Canadian Phoenix Resources Corp.
TSX VENTURE : CXP

Canadian Phoenix Resources Corp.

November 30, 2009 17:48 ET

Canadian Phoenix Releases Third Quarter Results

CALGARY, ALBERTA--(Marketwire - Nov. 30, 2009) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

CANADIAN PHOENIX RESOURCES CORP. (TSX VENTURE:CXP) ("Canadian Phoenix") announces its consolidated results for the three and nine months ended September 30, 2009. The consolidated financial and operational results include Canadian Phoenix and its controlled subsidiary of Serrano Energy Ltd. ("Serrano") (defined as the "Group"). Canadian Phoenix's investment in Marble Point Energy Ltd. ("Marble Point") is reflected in the investment loss and loss for the period.



HIGHLIGHTS For the three months For the nine months
Ended ended
September 30 September 30
($000's except as indicated) 2009 2008 2009 2008
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Average production (boe/d) 931 413 960 237
Average realized price - oil
($/boe) 57.66 99.01 48.16 90.52
Average realized price -
natural gas ($/mcf) 3.01 - 4.22 7.23

P&NG revenue 4,939 3,218 12,621 5,298
Netbacks - $/boe 24.72 46.54 19.57 46.24

Investment loss (2,330) 136 (8,110) 136

Loss for the period 4,576 3,515 24,869 8,695
Per share - basic & diluted $0.00 $0.00 $0.02 $0.01

Funds from Operations 408 468 260 (3,036)

Capital Expenditures, net 270 9,943 7,556 10,138

Cash on hand 208 13,923 208 13,923

Working Capital (Deficiency) (11,395) (29,250) (11,395) (29,250)

Total assets 103,511 228,049 103,511 228,049

Weighted Average Number of
Shares Outstanding 1,131,894 744,210 1,131,894 632,935
Basic & Diluted (000's)

Number of Shares Outstanding
(000's) 1,131,894 1,122,727 1,131,894 1,122,727
Number of Shares Outstanding -
Diluted (000's) 1,839,197 1,917,468 1,839,197 1,917,468


The Corporation's interest in Serrano increased from 47.0% at December 31, 2008 to 54.3% at September 30, 2009. The movement relates to several share issuances and cancellations by Serrano including a transaction with an industry partner requiring the partner to transfer back to Serrano all of the 4,037,344 common shares it held, issuance of shares to settle trade creditors and issuance of shares to a private mezzanine lender as a bonus fee payment for the granting of a credit facility.

Canadian Phoenix's equity investment in Marble Point remains at 56.5%, consistent with December 31, 2008.

For the respective three and nine months ended September 30, 2009 the Group recorded a loss after tax of $4.6 million and $24.9 million. Contributing significantly to the year-to-date loss were the second quarter impairment of property, plant and equipment of $7.7 million and a loss of $8.1 million associated with the Corporation's equity investment in Marble Point. The loss otherwise reflects operating, administrative, and depletion charges in excess of the Group's net revenue from operations of $9.7 million.

At September 30, 2009 the Group had a working capital deficit of $11.4 million, net assets of $78.3 million, and $1.6 million of known capital expenditure commitments. During the third quarter the Group (via Serrano) finalized a mezzanine debt facility in the amount of $8.1 million to alleviate immediate working capital needs, of which $6.4 million had been drawn at September 30, 2009 and the remaining $1.7 million was drawn by October 31, 2009.

The Board of Directors of the Corporation constituted a Special Committee of independent directors to investigate and evaluate strategic alternatives available to the Corporation to maximize shareholder value. Specifically, Serrano has retained Cormark Securities Inc. to act as its exclusive financial advisor to assist with its strategic alternatives process. In addition, the Special Committee will also evaluate strategic alternatives associated with the Corporation's investment in Marble Point as well as those alternatives associated with the oil and natural gas assets held directly. This process may result in Canadian Phoenix diversifying from its current business model, directly distributing assets to shareholders, selling its assets and/or consolidating its assets, all with the goal of maximizing shareholder value.

On November 12, 2009, the shareholders approved a consolidation of the outstanding common shares of the Corporation on the basis of one new share for every 25 old shares. This resulted in 45,275,723 post-consolidated shares being outstanding which started trading on the TSX Venture Exchange on November 17, 2009 under the new trading symbol of "CXP".

Also on November 12, 2009, the shareholders approved amendments to the outstanding share purchase warrants such that the exercise price of the outstanding warrants will be decreased to $0.05 for the first year following the date of the amendment and $0.10 for the balance of the term of the warrants. The expiry of the outstanding warrants was also extended by one year, subject to the accelerated expiry date if certain conditions are met. A meeting of the warrantholders to approve the amendments will be scheduled for a future date and the amendments are still subject to regulatory approval.

Outlook

2009 has been economically difficult for many industries, including the junior oil and gas producers. Energy prices that have not been seen since the late 1990's were recorded this year and reductions in capital spending were reported by companies of all sizes earlier in the year. With a recovery in oil prices and the exchange rate, signs of recovery are appearing as some exploration and production companies report expansions of capital budgets.

To date, consolidated capital activity has been minimal as the Group has worked hard to maintain production, reduce debt, and strengthen the balance sheet. The financial efforts of the Group have been aided by the recovery in oil prices and the decreasing differential for heavy oil resulting in a reduction in the Group's working capital deficit. Capital expenditures in the quarter were concentrated on efficient workovers that resulted in production gains for minimal investment. An updated reserves report for Serrano completed by GLJ Petroleum Consultants with an effective date of October 1, 2009 shows Serrano's net present value of proved and probable reserves, discounted at 10%, to be $73.9 million, an increase of $27 million from December 31, 2008. Additional workovers in the Lloydminster area are planned to continue to improve production and reserve values. On the Blackrod oilsands project, in addition to the $7 million already spent to date, Serrano has received a budget from the operator that projects spending net to Serrano of another $1.6 million to April 2010. Funding for the additional capital will come from both cash flow and available credit facilities. Further capital expenditures in the Group will be evaluated on a case-by-case basis considering cash availability, economic metrics, and strategic positioning.

The Group continues to seek other conventional and alternative methods of financing in order to fund exploration and development activity, as well as general and administrative costs. In general, as liquidity and sources of capital will allow, the Group will continue to maintain its focus on economically viable exploration and development of its oil and gas assets. Project and economic uncertainties will require the Group to seek such activities that attract new capital or can be financed in such a manner that non-cash elements are predominant.

The consolidated financial statements and related MD&A can be found on SEDAR's website at www.sedar.com and the Corporation's website at www.canadian-phoenix.com.

About Canadian Phoenix Resources Corp.

Canadian Phoenix is a publicly-traded junior oil and gas exploration, development and production company with operations in Western Canada. Canadian Phoenix's shares trade on the TSX Venture Exchange under the symbol "CXP".

FORWARD-LOOKING STATEMENTS Certain information set forth in this document, including management's assessment of the ability to secure future credit, the financial viability of its subsidiary, and the ability to raise additional equity, contain forward-looking statements. In particular, forward-looking statements included in this document, include but are not limited to, statements with respect to the approval of future credit, and the financial condition of its subsidiary. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond Canadian Phoenix's control, including the impact of general economic conditions, the lack of availability of qualified personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources. In making such forward-looking statements Canadian Phoenix has made certain assumptions concerning the sufficiency of budgeted capital expenditures in carrying out planned activities; the availability and cost of labour and service; and the receipt of applicable approvals. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. Canadian Phoenix's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that Canadian Phoenix will derive therefrom. Canadian Phoenix disclaims any intention or obligation to update or review any forward-looking statements, whether as a result of new information, future events or otherwise, except as required pursuant to applicable securities laws.

Per barrel of oil equivalent amounts have been calculated using a conversion of six thousand cubic feet of natural gas to one barrel of oil equivalent (6:1). Barrel of oil equivalents (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of 6mcf:1bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Canadian Phoenix Resources Corp.
    Robert Chenery
    Interim President and Chief Executive Officer
    (403) 920-0040
    (403) 920-0043 (FAX)
    or
    Canadian Phoenix Resources Corp.
    Adeline Martin
    Interim Chief Financial Officer
    (403) 705-1192
    (403) 920-0043 (FAX)
    www.canadian-phoenix.com