Exceed Energy Inc.
TSX VENTURE : EX.A
TSX VENTURE : EX.B

Exceed Energy Inc.

May 29, 2006 18:17 ET

Exceed Energy Inc. Presents Its Financial and Operating Results for the Period Ended March 31, 2006

CALGARY, ALBERTA--(CCNMatthews - May 29, 2006) - Exceed Energy Inc. (TSX VENTURE:EX.A) (TSX VENTURE:EX.B) ("Exceed" or the "Company") presents its financial and operating results for the three month period ended March 31 2006, and announces that it has filed its financial statements, Management's Discussion and Analysis with Canadian securities regulators. These documents are available for viewing at www.sedar.com or at the company's website at www.exceedenergy.com.

First Quarter Highlights

- Exceed tied-in 4 wells during the quarter.

- Exceed's average production in the first quarter was 218 BOE/D.

- 9-35 at Spruce Grove commenced production at 83 BOE/D.

- Exited 2005 with cash position of $ 2,460,153.

- One well was drilled in the quarter that being a farm-in well on Exceed's Bashaw lands.

Current Activity

The first quarter of 2006 was committed to completing and building facilities for wells drilled in Q4 2005. Exceed's average production in the first quarter was 218 BOE/D. In the first quarter average monthly production peaked at 282 BOE/D in March.

In the first quarter one well was drilled on a farm-in basis on the Company's Bashaw lands and was successfully completed in a Glauconitic channel. The well is awaiting tie-in. Exceed is in an override position until payout and a working interest thereafter. It is expected the well will commence production in Q2 2006.

Outlook

Exceed is prospect and project rich with 16 projects under development and exploration. Activity will increase significantly between June 2006 and the end of the year during which time the Company expects to drill 10 to 20 wells. The Company has a capital budget of $4.1 million for the remainder of 2006. Exceed holds 374 sections in gross lands, and 100 sections in net lands in Western Canada (a significant portion of these lands are at the Foam Lake property in Saskatchewan).

Our primary producing and development areas are Spruce Grove, Golden Spike, Camao, Radway, Cereal, Phoenix, Mitsue and Bashaw. Four of these properties have significant development and step-out drilling opportunities that the Company will be aggressively pursuing in 2006.

Exploration and exploitation projects include Roxana, Grande Prairie, Willesden Green, Sounding Lake, Foam Lake, Little Bow, Virginia Hills, and Big Bend. In the coming months the Company's drilling exposure to oil plays is 70% and 30% to gas plays.

Specifically, Exceed expects to drill two wells at Roxana at 25% working interest and one well at 50% working interest. The Company will drill two or more development wells in its Spruce Grove oil pool at a working interest of 20% each. One or two wells (50% w.i. each) will be drilled in Cereal, and one exploration well will be drilled at Sounding Lake (40% w.i.). Two wells (25% w.i. each) will likely be drilled at Foam Lake in Saskatchewan in the later half of 2006. The Company anticipates adding additional locations not yet specified to its drilling program later in the year at Spruce Grove, Cereal, Bashaw, Little Bow, and Big Bend.

Exceed has completed its initial consolidation phase post the refinancing and management team change and is now positioned for growth through exploration and acquisition through the later half of 2006.

The Company has adequate financial resources to make modest acquisitions, but will need to raise additional funds to make sizable acquisitions. The Company has examined some acquisition opportunities in Q1 2006 but in each case determined that the pricing was too excessive. However, the Company will continue its efforts to make acquisitions that we considers attractively priced.




Selected financial information

------------------------------------------------------------------------
Three month Three month
period ended period ended
Financial data March 31, 2006 March 31, 2005
------------------------------------------------------------------------

Oil and natural gas revenue $ 911,071 $ 414,795

Oil and natural gas revenue,
net of royalties $ 643,607 $ 324,919
Operating expense 105,094 94,249
------------------------------------------------------------------------
Net operating income $ 538,513 $ 230,670

Net loss $ (426,205) $ (87,829)
Per share, basic (0.01) (0.00)
Per share, diluted (0.01) (0.00)
Cash flow from operations (non GAAP) $ 368,088 $ 47,672
Per share, basic (non GAAP) 0.01 0.00
Per share, diluted (non GAAP) 0.01 0.00
------------------------------------------------------------------------
------------------------------------------------------------------------


March 31, 2006 December 31, 2005
------------------------------------------------------------------------
Total assets $ 13,142,152 $ 13,482,422
Total liabilities $ 4,625,326 $ 4,659,517

Share capital data
Number of class A common shares 35,362,420 21,076,706
Number of class B common shares 852,125 852,125
Number of options outstanding 1,870,000 1,265,833
Average exercise price $ 0.20 $ 0.38
Number of options exercisable 0 320,278
------------------------------------------------------------------------
------------------------------------------------------------------------


Forward Looking Statements

This press release contains forward-looking statements including expectations of future production, cash flow and earnings. These statements are based on current expectations that involve a number of risks and uncertainties, which could cause actual results to differ from those anticipated. These risks include, but are not limited to: the risks associated with the oil and gas industry (e.g. operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projects relating to production, costs and expenses, and health, safety and environmental risks), commodity price, price and exchange rate fluctuations and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. The Company has also used certain measures of financial reporting that are commonly used as benchmarks within the oil and natural gas production industry. The measures discussed are widely accepted measures of performance and value within the industry, and are used by analysts and investors to compare and evaluate oil and natural gas exploration and producing entities. Most notably, these measures include operating netback and cash flows from operations. Operating netback is a benchmark used in the crude oil and natural gas industry to measure the contribution of oil and natural gas sales subsequent to the deduction of royalties and operating costs. Cash flow from operations is before changes in non-cash working capital and site restoration expenditures, and is used to analyze operations, performance and liquidity. These measures are not defined under GAAP and should not be considered in isolation or as an alternative to conventional GAAP measures. These measures and their underlying calculations are not necessarily comparable to a similarly titled measure of another entity. When these measures are used, they are defined as "non GAAP" and should be given careful consideration by the reader. The term barrels of oil equivalent ("BOE") may be misleading, particularly if used in isolation. A BOE conversion ratio for natural gas of 6:1 has been used by the Company, which is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value of equivalency at the wellhead. All BOE conversions in this report are derived by converting natural gas to crude oil in the ratio of six thousand cubic feet of natural gas to one barrel of crude oil. Additional information on these and other factors that could affect Exceed's operations or financial results are included in Exceed's reports on file with Canadian securities regulatory authorities that may be accessed at www.sedar.com or through the Company's website, www.exceedenergy.com.



Exceed Energy Inc.
Balance Sheets


March 31, 2006 December 31, 2005
------------------------------------------------------------------------
Assets (Unaudited) (Audited)

Current assets
Cash and short term investments $ 2,460,153 $ 2,859,061
Accounts receivable 618,923 459,374
Prepaid expenses and deposits 176,810 73,208
------------------------------------------------------------------------
3,255,886 3,391,643

Property and equipment (Note 3) 9,886,266 10,090,779
------------------------------------------------------------------------

$ 13,142,152 $ 13,482,422
------------------------------------------------------------------------
------------------------------------------------------------------------

Liabilities and Shareholders' Equity

Current liabilities
Accounts payable and accrued
liabilities $ 1,046,274 $ 1,005,148

Debenture payable (Note 5) 1,898,004 1,864,687
Asset retirement obligation 280,538 272,214
Future income tax 1,400,510 1,517,468
------------------------------------------------------------------------
4,625,326 4,659,517

Shareholders' equity
Equity instruments (Note 6) 13,259,275 13,259,275
Equity portion of convertible
debenture 114,100 114,100
Contributed surplus 352,026 231,900
Deficit (5,208,575) (4,782,370)
------------------------------------------------------------------------
8,516,826 8,822,905
------------------------------------------------------------------------
$ 13,142,152 $ 13,482,422
------------------------------------------------------------------------
------------------------------------------------------------------------

Indemnifications and contingencies (Note 13)
The accompanying notes are an integral part of these financial
statements.



Exceed Energy Inc.
Statements of Operations and Deficit

------------------------------------------------------------------------
Three month Three month
period ended period ended
March 31, 2006 March 31, 2005
------------------------------------------------------------------------
(Unaudited) (Unaudited)
Revenue
Oil and natural gas sales $ 911,071 $ 414,795
Royalty expense (294,395) (97,306)
Alberta Royalty Tax Credit 26,931 7,430
Interest 13,832 8,974
------------------------------------------------------------------------
657,439 333,893
Expenses
Operating 105,094 94,249
General and administrative 254,662 198,840
Interest (Note 4 and 5) 49,721 19,106
Depletion, depreciation and
amortization (Note 3) 749,484 138,029
Accretion of asset retirement obligation 8,324 1,662
Accretion of debenture issue costs 11,617 -
Accretion of debebture obligation 21,700 -
------------------------------------------------------------------------
1,200,602 451,886
------------------------------------------------------------------------

Loss before taxes (543,163) (117,993)

Taxes
Future tax recovery (116,958) (30,164)
------------------------------------------------------------------------

Net loss for the period (426,205) (87,829)
------------------------------------------------------------------------

Deficit, beginning of period (4,782,370) (4,440,290)

Deficit, end of period $ (5,208,575) $ (4,528,119)
------------------------------------------------------------------------

Net loss per common share (Note 6)
Basic and diluted $ (0.01) $ (0.00)
------------------------------------------------------------------------
------------------------------------------------------------------------

The accompanying notes are an integral part of these financial
statements.



Exceed Energy Inc.
Statements of Cash Flows

------------------------------------------------------------------------
Three month Three month
period ended period ended
March 31, 2006 March 31, 2005
------------------------------------------------------------------------
(Unaudited) (Unaudited)
Cash provided by (used in)
Operating Activities
Net loss for the period $ (426,205) $ (87,829)
Items not requiring cash
Depletion, depreciation
and amortization 749,484 138,029
Accretion of asset retirement
obligation 8,324 1,662
Accretion of debenture issue cost 11,617 -
Accretion of debenture obligation 21,700 -
Future tax recovery (116,958) (30,164)
Stock based compensation 120,126 25,974
------------------------------------------------------------------------
368,088 47,672
Change in non-cash working capital
(Note 9) (49,334) 185,215
------------------------------------------------------------------------
318,754 232,887
Financing Activities
Issue of share capital,
net of costs - (925)
Change in non-cash working
capital balances related to
financing activities (Note 9) (60,387) -
------------------------------------------------------------------------
(60,387) (925)
Investing Activities
Additions to property and equipment (544,971) (1,248,679)
Change in non-cash working capital
balances related to investing
activities (Note 9) (112,304) (1,480,825)
------------------------------------------------------------------------
(657,275) (2,729,504)

Decrease in cash and short-term
investments (398,908) (2,497,542)

Cash and short-term investments,
beginning of period 2,859,061 3,258,757
------------------------------------------------------------------------

Cash and short-term investments,
end of period $ 2,460,153 $ 761,215
------------------------------------------------------------------------

Cash interest payments $ 49,721 $ 216,810
------------------------------------------------------------------------
------------------------------------------------------------------------

The accompanying notes are an integral part of these financial
statements.



The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Exceed Energy Inc.
    Richard Wolfli
    President and CEO
    (403) 508-1853
    (403) 508-1781 (FAX)
    Website: www.exceedenergy.com