Point North Energy Ltd.
TSX : PNY

Point North Energy Ltd.

May 15, 2006 16:10 ET

Point North Announces Q1 2006 Financial and Operating Results and Considers Strategic Alternatives

CALGARY, ALBERTA--(CCNMatthews - May 15, 2006) - Point North Energy (TSX:PNY) has now completed its first full quarter of operations for those assets not sold or transferred as part of the "Purcell Plan of Arrangement", which was effective on November 2, 2005.

During the first three months of 2006, Point North's capital and attention were focused on non-operated joint venture activity in Fort Liard, NT. A new production tubing and packer system was installed in well K-29A to isolate various sections of the well bore from water influx. Testing of the well proved inconclusive and was not completed due to downhole issues and a time constraint imposed by the decommissioning of the ice bridge during spring. Further action on this well may be recommended once all test results and options have been evaluated. At well 3K-29 a workover was successfully performed on the well which should allow the well to be brought on stream with the installation of compression which is expected to be finished in May, 2006.

During the quarter, Point North tied in two previously shut-in oil wells, at Carrot Creek and Sturgeon Lake, which added 13 boepd net to the company. Our efforts to tie-in two gas wells in Judy Creek and Evie were delayed by a lack of field equipment and personnel until late in the quarter. A new compressor and pipeline are now installed at Judy Creek and the gas well is ready for start-up pending EUB approval. The Judy Creek gas well last produced at rates of 30 boped net to Point North prior to shut-in due to a third party pipeline failure. In Evie, the company has a new pipeline and facility in place, and expects the well will be on production by the end of May at an initial rate of 100 boepd net to Point North.

Average production for the quarter was 195 boepd primarily from the Fort Liard, Clarke Lake, Edson, Loon and Carrot Creek properties. From the beginning of the first quarter, production from the 2K29 gas well in Fort Liard declined from a high of 146 boepd net to Point North and is currently shut in as the well is not capable of flowing against the high line pressure at Fort Liard. With compression, Point North anticipates the 2K29 well will be restarted. Water production in Fort Liard makes it difficult to predict a gas flow rate for the well. The 2M25 gas well continued to produce throughout the first quarter and is currently producing 83 boepd net to Point North.

Point North anticipates exiting the second quarter at 225 boepd net, excluding potential additional production from the compression project at Fort Liard. With the successful addition of production from the compression project at Fort Liard, the second quarter exit rate would be expected to exceed 225 boepd net.



POINT NORTH Q1, 2006 HIGHLIGHTS

------------------------------------------------------------------------
Net Production 195 boepd
------------------------------------------------------------------------
Net Revenue $ 789,000
------------------------------------------------------------------------
Expenses
Operating $ 605,000
Transportation $ 538,000
G&A $ 426,000
------------------------------------------------------------------------
Net Income (loss) ($ 3,461,000)
------------------------------------------------------------------------
Capital Expenditures $ 2,887,000
Working Capital (Deficiency) ($ 6,588,000)
------------------------------------------------------------------------


The $6.6 MM of working capital deficiency arose primarily from the unanticipated tax liability arising from the gain on the sale of assets prior to the November plan of arrangement, the underutilization of the previous natural gas processing and transportation commitments due to lower gas production in Fort Liard, and the greater than expected work over costs for the Fort Liard wells.

The Board of Directors has initiated a process to examine strategic alternatives that may include the sale, merger, takeover or restructuring of the company, or any other alternatives that would improve liquidity and be in the best interest of the Point North shareholders.

Full copies of the MD&A and Financial statements are filed on SEDAR, at www.sedar.com, or available at Point North's website, www.pointnorthenergy.com.

About Point North

Point North is a northern-focused junior natural gas company with assets in Fort Liard, N.W.T., northeast B.C., and northwest Alberta. Point North is the successor company to Purcell Energy Ltd. after the reorganization completed on November 2, 2005.

Forward Looking Statements

Information in this press release contains forward-looking statements including expectations of future production and components of cash flow and earnings. Investors are cautioned that assumptions used in the preparation of such information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of Point North Energy. These risks include, but are not limited to; the risks associated with the oil and gas industry, commodity prices and exchange rate changes. Industry related risks could include, but are not limited to; operational risks in exploration, development and production, delays or changes in plans, risks associated to the uncertainty of reserve estimates, health and safety risks and the uncertainty of estimates and projections of production, costs and expenses. The risks outlined above should not be construed as exhaustive. Investors are cautioned not to place undue reliance on any forward-looking information. Point North Energy undertakes no obligation to update or revise any forward-looking statements.

Note

In this news release the term barrel of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of one boe for 6,000 cubic feet of natural gas 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 news release are derived by converting gas to oil in the ratio of six thousand cubic feet of gas to one barrel of oil.


Contact Information

  • Point North Energy Ltd
    John Emery
    President & CEO
    (403) 269-5803
    (403) 264-1336 (FAX)
    or
    Iradesso Communications Corp.
    Stephanie K. Mesher
    Investor Relations Advisor
    (403) 503-0144 Ext: 216
    or
    Point North Energy Ltd
    2810, 605 - 5th Avenue SW
    Calgary, AB, T2P 3H5
    Website: www.pointnorthenergy.com