FieldPoint Petroleum Corp. (FPPP)

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Form 10-Q for FIELDPOINT PETROLEUM CORP


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14-Aug-2008

Quarterly Report



MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion should be read in conjunction with the Company's Condensed Consolidated Financial Statements, and respective notes thereto, included elsewhere herein. The information below should not be construed to imply that the results discussed herein will necessarily continue into the future or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of the management of FieldPoint Petroleum Corporation.

General

FieldPoint Petroleum Corporation derives its revenues from its operating activities including sales of oil and natural gas and operating oil and natural gas properties. The Company's capital for investment in producing oil and natural gas properties has been provided by cash flow from operating activities and bank financing. The Company categorizes its operating expenses into the categories of production expenses and other expenses.

Comparison of Three Months Ended June 30, 2008 to the Three Months Ended June 30, 2007

Results of Operations

Total revenues increased 101% or $1,005,131 to $2,000,192 for the three month period ended June 30, 2008 from the comparable 2007 period. This was due primarily to the overall increase in oil and natural gas sales pricing.
Production volumes increased 9% on a BOE basis. Average oil sales prices increased 82% to $120.01 for the three-month period ended June 30, 2008 compared to $65.89 for the three-month period ended June 30, 2007. Average natural gas sales prices increased 64% to $8.88 for the three month period ended June 30, 2008 compared to $5.42 for the three month period ended June 30, 2007.


Quarter Ended June 30,
2008 2007
Oil Production 14,009 11,277
Average Sales Price Per Bbl ($/Bbl) $ 120.01 $ 65.89

Natural Gas Production 31,754 38,765
Average Sales Price Per Mcf ($/Mcf) $ 8.88 $ 5.42
Lifting cost per BOE $ 31.90 $ 21.60




Production expenses increased 64% or $240,781 to $615,656 for the three month period ended June 30, 2008 from the comparable 2007 period. This was primarily due to the increase in new wells acquired and costs associated with mature field production, with additional workovers expense and remedial repairs in the 2008 period. Depletion and depreciation increased 34% or $71,000 to $280,000 for the three month period ended June 30, 2008 versus the comparable 2007 period. This was primarily due to additional properties we acquired in the December 2007 period. As a result of additional wells lifting costs per BOE increased 48% or $10.30 to $31.90 for the three months ended June 30, 2008. General and administrative overhead cost decreased 23% or $37,655 to $127,603 for the three month period ended June 30, 2008 from the three month period ended June 30 2007.
This was primarily due to the collection of a reserved joint interest billing receivable and reversal of the associated allowance of $44,624 offset slightly by an overall increase in administrative expenses and salaries in the 2008 period.



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Interest expense increased $25,048 to $42,596 for the three month period ended June 30, 2008 from $17,548 for the comparable 2007 period due to $3,489,125 in total bank financing outstanding in the 2008 period as compared to $1,000,000 in total bank financing outstanding in the 2007 period.
Comparison of Six Months Ended June 30, 2008 to the Six Months Ended June 30, 2007

Results of Operations

Total revenues increased 85% or $1,612,741 to $3,509,314 for the six month period ended June 30, 2008 from $1,896,573 for the comparable 2007 period due to the overall increase in oil and natural gas prices. Production volumes increased 8% on a BOE basis. Average oil sales prices increased 74% to $106.65 for the six month period ended June 30, 2008 compared to $61.19 for the six month period ended June 30, 2007. Average natural gas sales prices increased 43% to $7.90 for the six month period ended June 30, 2008 compared to $5.51 for the six month period ended June 30, 2007.


Six Months Ended June 30,
2008 2007
Oil Production 27,382 22,797
Average Sales Price Per Bbl ($/Bbl) $ 106.65 $ 61.19

Natural Gas Production 65,125 75,449
Average Sales Price Per Mcf ($/Mcf) $ 7.90 $ 5.51
Lifting cost per BOE $ 27.23 $ 19.74




Production expenses increased 53% or $359,798 to $1,041,299 for the six month period ended June 30, 2008 from the comparable 2007 period. This was primarily due to the increase in new wells acquired and costs associated with workovers and remedial repairs for the period ended June 30, 2008. Depletion and depreciation expense increased 27% to $545,000, compared to $429,000 for the comparable 2007 period. This was primarily due to the addition of the Sulimar property we acquired in December 2007. As a result of additional wells lifting costs per BOE increased 38% or $7.49 to $27.23 for the six months ended June 30, 2008. General and administrative overhead cost decreased 7% or $20,324 to $289,858 for the six month period ended June 30, 2008 from the six month period ended June 30, 2007. This was attributable primarily due to the collection of a reserved joint interest billing receivable and reversal of the associated allowance of $44,624 offset slightly by an overall increase in administrative expenses and salaries in the 2008 period.

Interest expense increased $57,224 to $95,224 for the six month period ended June 30, 2008 from $38,000 for the comparable 2007 period due to the additional bank financing obtained in the second half of 2007.

Liquidity and Capital Resources

Cash flow provided by operating activities was $1,502,677 for the six month period ended June 30, 2008, as compared to cash flow provided by operating activities of $796,375 in the comparable 2007 period. The increase in cash flows from operating activities was primarily due to an increase in net income.

Cash flow used in investing activities was $1,481,236 for the six month period ended June 30, 2008 as compared to $55,828 used in investing activities for the comparable period ended June 30, 2007. This was primarily due to the acquisition of oil and natural gas properties in 2008.



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Cash flow provided by financing activities for the six months ended June 30, 2007, resulted primarily from the exercise of stock options and the related income tax effects. There were no financing activities during the six months ended June 30, 2008, as we had no outstanding exercisable stock options during the period, nor did we require additional borrowings under our revolving credit arrangement.