Grand Banks Energy Corporation
TSX VENTURE : GBE

Grand Banks Energy Corporation

May 24, 2006 16:47 ET

Grand Banks Announces First Quarter 2006 Results

CALGARY, ALBERTA--(CCNMatthews - May 24, 2006) -

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

The first quarter of 2006 has seen Grand Banks Energy Corporation (TSX VENTURE:GBE) continue with its strategy of acquiring and developing land prospective for light oil in the Williston Basin, while participating in high impact joint ventures targeting deeper high deliverability gas reservoirs in Alberta.

Production for the quarter averaged 951 boe/d, which is just over double our Q1 2005 average of 473 boe/d. Over the last year, a key corporate challenge has been to replace production from high deliverability but short reserve life gas reserves brought on stream in early 2005. We have largely accomplished that goal with new light oil production from wells drilled on our lands in the Williston Basin. Our production now consists predominantly of light oil (68%). Our current production rate, with all wells on, is in the 850 boe/d range.

We have amassed a very considerable land position exceeding 20,000 net acres in the Williston Basin, and operate an additional 30,000 gross acres (with a 50% working interest) an exploration farm-in joint venture. We drilled the first earning well on the joint venture lands in February earning 4.0 gross sections of land and gathering important reservoir information from the Middle Bakken Sandstone within the Bakken Viewfield play fairway. The next step in the project will be to drill two Bakken horizontal well starting in late May once our contracted drilling rig is able to move after spring break up.

Following this, we will move the rig to the Sinclair area of Manitoba and eastern Saskatchewan to continue our drilling activity targeting the Bakken/Three Forks play. A number of these wells will be horizontals, at a 100% working interest, which we believe will increase production and reserves.

We continue to operate the drilling of a 5,000 meter Leduc Pinnacle test at Harley (Tower Creek) in which the Corporation has a 16.67% non-reverting working interest. We have successfully run intermediate casing to a depth of 3,900 meters, and continue to drill, ahead of schedule and within budget, and expect to reach total depth before the end of June 2006.



HIGHLIGHTS

------------------------------------------------------------------------
Three Months Ended March 31, 2006 2005 Change
------------------------------------------------------------------------
(000s, except per share amounts) ($) ($) (%)
Financial Results
Gross revenues 4,632 1,921 141
Net loss (425) (282) (51)
Per share - basic (0.01) (0.01) -
Per share - diluted (0.01) (0.01) -
Funds generated from operations (1) 2,803 856 227
Per share - basic 0.09 0.04 125
Per share - diluted 0.09 0.03 200
Additions to property and equipment, net 7,196 6,673 8
Total assets 43,511 30,934 41
Working capital (2,576) 3,805 (168)
Asset retirement obligation 964 477 102
Flow-through share obligations 3,500 7,350 (52)
------------------------------------------------------------------------
(000s) (#) (#) (%)
Share Data
Equity outstanding at March 31,
Common shares 29,790 26,541 12
Stock options 2,965 1,730 71
Warrants - 2,075 (100)
------------------------------------------------------------------------
Fully diluted 32,755 30,346 8
------------------------------------------------------------------------
Sales Volumes (average)
Natural gas (mcf/d) 1,844 2,224 (17)
Crude oil and liquids (bbls/d) 643 98 556
Royalty income (boe/d) - 4 (100)
Average boe/d (6:1) 951 473 101
------------------------------------------------------------------------
Product Prices (average)
Natural gas ($/mcf) 7.80 7.02 11
Crude oil and liquids ($/bbl) 57.21 52.79 8
------------------------------------------------------------------------
($/boe) ($/boe) (%)
Netback Analysis
Oil and gas revenue (6:1) 53.84 44.34 21
Royalty expense 9.20 10.59 (13)
Operating costs 8.09 7.84 3
------------------------------------------------------------------------
Netback 36.55 25.91 41
------------------------------------------------------------------------
------------------------------------------------------------------------

(1) Funds generated from operations is a non-GAAP measure that
represents net income plus depletion, depreciation and amortization,
stock-based compensation, future taxes and other non-cash expenses.
See further discussion under Non-GAAP Measures in the Management's
Discussion and Analysis.


Operations

Sales Volumes

Total sales increased to an average of 951 boe/d in the first quarter of 2006 from an average of 473 boe/d in the first quarter of 2005. The 478 boe/d improvement was due to a 545 bbls/d increase in crude oil and liquids volumes and a 380 mcf/d decrease in natural gas volumes. The increases in oil and liquids resulted mainly from new wells at Kingsford (425 boe/d) in southeast Saskatchewan and from the Sinclair area (82 boe/d) in southwestern Manitoba and southeastern Saskatchewan. The decline in natural gas volumes was primarily due to declines experienced at Blueberry and Bittern Lake, offset by production gains during the period at Virginia Hills and Kakwa in Alberta. All of the Corporation's sales volumes consisted of natural gas and light to medium crude oil, with no heavy oil.

Drilling

During the first quarter of 2006, Grand Banks participated in 9 wells (6.1 net). The Corporation operated 7 of these wells (6.0 net). This program resulted in 5 (4.4 net) oil wells, 2 (0.2 net) standing wells and 2 (1.5 net) dry holes, for an average 78% (75% net) success rate. By March 31, 2006, all the oil wells had been brought on production.

For a copy of Grand Bank's 2006 financial statements and management discussion and analysis please visit www.sedar.com.

Grand Banks is listed on the TSX-Venture Exchange under the Symbol GBE.

FORWARD LOOKING STATEMENTS

This press release contains forward-looking statements including expectations of future production. 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.

BOEs 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.

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

Contact Information

  • Grand Banks Energy Corporation
    E.C. (Ted) McFeely
    Chairman, President and Chief Executive Officer
    (403) 262-8666
    (403) 262-8796 (FAX)
    or
    Grand Banks Energy Corporation
    1600, 444 - 5th Avenue S.W.
    Calgary, Alberta T2P 2T8