Trimox Energy Inc.
TSX VENTURE : TRM.A
TSX VENTURE : TRM.B

Trimox Energy Inc.

May 24, 2006 20:02 ET

Trimox Energy Inc. Announces First Quarter Results

CALGARY, ALBERTA--(CCNMatthews - May 24, 2006) - Trimox Energy Inc. ("Trimox" or the "Company") (TSX VENTURE:TRM.A) (TSX VENTURE:TRM.B) is pleased to announce its financial and operating results for the three months ended March 31, 2006.



Highlights

Three months ended March 31
unaudited
2006 2005
------------------------------------------------------------------------
Financial ($)
Petroleum and natural gas sales 2,190,807 -
Net loss (395,736) (76,254)
Per share - basic and diluted (0.02) (0.01)
Cash flow from (used for) operations 1,272,464 (54,404)
Per share - basic 0.08 (0.00)
Per share - diluted 0.07 (0.00)
Capital expenditures 6,089,651 998,860
Working capital (deficiency) (640,718) 7,321,384

Equity outstanding
Class A shares 14,900,000 10,000,000
Class B shares 450,000 450,000
Stock options on Class A shares 1,335,000 665,000

Operating
Average Daily Production
Natural gas - mcf 2,501 -
Crude oil & NGL - bbls 120 -
Total - boe 537 -

Average Sales Prices
Natural gas - $/mcf 7.50 -
Crude oil & NGL - $/bbl 46.50 -
Total - $/boe 45.35 -

Operating Netbacks
BOE - $/boe 27.24 -

Wells Drilled
Gross 2.0 -
Net 0.6 -


Since January 2005, Trimox has executed an active full-cycle exploration program. This program continues to identify additional drilling locations in the Company's three core areas - Retlaw in southern Alberta, Niton and Windfall in west-central Alberta and Worsley on the Peace River Arch. Important infrastructure additions have also occurred in all project areas allowing Trimox to enjoy increased reliability of existing production and providing the Company with the ability to bring additional volumes on-stream through continued operations.

First quarter activities were directed primarily towards completions, tie-ins and equipping of wells, culminating with the commencement of initial production from three (2.7 net) wells at Retlaw and two (1.1 net) wells at Niton. Two (0.6 net) wells were drilled at Worsley, resulting in one (0.3 net) potential oil well and one (0.3 net) gas well. Total capital expenditures were $6.1 million for the quarter, of which $4.7 million (77%) was directed towards drilling, completions, tie-ins and equipping operations and the balance of $1.4 million (23%) was spent on undeveloped land and seismic activities.

First quarter results were in line with expectations - production and cash flow were 537 boe/d (120 bop/d and 2,501 mcf/d) and $1,272,464, respectively. Production for the second quarter is targeted to increase approximately 30% to 700 boe/d; however, cash flow will likely be comparable to the first quarter as a result of reduced prices realized for natural gas.

Subsequent to the first quarter, Trimox finalized a $2,000,000 credit facility with a Canadian chartered bank. The Company will fund the balance of its 2006 capital expenditure program, currently estimated at $7,400,000, through a combination of cash flow, bank debt and, if required, equity financing.

To date during the second quarter, one (0.5 net) successful Leduc gas well has been drilled and cased in the Worsley area. Ongoing completion and testing operations confirm that this well is capable of producing gas at a stabilized rate of 3,000 mcf/d (1,500 mcf/d net / 250 boe/d net) at flowing pressure of approximately 1,750 psi with a 25% effective reservoir drawdown. Tie-in and equipping operations will occur over the next few weeks. Sustainable gross production of approximately 2,000 mcf/d (1,000 mcf/d net / 165 boe/d net) is expected to commence in the third quarter of 2006. One (0.3 net) additional well is currently being drilled in the Worsley area.

A second drilling rig is expected to commence drilling in southern Alberta in early June. This multi-well program will include two (1.7 net) wells at Retlaw to offset an exceptionally strong Glauconitic oil well drilled by the Company in the late 2005. Production from this well in the 90 days since it went on-stream has averaged 237 boe/d (170 bopd and 400 mcf/d), of which Trimox has a 71.2% working interest. Current production from this well is 225 (160 net) boe/d.

Trimox continues to achieve significant quarter over quarter growth. Management is confident that this profile will be maintained into the future as further success is realized in each of the Company's three core areas of operation.

The unaudited financial statements and related MD&A for the three months ended March 31, 2006 will be filed on the SEDAR website at www.sedar.com within 48 hours.

This news release refers to "cash flow from (used for) operations", "cash flow from (used for) operations per share" and "operating netback", which are not recognized measures under Canadian generally accepted accounting principles ("GAAP"). Management believes that in addition to net income (loss), cash flow (loss) and operating netback are useful supplemental measures as they demonstrate the Company's ability to generate the cash necessary to fund future growth through capital investment. The reconciliation between net income (loss) and cash flow (loss) can be found on the statements of cash flow in the interim financial statements and the audited financial statements. Trimox defines operating netback as revenue less royalties, operating and transportation expenses. Investors are cautioned, however, that these measures should not be construed as an alternative to net income (loss) determined in accordance with GAAP as an indication of the Company's performance. Trimox's method of calculating these measures may differ from the method used by other companies and accordingly, may not be comparable to measures used by other companies.

This news release contains forward-looking statements which are subject to known and unknown risks, uncertainties and other factors that could influence actual results or events and cause actual results or events to differ materially from those stated, anticipated or implied. Such forward-looking statements necessarily involve risks associated with oil and gas exploration, property development, production, marketing, and transportation, such as dry holes and non-commercial wells, facility and pipeline damage, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers and the ability to access sufficient capital from internal and external sources. Readers are cautioned not to place undue reliance on forward-looking statements, as no assurances can be given as to future results, levels of activity or achievements.

Natural gas volumes have been converted to barrels of oil equivalent ("boe") using six thousand cubic feet ("mcf") equal to one barrel ("bbl"). This conversion ratio is based on an energy equivalent conversion applicable at the burner tip and does not represent a value equivalency at the wellhead.


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

Contact Information

  • Trimox Energy Inc.
    Steve Dabner
    President & C.E.O.
    (403) 216-1721
    Email: steved@trimox.ca
    or
    Trimox Energy Inc.
    Thomas Love
    Chairman & C.F.O.
    (403) 216-1722
    Email: toml@trimox.ca