Exall Energy Corporation
TSX : EE

Exall Energy Corporation

August 12, 2009 09:00 ET

Exall Energy Corporation Announces Results for the Three and Six Months Ended June 30, 2009

CALGARY, ALBERTA--(Marketwire - Aug. 12, 2009) - Exall Energy Corporation (TSX:EE) ("Exall" or the "Company") is pleased to announce financial and operating results for the three and six months ending June 30, 2009.

Exall achieved additional significant goals during the second quarter of 2009.

Highlights include:

- Received approval of enhanced oil recovery scheme and granted Good Production Practice at the Marten Mountain 14-1 well,

- Production averaged 251 boe per day in the second quarter and 470 boe per day in the first half of 2009, a 123 percent increase over the first half of 2008,

- Initiated water source and injection well workovers to implement enhanced recovery scheme.



FINANCIAL Three months ended June 30 Six months ended June 30
HIGHLIGHTS % %
2009 2008 change 2009 2008 change
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Financial ($)
Gross revenue 1,015,700 1,666,845 (39) 3,971,361 3,328,586 19
Funds from
operations 115,950 765,410 (85) 1,239,062 1,609,592 (23)
Basic and
diluted per
share - 0.02 - 0.03 0.04 25
Net income (loss) (642,771) 176,840 - (1,587,380) 390,139 -
Basic and
diluted per
share (0.01) - - (0.03) 0.01 -
Capital
expenditures,
net 59,468 1,360,891 (96) 592,484 3,930,900 (85)
Net debt - - - 5,427,283 2,706,020 101
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Operations
Daily production:
Crude oil (bbl) 133 91 46 354 107 231
Natural gas
liquids (bbl) 11 14 (20) 12 15 (17)
Natural gas (mcf) 642 548 17 620 534 16
Total daily
production
(boe @ 6:1) 251 196 28 470 211 123
Netback per
boe (6:1) ($) 24.02 58.36 (59) 23.96 53.64 (55)
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Overview

Production averaged 470 boe per day during the first half of 2009, an increase of 123% over the previous year, primarily due to the drilling success at Marten Mountain in the Mitsue area of Alberta during the last quarter of 2008. Production for the second quarter declined from 690 boe per day in the first quarter of 2009 to 251 boe per day because the 7-12-75-6W5 well was shut in at the end of March as it had produced the well's allowable production through September, and the 14-1 well was restricted to a daily allowable production rate of 148 (90 net) barrels of oil per day. The Company has received approval for Waterflood Project status and Good Production Practice (GPP), which will allow higher production rates from the 14-1 well. Workover operations have begun on the water source and injection wells and equipping of the 14-1 production well for higher rates. The issues which caused delay in the approval of the pipeline and battery facilities have been resolved and the Company is awaiting final regulatory approval to start construction. Completion of the construction projects and increased production rates are expected toward the end of the third quarter of 2009. Application for waterflood and GPP approval for the 7-12 well will be made once water injection has been initiated under the current approval. The 7-12 well will be back on production at a restricted daily allowable rate of 148 (98 net) barrels of oil per day in October of 2009 with unrestricted production commencing with waterflood and GPP approval.

Results of Operations

Funds from operations for the first half of 2009 are $1.2 million or $0.03 per share and were the result of production increasing to average 470 boe per day and reduced operating costs per boe, but were negatively impacted by significantly lower commodity prices than in the prior year. Net loss for the first half of 2009 was $1.6 million or $0.03 per share.

As planned, the Company spent only $0.6 million on capital expenditures while planning and doing minor field work on the waterflood project at Marten Mountain.

Outlook

During Q2 2009 Exall received approval for the waterflood and Good Production Practice for the Marten Mountain project. Exall is currently focused on the waterflood project and the design and permitting of the pipeline and battery facilities in the area. The Company expects to have final approvals for the project and, depending on weather, to complete construction in the third quarter of 2009.

Exall has also continued preparation of a second surface location for the drilling of up to five wells along the extension of the Marten Mountain channel trend beginning in the fourth quarter of 2009. The Company plans to drill the wells as horizontal development wells from a single pad. The recent approval of the routing of a large-diameter pipeline through the Marten Mountain project area by a major pipeline company may result in substantial cost savings in accessing future drilling locations. The proposed pipeline would share a portion of the proposed northern extension right-of-way which would result in a smaller cumulative environmental footprint as well as cost benefits.

With the recent approval in hand the Company is on track for significant production growth in the future as shown by the production results in the first half of 2009. Exall is a light oil-weighted company with high operating margins.

About Exall

Exall Energy Corporation is a junior oil and gas company active in its business of oil and gas exploration, development and production from its properties in Alberta, British Columbia and Texas. Exall is currently developing a new oil discovery in north-central Alberta.

The Company currently has 45,921,227 common shares outstanding. The Company's common shares are listed on the Toronto Stock Exchange under the trading symbol EE.

Reader Advisory

Certain selected financial and operational information for the three and six months ended June 30, 2009 is set out above and should be read in conjunction with the financial statements and related management's discussion and analysis (MD&A) for the three and six months ended June 30, 2009, the audited financial statements and related MD&A for the three months and year ended December 31, 2008 as well as the Company's Annual Information Form for the year ended December 31, 2008. These documents are filled on SEDAR at www.sedar.com and on the Company's website at www.exall.com.

This news release contains forward-looking statements, which are subject to certain risks, uncertainties and assumptions, including those relating to results of operations and financial condition, capital spending, financing sources, commodity prices and costs of production. By their nature, forward-looking statements are subject to numerous risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, actual results may differ materially from those predicted. A number of factors could cause actual results to differ materially from the results discussed in such statements, and there is no assurance that actual results will be consistent with them. Such factors include fluctuating commodity prices, capital spending and costs of production, and other factors described in the Company's most recent Annual Information Form under the heading "Risk Factors" which has been filed electronically by means of the System for Electronic Document Analysis and Retrieval ("SEDAR") located at www.sedar.com. Such forward-looking statements are made as at the date of this news release, and the Company assumes no obligation to update or revise them, either publicly or otherwise, to reflect new events, information or circumstances, except as may be required under applicable securities law.

For the purposes of calculating unit costs, natural gas has been converted to a barrel of oil equivalent (boe) using 6,000 cubic feet equal to one barrel (6:1), unless otherwise stated. The boe conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method and does not represent a value equivalency; therefore boe may be misleading if used in isolation. This conversion conforms to the Canadian Securities Regulators' National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities.

Contact Information

  • Exall Energy Corporation
    Frank S. Rebeyka
    Vice Chairman & CEO
    403-815-6637
    or
    Exall Energy Corporation
    Roger N. Dueck
    President & COO
    403-237-7820 x 223
    info@exall.com
    www.exall.com