Redcliffe Exploration Inc.

Redcliffe Exploration Inc.

November 27, 2008 10:01 ET

Redcliffe Announces Q3 2008 Financial Results

CALGARY, ALBERTA--(Marketwire - Nov. 27, 2008) -


Redcliffe Exploration Inc. (TSX VENTURE:RXP.A) (TSX VENTURE:RXP.B) ("Redcliffe" or the "Company") is pleased to announce that it has filed its unaudited interim financial statements and related Management's Discussion and Analysis as of September 30, 2008 and for the three and nine months then ended with Canadian securities regulatory authorities. These filings are available for review at

Q3 2008 Highlights:

- Production increased 84% to an average of 828 boe/d for Q3 2008, compared to 451 boe/d for Q3 2007. The Company is currently producing approximately 1,100 boe/d, with potential production of 300 boe/d currently being tied-in.

- Petroleum and natural gas sales increased 259% to $5,411,000, compared to $1,508,000 in Q3 2007. Average prices realized for Q3 2008 increased 95% to $71.00/boe, compared to $36.34/boe for Q3 2007.

- Operating netback increased 107% to $39.22/boe for Q3 2008, compared to $18.97/boe for Q3 2007.

- Funds from operations increased 568% to $2,011,000, compared to $301,000 for Q3 2007.

- Net income increased to $1,856,000 for Q3 2008, compared to a net loss of $1,131,000 for Q3 2007.

- Net capital expenditures totaled $4,474,000 for Q3 2008. Redcliffe drilled 2 (1.03 net) wells during the quarter, resulting in 2 (1.03 net) gas wells, for an overall success rate of 100%.

- Subsequently completed a flow-through equity financing on October 30, 2008 at $0.50 per Class A share for gross proceeds of $5 million.

Three months Nine months
ended September 30 ended September 30
Financial 2008 2007 2008 2007
($ thousands, except per
share amounts)

Petroleum and natural gas sales 5,411 1,508 16,693 4,270
Funds from operations (1) 2,011 301 7,021 1,038
Per basic and diluted share 0.02 0.01 0.09 0.03
Cash provided by operating activities 1,368 879 5,923 1,452
Per basic and diluted share 0.02 0.02 0.08 0.04
Net income (loss) and other
comprehensive income (loss) 1,856 (1,131) 632 197
Per basic and diluted share 0.02 (0.03) 0.01 0.01
Capital expenditures, net 4,474 5,566 13,096 11,234
Weighted-average shares (thousands)
Basic 80,484 42,658 75,549 35,257
Diluted 80,484 42,658 75,872 35,257

Capital Structure September 30, 2008 December 31, 2007
($ thousands, except share amounts)

Working capital deficiency (2) 3,974 9,144
Bank debt 9,503 4,225
Net debt 13,477 13,369
Bank facility 14,000 9,200
Total assets 64,255 56,922
Shares outstanding (thousands)
Class A 65,609 54,406
Class B 1,494 1,494

Three months Nine months
ended September 30 ended September 30
Operations 2008 2007 2008 2007

Daily production
Crude oil and condensate (bbl/d) 224 24 176 10
Natural gas liquids (bbl/d) 47 66 109 69
Natural gas (mcf/d) 3,345 2,163 3,739 1,753
Oil equivalent (boe/d @ 6:1) 828 451 908 371
Per million diluted shares 10.29 10.57 11.97 10.52
Average prices (3)
Crude oil and condensate ($/bbl) 115.45 77.11 115.95 75.37
Natural gas liquids ($/bbl) 49.79 39.30 55.04 43.36
Natural gas ($/mcf) 8.95 5.51 9.17 6.80
Oil equivalent ($/boe) 71.00 36.34 67.08 42.19
Operating netback ($/boe) (4) 39.22 18.97 38.79 24.56
Realized loss on financial
instruments ($/boe) (3.36) - (1.99) -
General and administrative ($/boe) (7.68) (7.88) (6.97) (10.15)
Interest ($/boe) (1.78) (3.84) (1.61) (4.16)
Funds from operations ($/boe) 26.40 7.25 28.22 10.25
Drilling activity
Gross wells 2.00 2.00 5.00 7.00
Net wells 1.03 0.63 3.53 3.65
Success rate, net wells 100% 100% 100% 68%
(1) Funds from operations is calculated as cash provided by operating
activities and adding changes in non-cash working capital. Funds from
operations is used to analyze the Company's operating performance and
leverage. Funds from operations does not have a standardized measure
prescribed by GAAP and therefore may not be comparable with
calculations of similar measures for other companies.

(2) Working capital deficiency includes only accounts receivable, prepaid
expenses and deposits, less accounts payable and accrued liabilities.

(3) Average prices are before the deduction of transportation costs; oil
equivalent includes sulphur sales.

(4) Operating netback equals petroleum and natural gas sales less
royalties, operating expenses and transportation costs, calculated on
a boe basis. Operating netback does not have a standardized measure
prescribed by GAAP and therefore may not be comparable with the
calculation of similar measures for other companies.


Redcliffe's 2008 focus has been to increase production through the tie-in of significant behind-pipe production, to increase production and reserves from additional drilling activities in our core areas, and to significantly expand our land position and high-impact drilling opportunities for 2009 and beyond.

The Company is currently producing approximately 1,100 boe/d. Production has increased from Q3 2008 from the Wapiti 7-3 light oil well as a result of receiving GPP status, although production of this well is constrained based on its gas rate and related plant capacity. The Company expects to complete the tie-in of two recently completed Gold Creek gas wells, with production from such wells expected to commence in December 2008 for a net potential addition of approximately 300 boe/d to the Company. Approximately 250 boe/d of the Company's Gold Creek production remains shut-in as a result of continued facility constraints and high hydrocarbon liquid handling issues in the area. The Company has been able to steadily increase production from such affected Gold Creek wells since earlier this year; however, the remaining shut-in production is not expected to come on-stream until the remaining operational and technical issues are resolved. This has also postponed the drilling of a number of lower risk wells in the Gold Creek area until 2009. The Company and the other working interest partners continue to work diligently to address these issues and are exploring a number of near and longer-term alternatives.

Redcliffe has continued to enjoy excellent drilling success in 2008 and we currently plan to drill up to four wells to the end of Q1 2009. Nevertheless, as a result of the current global economic downturn and credit crisis, the Company will monitor its capital budget in relation to available funding and changes in commodity prices, and will adjust capital expenditures accordingly.

Our 2008 objective of significantly expanding our land position and high-impact drilling opportunities for 2009 and beyond continues to meet with excellent success. In particular, the raising of a US$6 million land fund during the quarter has enabled us to assemble an enviable undeveloped land position in the dynamic Gold Creek/Wapiti areas of the Peace River Arch, while maintaining technical and operational control over these lands in regards to all drilling and operational issues. As a result, the Company now controls approximately 121 (78 net) sections or approximately 77,500 (50,100 net) acres of undeveloped land, which includes the Company's share of unearned lands held through the land fund (11,400 net acres). For the remainder of 2008, we will continue to build our land base and drilling inventory.

The past several months have been a trying time for our industry and we anticipate a continued difficult environment for junior oil and gas companies for the foreseeable future caused by lower oil prices and world-wide recessionary and liquidity issues. Nevertheless, we will continue to focus on creating value in these difficult times, and with our strong management and technical teams, our excellent land base, and our inventory of high-impact drilling opportunities, we remain confident and optimistic about our future. Recent royalty program modifications by the Alberta government have significantly improved the economics of our drilling programs for 2009 and beyond, which will also assist in our competition for capital resources to finance our investment programs.

Reader Advisories

Forward-Looking Statements: This news release contains certain forward-looking statements, including management's assessment of future plans and operations, and capital expenditures and the timing thereof, that involve substantial known and unknown risks and uncertainties, certain of which are beyond the Company's control. Such risks and uncertainties include, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing, processing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, the impact of general economic conditions in Canada, the United States and overseas, industry conditions, changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof, and obtaining required approvals of regulatory authorities. The Company's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits, including the amount of proceeds, that the Company will derive there from. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect the Company's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website ( All subsequent forward-looking statements, whether written or oral, attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

BOE may be misleading, particularly if used in isolation. A BOE conversion 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 has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.

Contact Information

  • Redcliffe Exploration Inc.
    Daryl H. Connolly
    President & CEO
    (403) 539-8440
    (403) 539-8433 (FAX)
    Redcliffe Exploration Inc.
    George Gramatke
    Vice President, Finance & CFO
    (403) 539-8442
    (403) 539-8433 (FAX)