May 27, 2009 17:42 ET

Colonia Energy Corp. Posts Steady First Quarter Results

CALGARY, ALBERTA--(Marketwire - May 27, 2009) -


COLONIA ENERGY CORP. ("Colonia" or, the "Company") (TSX VENTURE:CLA) released today its unaudited financial statements for the three month period ended March 31, 2009.

Against a backdrop of continued contraction in the western Canadian oil and gas industry where benchmark prices for both oil and gas decreased a further 25% from the prior quarter, Colonia posted steady results. Production for the quarter averaged 139 BOE per day, 1% lower than the prior quarter. A well purchased in late March 2009 added an additional 15 bopd to the corporate production at the end of the reporting period.

Cash flow for the quarter was $276,000, down 5% from the fourth quarter of 2008 and off 66% from the $812,000 achieved in the first quarter of 2008. The differences are almost exclusively attributable to the outstanding revenue and field netback values achieved in Q1 2008 of $85.67 and $64.28 per BOE respectively, as compared to the significantly more modest metrics of $44.17 and $31.00 respectively for Q1 2009. The Company showed a loss of $41,000 for the quarter compared to earnings of $355,000 for the corresponding period the year prior. Based upon current production levels of more than 160 BOE per day and significantly improved oil prices to date in the second quarter of 2009, the Company expects to report a marked improvement in cash flow and earnings for our next reporting period.

The Company's working capital at the end of the current quarter stands at $540,000, versus a year previous value of $535,000. Our bank line of credit remained un-drawn at the end of each of those reporting periods.

The Company's prospect inventory has never been stronger and contains more than half a dozen potential locations, each with an expectation of yielding 100 BOE per day or more. Going forward, Colonia believes that the outlook for our industry is sufficiently stable and predictable to allow the Company to participate in several impact operations in the latter half of 2009.

Colonia has concentrated its asset base exclusively on light oil properties, primarily in southeast Saskatchewan. The Company's solid and growing inventory of mainly Bakken and Midale light oil prospects, a pristine balance sheet, and sharply recovering oil prices of late are factors that will permit the Company to be amongst the first to reinstate the pattern of growth that was disrupted by the world economic events of mid-2008.


This news release contains forward looking statements which may include assumptions related to the Company's drilling success, production, capital expenditures and cash flow. These statements are based on current expectations that involve a number of risks and uncertainties which could cause actual results to vary from those anticipated.

BOE Presentation - The term barrels of oil equivalent (BOE) may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All BOE conversions in this report are derived by converting gas to oil in the ratio of six mcf of gas to one bbl of oil.

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

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