SOURCE: ReoStar Energy Corporation

November 20, 2008 12:05 ET

ReoStar Energy Corp. Announces Second Quarter and Six Months Fiscal Year 2009 Financial Results

FORT WORTH, TX--(Marketwire - November 20, 2008) - ReoStar Energy Corp. (OTCBB: REOS) announced results of operations for the Second Quarter and Six Months Fiscal Year 2009, ended September 30, 2008.

Highlights of the Fiscal 2009 Second Quarter and Six Months

--  Second Quarter Oil and Gas revenues increased 123% to $2.28 million
    versus $1.02 million  for the previous year second  quarter
--  Six Months Oil and gas revenues increased 174% to $5.03 million versus
    $1.83 million for the previous year six months ended September 30, 2007
--  Six Months oil production increased 79% to 26,195 barrels versus
    14,630 for the  six months period in the prior year
--  Six Months gas productions increased 57% to 234,055 mcf versus 148,845
    mcf for the previous year six months
    

Second Quarter Fiscal Year 2009 Financial Review and Production Summary

Oil and gas revenues for the second quarter ended September 30, 2008 were $2.28 million, compared with $1.02 million during the quarter ended September 30, 2007, an increase of approximately 123%. Total costs and expenses increased approximately 29% to $1.8 million versus $1.4 million the previous year, and operating income was $505 thousand compared to $111 thousand for the second quarter of the previous year. Total operating costs and expenses increased primarily due to the increased number of producing wells and higher retained working interest per well.

During the second quarter ended September 30, 2008, ReoStar sold approximately 11,565 barrels of oil compared with approximately 7,800 barrels of oil for the quarter ended September 30, 2007, an increase of approximately 48%. The average price for oil sold during the quarter ended September 30, 2008 was $115.90 per barrel compared with the average price for the quarter ended September 30, 2007 of $71.50 per barrel.

ReoStar sold approximately 124,300 mcf of gas for the quarter ended September 30, 2008 compared with 82,030 mcf of gas for the quarter ended September 30, 2007, an increase of approximately 50%. The average price for natural gas sold during the quarter ended September 30, 2008 was $7.57 per mcf (net of transportation, compression and CO2 charges) compared with $5.45 per mcf for the quarter ended September 30, 2007.

During the quarter ReoStar retained an investment banking firm to assist the company in securing financing to fund their Barnett development and Corsicana re-development programs. Subsequent to quarter end the Company closed on a $25MM senior secured credit facility.

Six Months Fiscal Year 2009 Financial Review and Production Summary

Oil and gas revenues for the six months ended September 30, 2008 were $5.03 million , compared with $1.83 million for the six months ended September 30, 2007, an increase of approximately 174%. Total costs and expenses increased approximately 37% to $3.5 million versus $2.6 million the same period for the previous year, and operating income was $1.7 million compared to an operating loss of $214 thousand for the same period the previous year.

During the first six months ended September 30, 2008, ReoStar sold approximately 26,195 barrels of oil compared with 14,630 barrels of oil for the six months ended September 30, 2007, an increase of approximately 79%. The average price for oil sold during the six month period ended September 30, 2008 was $120 per barrel compared the average price for the same period the previous year of $67 per barrel.

ReoStar sold approximately 234,055 mcf of gas for the six months ended September 30, 2008 compared with 148,845 mcf of gas for the same period the previous year, an increase of approximately 57%. The average price for natural gas sold during the six months ended September 30, 2008 was $8.09 per mcf (net of transportation, compression and CO2 charges) compared with $5.68 per mcf for the same period the previous year.

Net income for the six months ended September 30, 2008 reached $1.1 million, or $0.01 per share basic and diluted, compared to earnings of $1.3 million, or $0.02 per share basic and diluted from the same period the previous year. The company realized a $1.47 million gain the previous year period resulting from the gain on the sale of the pipeline.

Mark Zouvas, CEO of ReoStar, stated, "We are very pleased with our operational and financial performance during the second quarter and first half of our current fiscal year. Our Barnett Shale properties continue to deliver positive returns, while our Corsicana operations have shown great promise over the first six months. Our recently secured financing will provide the capital necessary to continue to exploit our key areas of operations, and will allow us to continue our growth initiatives in both the Barnett Shale and Corsicana fields."

About ReoStar Energy Corporation

ReoStar Energy Corporation (OTCBB: REOS), headquartered in Fort Worth, Texas, is an oil and gas company engaged in the acquisition, development and production of natural gas and oil properties with operations primarily focused on developmental resource plays and enhanced oil recovery projects. The Company has vertically integrated its assets to remove potential obstacles to growth, which will enable it to develop and produce assets without the risk, cost and time involved in traditional exploration.

The Company's strategy is to acquire an attractive portfolio of oil reserves for a low cost, which have a high ratio of possible, probable or proven undeveloped reserves. By converting these undeveloped reserves into proved producing reserves, the Company will continue to realize an increase in the overall value at low risk and cost.

The Company's assets include approximately 20,000 gross (16,250 net) acres of mineral leasehold located in Texas (Barnett & Corsicana) and Arkansas (Fayetteville). ReoStar's assemblage of E&P assets allows for appreciable, unimpeded growth into the foreseeable future.

Additional information is located on the company's website www.reostarenergy.com.

Certain statements in this news release may contain forward-looking information within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934, and are subject to the safe harbor created by those rules. All statements, other than statements of fact, included in this release, including, without limitation, statements regarding potential future plans and objectives of the company, are forward-looking statements that involve risks and uncertainties. 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. Technical complications which may arise could prevent the prompt implementation of any strategically significant plan(s) outlined above.

Contact Information

  • Contact:
    ReoStar Energy Corporation
    Teresa Wright
    817-546-7718