum products are sold in Russia, Eastern Europe, CIS countries and the USA. LUKOIL is the second largest private oil Company worldwide by proven hydrocarbon reserves. It has around 1.3% of global oil reserves and 2.1% of global oil production. LUKOIL dominates the Russian energy sector, with 18% of total Russian oil production and 18% of total Russian oil refining. More information is available on the Company's web site, http://www.chaparralresources.com/. Information Regarding Forward-Looking Statements: Except for historical information contained herein, the statements in this News Release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Company's actual results in future periods to differ materially from forecasted results. These risks and uncertainties include, among other things, volatility of oil prices, product demand, market competition, risks inherent in the Company's international operations, imprecision of reserve estimates and Chaparral's ability to replace and expand oil and gas reserves. These and other risks are described in the Company's Annual Report on Form 10-K and other filings with the Securities and Exchange Commission. FINANCIAL HIGHLIGHTS -------------------- ($000, except share data) Quarter Ended March 31 -------------------------- 2006 2005 ------------ ----------- Revenue 53,450 24,327 Cost and expenses (20,630) (14,103) Excess Profits Tax (4,426) - Other income/(expense) (607) (1,132) Minority interests (7,729) (2,822) Income tax expense (10,200) (2,436) Net income available to common ------------ ----------- stockholders 9,858 3,834 ------------ ----------- ------------ ----------- Basic earnings per share: Net income per share $ 0.26 $ 0.10 Weighted average number of shares outstanding (basic) 38,209,502 38,209,502 Diluted earnings per share: Net income per share $ 0.24 $ 0.10 Weighted average number of shares outstanding (diluted) 40,541,941 39,117,455 DATASOURCE: Chaparral Resources, Inc. CONTACT: Jan Moir, 1-866-599-3822

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