Turnkey E&P Inc.

Turnkey E&P Inc.

May 12, 2006 18:43 ET

Turnkey E&P Inc. Announces Q1 2006 Results

CALGARY, ALBERTA--(CCNMatthews - May 12, 2006) - Turnkey E&P Inc. ("Turnkey") (TSX:TKY), today announced its financial and operating results for the three month period ending March 31, 2006.

The figures presented below are expressed in thousands of U.S dollars, except where otherwise stated.

Selected Consolidated Financial Information
First Quarter ended March 31, 2006

Financial Results $U.S.

Revenue 5,757
Operating expenses 5,303
Financial Items (578)
Net loss 568
Loss per share - basic and diluted 0.02

Financial Position

Cash and cash equivalents 55,580
Working capital 59,430
Long term debt Nil
Shareholders' equity 97,828

Operating and Financial Highlights

Financial results reported for the first quarter of 2006 reflect Turnkey's first full quarter of operation following our IPO on December 13, 2005, and the subsequent purchase of the four casing drilling rigs from Tesco Corp. (TEO-TSX, TESOF-NASDAQ). While the results were somewhat disappointing, they reflect the start-up nature of Turnkey's operations as management begins to execute the business plan to use casing drilling technology to secure equity participation in difficult drilling prospects that will create shareholder value by adding oil and gas reserves and production to the company's drilling assets.

In the first quarter, Turnkey's four casing drilling rigs generated 232 revenue days at an average revenue rate of $17,029 per day and a daily operating margin contribution of $3,283. Turnkey's fleet utilization averaged about 63% in the quarter. Utilization increased substantially in April and currently, three of the four rigs are under contract with the fourth rig being bid on work.

As previously announced, as a key component of Turnkey's business plan, we signed an agreement with American Oil & Gas, Inc. (AEZ-Amex) to drill two wells, with an option for a third well, on their Fetter field project in Wyoming. These wells will be an excellent test of the value of casing drilling in challenging geologic formations and will enable Turnkey to earn a 40% working interest in the two wells and in the 640-acre spacing unit surrounding each well. Turnkey also holds an option to purchase a 15% working interest in the remaining almost 51,000 acres of the Fetter field project for $750,000. Due to existing commitments for the rig anticipated to drill the wells, the initial well spud date has been revised from May to late June.

The Management Discussion and Analysis and the March 31, 2006 Interim Financial Statements for Turnkey are posted on www.sedar.com .
Turnkey is an independent oil and gas company that is focusing its oil and natural gas acquisition, exploitation, development and production activities in the continental United States using Casing Drilling® technologies. Additional information about Turnkey can be found at its website: www.turnkeyep.com.

This release and Turnkey's website referenced in this release contain forward-looking statements including expectations of future production and components of cash flow and earnings. Investors are cautioned that assumptions used in the preparation of such information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of Turnkey. These risks include, but are not limited to; the risks associated with the oil and gas industry, commodity prices and exchange rate changes. Industry related risks could include, but are not limited to; operational risks in exploration, development and production, delays or changes in plans, risks associated to the uncertainty of reserve estimates, health and safety risks including, without limitation, blowouts and spills, and the uncertainty of estimates and projections of production, costs and expenses. The risks outlined above should not be construed as exhaustive. Investors are cautioned not to place undue reliance on any forward-looking information. Turnkey undertakes no obligation to update or revise any forward-looking statements.

Contact Information

  • Turnkey E&P Inc.
    Dale W. Bossert
    President and Chief Executive Officer
    (403) 828-5720
    Turnkey E&P Inc.
    Martin Hall
    Vice-President, Finance and Chief Financial Officer
    (403) 616-3910
    Website: www.turnkeyep.com