Rival Energy Ltd.

Rival Energy Ltd.

May 30, 2006 08:00 ET

Rival Energy Ltd. Announces Q1 Results, Acquisition and Increased Capital Budget

CALGARY, ALBERTA--(CCNMatthews - May 30, 2006) - RIVAL ENERGY LTD. (TSX VENTURE:RGY) is pleased to release its operating and financial performance for the first three months of 2006. Despite weaker commodity prices for this most recent quarter, Rival Energy posted gains in its average production, oil and natural gas revenues and cash flow per share numbers.

Highlights Table
Three Months Ended
March 31

Financial 2006 2005 Change %
Oil & gas sales $3,633,016 $3,179,288 14
Cash flow from operations 1,650,426 1,309,279 26
Net income 273,378 62,234 339
Cash flow from operations per share 0.08 0.07 22
Net income per share 0.01 0.00 N/A
Average shares outstanding (000) 19,809 19,121 4

Operating (6:1 BOE)
Average daily production
Natural gas (mcfd) 2,655 3,052 (13)
Oil and NGL (bblsd) 369 273 35
Barrels of oil equivalent (boe) 812 781 4

Average Sales Price
Natural gas ($/mcf) $ 7.63 $ 6.98 9
Crude oil ($/bbl) 53.18 49.93 7

For this most recent quarter, Rival's oil and natural gas revenues increased by 14%, to $3.6 million, from the $3.2 million realized during the first three months of 2005. Over this same time period the Company also realized a 4% increase in average daily production, averaging 812 barrels of oil equivalent versus 781 boe/d for the first quarter of 2005. Despite weakening natural gas prices through this quarter, the overall increases in production volumes and revenues generated resulted in an improvement in cash flow per share for Q1 2006. Rival's cash flow was $1.6 million ($0.08 per share) for the first three months of 2006, a 26% increase for this most recent quarter over the same period in 2005.

Difficulties procuring drilling and oilfield services during the first quarter of 2006 challenged Rival's operations. During this most recent quarter, Rival's activities were severely impacted by drilling rig availability delays and surface access issues. As a result, the Company was able to drill only three wells during March. One well in east central Alberta was a successful oil test, while the other two wells, an exploratory test in the Peace River Arch and the other a shallow natural gas test in the central W5M region, were both unsuccessful.

Subsequent to Q1, with an improvement in drilling rig availability, Rival has been successful in completing a six well drilling program, with 100% success. Three of these wells were drilled in east central Alberta and the other three were drilled in the Robsart area of Saskatchewan. These wells are currently in various stages of being tested, completed and placed on production. In conjunction with a much more active drilling program, Rival has also recently completed a key property acquisition in the Morinville area of Alberta. This strategic acquisition in a new core area provides Rival with access to an additional 15,000 (net) acres of land adjacent to the existing producing wells. This brings Rival's overall net undeveloped land position to approximately 63,000 net acres.

Rival expects to have an active second and third quarter this year and has current plans to drill at least another eight wells within its core area of east central Alberta and southwestern Saskatchewan within this time period. On top of this, the Company plans an active program in the Morinville area to capitalize on the opportunities identified with this acquisition and to shoot a 3D seismic program to pursue a very prospective deeper oil play in the area. Together with these drilling opportunities, Rival is currently in the process of completing a 3D seismic program that should lead to the drilling of a high impact exploration target in the Lousana area in Q3.

Also on the exploration front, Rival has recently concluded a farmin arrangement that gives the Company access to over 40 sections (25,600 net acres) of prospective acreage on a shallow natural gas play being developed internally. Rival will shoot seismic early this winter with a view to drilling between two and four wells prior to spring break-up, 2007. This winter access only area complements our existing opportunities and may provide the basis for significant future growth.

In light of this level of activity, Rival is increasing its capital budget for 2006 from an estimated $12-15 million to $15-20 million in order to complete the projects planned and take advantage of the acquisition opportunities available to the Company. Rival is also in the final stages of negotiation with one of its partners to acquire a complementary interest in one of its existing properties. It is expected this transaction will close next month and will be funded from an expanded credit facility that is presently being established with the Company's lending institution. As of this corporate update, Rival's current production is 925 barrels of oil equivalent per day with an estimated 100 boe/d of production waiting on completion and tie-in.

The current market environment for oil and natural gas assets remains very competitive; however, Rival believes that opportunity exists for consolidation transactions within the junior sector of our industry. To this end, Rival remains active on the merger and acquisition front. At the same time, Rival expects the results from its proposed drilling and acquisition program to continue the Company's growth throughout 2006. The successful execution of our strategy will enable Rival to significantly increase its production volumes and cash flow, which will lead the Company to new levels of growth.

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

Contact Information

  • Rival Energy Ltd.
    Colin F. Ogilvy
    (403) 233-4366
    Rival Energy Ltd.
    George D. Ziroff
    VP Finance
    (403) 233-4365
    Website: www.rivalenergy.com