Petro-Reef Resources Ltd.
TSX VENTURE : PER

Petro-Reef Resources Ltd.

August 25, 2010 18:00 ET

Petro-Reef Resources Ltd. Announces Q2- 2010 Financial and Operational Results

CALGARY, ALBERTA--(Marketwire - Aug. 25, 2010) - Petro-Reef Resources Ltd. (TSX VENTURE:PER),

Petro-Reef Resources Ltd. ("Petro-Reef" or the "Corporation") is pleased to release its Q2 - 2010 financial statements and management discussion and analysis. Access to Petro-Reef's Q2 – 2010 results may be obtained at www.sedar.com or www.petro-reef.ca.

Q2 – 2010 Highlights:

  • Gross revenue of $2,469,290– 18.0% increase from Q2 – 2009
  • Cash flow from operations of $929,504 – 50.1% increase from Q2 – 2009
  • Cash flow per share of $0.02 – 30.6% increase from Q2 - 2009
  • Average production of 794 boe/d – 6.2% decrease from Q2 – 2009
  • Operating costs on a per unit of production basis of $10.40 – 15.6% decrease from Q2 – 2009
  • Royalty rate of 11.2% as production shifts to lands which attract Freehold royalties as compared to Crown royalties

As a result of spring break-up, Petro-Reef did not drill any new wells during the quarter. As a result, capital expenditures were limited to facility expansions including preliminary work towards the construction of Petro-Reef's new amine facility.

Subsequent to the end of the quarter, Petro-Reef announced it had received approval for the construction of a 4.0 mmcf/d amine facility in its core area of Alexander. The construction of the facility, which is scheduled to be completed by mid September, will allow Petro-Reef to bring approximately 300 boe/d, including 200 bbls/d of crude oil onstream. Petro-Reef estimates with the additional production volumes, cash flow will double as the incremental production does not require a substantial increase in cash expenses. The well that is currently standing behind pipe will attract freehold royalties, which will result in a maximum royalty rate of approximately 10.0% for the well, as compared to a maximum rate of 50.0% for production on lands which attract Crown royalties. Petro-Reef has identified three follow-up oil locations, all of which are on freehold lands, targeting the same highly prolific oil zone which it intends to drill upon the completion of the amine facility.

Forward-Looking Statements: All statements, other than statements of historical fact, set forth in this news release, including without limitation, assumptions and statements regarding reservoirs, resources and reserves, future production rates, exploration and development results, financial results, and future plans, operations and objectives of the Corporation are forward-looking statements that involve substantial known and unknown risks and uncertainties. Some of these risks and uncertainties are beyond management's control, including but not limited to, the impact of general economic conditions, industry conditions, fluctuation of commodity prices, fluctuation of foreign exchange rates, environmental risks, industry competition, availability of qualified personnel and management, availability of materials, equipment and third party services, stock market volatility, timely and cost effective access to sufficient capital from internal and external sources. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable by the Corporation at the time of preparation, may prove to be incorrect. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements.

Reference is made to barrels of oil equivalent (boe). Barrels of oil equivalent may be misleading, particularly if used in isolation. In accordance with National Instrument 51-101, a boe conversion ratio for natural gas of 6 Mcf: 1 bbl has been used, which 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 news release.

Contact Information

  • Petro-Reef Resources Ltd.
    John Pantazopoulos
    Vice-President Finance and CFO
    (403) 265-6444
    (403) 264-1348 (FAX)
    or
    Petro-Reef Resources Ltd.
    970, 10655 Southport Road S.W.
    Calgary, Alberta T2W 4Y1
    info@petro-reef.ca
    www.petro-reef.ca