Stonefire Energy Corp.

Stonefire Energy Corp.

January 15, 2008 16:24 ET

Stonefire Energy Corp. Reports Year End Operating Results and 2008 Guidance

CALGARY, ALBERTA--(Marketwire - Jan. 15, 2008) -


Stonefire Energy Corp. (TSX VENTURE:SFE.A) (TSX VENTURE:SFE.B) ("Stonefire" or the "Company") is pleased to report that the 2007 year end exit production rate based on field estimates is approximately 611 boepd (80% natural gas) which is within previous guidance and an all time high for the Company. Notably this production rate does not include Stonefire's previously announced Q3 2007 discovery well. The pipeline tie-in for this well encountered 3rd party delays and first production is now expected later in Q1 2008 at an estimated initial net rate of 75 boepd. In the 4th quarter of 2007 Stonefire drilled two 100% working interest exploration wells in the Edson area with a 100% success rate. Both wells came on production through Stonefire's 100% working interest Edson Gas Plant late in the quarter. The company is also pleased to report that it has satisfied it's exploration flow-through spending commitments for 2007.

Highlights for the fourth quarter included the first full quarter of operation of the Company's 100% working interest Edson Gas Plant. After start-up in late September the plant has experienced excellent run time with no significant operational problems. As a result of the new Edson Gas Plant average production for the fourth quarter is estimated at 360 boepd (78% natural gas), an all time high for the company. The fourth quarter also saw continued exploration success at Edson. Two 100% working interest exploration wells were successfully drilled to depths of 2363 meters and 2120 meters. A total of six gas zones were completed in the two new wells. These two wells were tied-in to Stonefire's 100% working interest gathering system and gas plant in December 2007 and are currently producing at a combined rate of approximately 300 boepd comprised of 80% natural gas and 20% natural gas liquids. Based on these significant exploration results Stonefire initiated plans for a 16 square kilometer 3D seismic program over a portion of the Company's 100% working interest lands at Edson. This seismic program is currently underway and will be completed by late January 2008. The 3D seismic results are expected to help delineate numerous deep basin gas zones prevalent in the Edson area, firm up exploration and development drilling locations for 2008 and identify down- spacing opportunities.

2008 Guidance

The company expects to drill one to two 100% working interest wells at Edson based on the 3D seismic results prior to the end of the first quarter. In addition, a Stonefire-operated, 50% working interest offset well to the previously announced Q3 2007 discovery well is being prepared for drilling in February 2008.

A preliminary capital budget for 2008 has been set at $12 MM with forecast average production of 800 boepd for 2008 (80% natural gas). Cashflow for 2008 is forecast at $7.0 MM with a year-end 2008 exit debt to annualized exit cash flow ratio of 1.2. The majority of the 2008 capital spending will be directed towards drilling and completions primarily in the Edson area where Stonefire has 100% working interest in 3200 hectares (12.5 sections) of land, control of gas processing facilities and has had significant exploration success to date. Up to six gross (5.5 net) new wells are budgeted for 2008. All wells to be drilled are Stonefire-operated, high working interest, and high impact multi-zone deep basin gas prospects. These wells will typically be drilled to depths between 2200 and 2500 meters and will thereby qualify as deep gas under the proposed new royalty structure for Alberta. The remaining flow through spending obligation for 2008 is approximately $6.0MM which the Company expects to easily satisfy with the forecast budget and the Company's exploration drilling inventory. The capital budget will be continuously reviewed and adjusted on a quarterly basis as circumstances dictate.

Stonefire Energy Corp. is an Alberta-based company formed to participate in oil and gas exploration, development and acquisitions focusing in the West Central region of Alberta. The Company's shares trade on the TSX Venture exchange under the symbols SFE.A and SFE.B. The Company currently has 18,265,000 Class A shares and 1,012,000 Class B shares outstanding.

Reader Advisory

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 Stonefire's control. Such risks and uncertainties include, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing 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. Stonefire'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 Stonefire will derive there from. Readers are cautioned that the foregoing list of factors is not exhaustive. All subsequent forward-looking statements, whether written or oral, attributable to Stonefire 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 Stonefire 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.

Petroleum and natural gas volumes are converted to an equivalent measurement basis referred to as a "barrel of oil equivalent" (boe) on the basis of 6 thousand cubic feet of natural gas equalling 1 barrel of oil. This is based on an energy equivalency conversion method applicable at the burner tip and does not necessarily represent a value equivalency at the wellhead. Readers are cautioned that boe figures may be misleading, particularly if used in isolation.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this statement.

Contact Information

  • Stonefire Energy Corp.
    Mr. Richard Dahl
    President & Chief Executive Officer
    (403) 262-9885 ext 222
    (403) 262-9887 (FAX)
    Stonefire Energy Corp.
    Mr. Ronald Williams
    Vice President Finance and CFO
    (403) 262-9885 ext 228
    (403) 262-9887 (FAX)
    Stonefire Energy Corp.
    Suite 320, 333 - 5th Avenue SW
    Calgary, Alberta T2P 3B6