Anterra Corporation

Anterra Corporation

August 21, 2006 18:22 ET

Anterra Announces Second Quarter 2006 Financial and Operating Results

CALGARY, ALBERTA--(CCNMatthews - Aug. 21, 2006) - Anterra Corporation, ("Anterra" or the "Company") (TSX VENTURE:ATR)is pleased to announce today its financial and operating results for the six month period ended June 30, 2006 and to provide an operations update.


- Average production volumes were up 19% to 229 boepd in the second quarter of 2006 from 193 boepd in the same period of 2005.

- Funds flow from operations for the second quarter of 2006 was $172,283, compared to $267,025 for the same period in 2005. For the six month period, funds flow was $431,968, compared to $527,571 for the same period in 2005.

- For the quarter, the Company experienced a loss of $102,561, compared to a profit of $84,126 for the same period last year. For the six month period, the Company experienced a loss of $175,584 compared to a profit of $197,630 for the same period last year. Earnings were reduced by higher depletion and general and administrative costs combined with a reduced operating contribution.

- The Company closed a $2.2 million equity financing with Haywood Securities on April 7, 2006 and the proceeds were added to working capital.


Anterra's funds flow from operations, were $431,968 ($0.017 per share) for the six months ended June 30, 2006, compared to $527,571 ($0.024 per share) reported for the same period in 2005. Operating netbacks for oil and gas production were $29.17 per boe compared to $33.08 for the second quarter of 2005. Operating netbacks for midstream operations were a negative $1.19 per m3 processed compared to a negative contribution of $0.10 per m3 in the second quarter of 2005. During the second quarter, midstream operations were adversely affected by high maintenance costs at Suffield, an early spring slowdown at the same location and costs associated with the water injection line break at Breton. Midstream netbacks are expected to improve in the third quarter of 2006 while oil and gas netbacks are expected to remain the same. Net earnings for the second quarter of 2006 were a negative $102,561 after deduction for cash taxes owing of $7,182.

Anterra invested $1.69 million of capital in the second quarter of 2006, of which $0.80 million was incurred at the Matziwin property, $0.66 million was spent on workovers at Breton and the balance was spent on miscellaneous projects in southeast Alberta. The capital program was funded by the proceeds of the equity financing, funds flow from operations, working capital and bank debt.

Three Months Ended Six Months Ended
June 30 June 30
2006 2005 2006 2005

Total net revenue $ 1,281,658 $ 1,086,000 $ 2,585,834 $ 2,120,480

Oil and gas
operating margin $ 608,887 $ 585,696 $ 1,347,685 $ 1,142,991
Net back $/boe
for the period $ 29.17 $ 33.08 $ 32.33 $ 32.48

Funds flow from
operations (1) $ 172,283 $ 267,025 $ 431,968 $ 527,571
Funds flow per
share, basic $ 0.007 $ 0.012 $ 0.017 $ 0.024

Net income (loss) $ (102,561) $ 84,126 $ (175,584) $ 197,630
Net income(loss)
per share, basic $ (0.004) $ 0.004 $ (0.007) $ 0.009

Operating costs
per boe $ 26.57 $ 20.03 22.97 $ 18.98
G and A per boe $ 16.67 $ 8.45 $ 16.00 $ 9.55

Total assets $13,637,578 $ 8,783,890 13,637,578 $ 8,783,890
Capital Expenditures $ 1,687,609 $ 607,877 3,187,790 $ 983,050
Bank debt plus
working capital $(3,625,237) $(2,636,075) $(3,625,237) $(2,636,075)

Shareholders' equity $ 5,780,786 $ 3,141,741 5,780,786 $ 3,141,741
Weighted average
shares o/s 25,733,000 21,930,000 25,733,000 21,930,000

Share Trading
High $ 0.58 $ 0.35 $ 0.66 $ 0.35
Low $ 0.33 $ 0.23 $ 0.33 $ 0.23
Close $ 0.35 $ 0.31 $ 0.35 $ 0.31
Trading volume 1,826,850 576,950 2,358,445 1,255,250

Operating (6:1

Production volumes
Natural gas (mcf/d) 445 272 442 272
Oil & NGL (bbls/d) 155 148 156 148
Total (boe/d) 229 193 229 193

Average sale price
Natural gas ($/mcf) $ 6.47 $ 6.14 $ 7.99 $ 6.04
Liquids ($/boe) $ 71.66 $ 63.41 $ 67.91 $ 61.54
Barrel of oil
equiv. $ per boe $ 61.07 $ 57.17 $ 61.50 $ 55.59
(1) Includes provision for cash income taxes payable of $92,810.


As mentioned in the Financial Review, Anterra spent $0.8 million on workovers at Matziwin, and a further $0.66 million on workovers at Breton during the second quarter. The workovers at Matziwin added 30 bopd of production at a cost of $26,667 per flowing barrel per day, while the workovers at Breton were unsuccessful. Water disposal operations at Suffield were slow during the second quarter due to the combination of unusually wet weather and the slow down in activity in the area due to low gas prices. Late in July 2006, volumes returned to more normal levels. The Company's midstream volumes averaged 379 m3 per day for the second quarter and unit revenue was $4.89 per m3 for the quarter compared to $3.71 per m3 for the second quarter of 2005.


An accumulation of short term operating issues including pump failures on good producers, poor results from workovers at Breton, unbudgeted expenditures on the cleanup from a water injection line break, and unexpectedly high midstream operating costs prevented the Company from achieving its goals during the second quarter. The technical team has now completed the repairs and clean-up and second quarter exit production was 270 boepd, down 30 boepd from the 300 boepd reported at the end of the first quarter. Average production for the quarter was 229 boepd.

Breton, central Alberta

Due to unsuccessful workovers on two producing wells, production at Breton dropped 25 boepd during the quarter and pump failures kept two of the better Breton oil wells out of service for several weeks. Management now intends to focus more on the drilling of new wells as opposed to the workover and conversion of old wells. The first Breton development well is scheduled to be drilled during the third quarter and subject to capital availability several more development wells will be drilled on the property during the fourth quarter. There have been delays in the drilling of wells at Breton due to the time taken to acquire surface leases from the local landowners. The Company has now acquired four surface leases and is awaiting its well license from regulators, prior to "spudding" the first well. Following the completion of the first development well, a decision will be made on the schedule for completing a full reservoir and water flood simulation study. This study is required prior to finalizing a multi well, multi million dollar development plan for the Breton pool. Production at Breton is presently 210 boepd.

During the second quarter, midstream operations at Breton were subject to unaccountable oil losses and as a result of customer response to the resulting shrinkage, business volumes dropped considerably. These unaccountable losses have since stopped, however it is taking some time for business volumes to return to pre-loss levels. Management contemplates a return to more normal operations during the third quarter as a result of improvements to operating procedures and piping improvements at the plant.

Southeast Alberta

At Matziwin, a four well workover program is nearing completion with results from the final workover expected by late August. During the quarter, the Company purchased and interpreted several 2-D seismic lines over the property and has identified two drilling locations. Surface leases are being acquired and the Company anticipates drilling one or both locations later in the year. Production at Matziwin is presently 50 bopd.

At Suffield, the Company was successful at a recent Crown land sale and acquired three quarter sections of land over a prospective channel identified from the fall 2005 seismic program. The Company also acquired one additional quarter section over a Devonian reef prospect which was also identified from seismic. As a result of these purchases, Anterra has a four well drilling program scheduled for this winter and may seek a joint venture partner to drill the wells. Production at Suffield is presently zero as the one producing well has been shut-in due to downhole pump problems. Also at Suffield, the Class 1(b) water disposal operation has returned to profitability as a result of dry weather and the increased drilling and completion activity in the area.

At Scots Lake the Company continues to produce 25 bopd from one well, with one additional location to be drilled.


We did not achieve our targets for the first six months of 2006 and now the challenge is to ensure that our initiatives in the second half of the year are focused in those areas where we know we can deliver results. The drilling of development wells at Breton is a low risk activity that is most likely to deliver quick positive results and subject to capital availability, this activity will be a focus in the fall.

There are also seven drilling locations in southeast Alberta on lands 100% owned by the Company, and success on several of these wells could have a significant impact on Anterra. The target formations are Pekisko and Sunburst with one high impact Suffield location targeting a potential Devonian reef. Some of these wells will be drilled in the fourth quarter once partners have been chosen and the drilling schedule has been finalized.

Further to the north, the Company's geological team is working on a Devonian reef edge prospect and once land has been tied up a large 3-D seismic program is contemplated. This is a high impact, high risk play which has the potential to add several million barrels of reserves when drilled. At least one well re-entry is planned for the fourth quarter while drilling is contemplated for early 2007.

Funds flow from operations is not a recognized measure under Canadian generally accepted accounting principles (GAAP). However, management believes that funds flow from operations is a useful measure of financial performance. For the purposes of funds flow from operations calculations, funds flow is defined as "Funds flow from operations" before changes in non-cash operating working capital.

In this report the calculation of barrels of oil equivalent (BOE) is calculated at a conversion rate of 6,000 cubic feet (mcf) of natural gas for one barrel (bbl) of oil based on an energy equivalency conversion method. BOEs may be misleading particularly if used in isolation. A BOE conversion ratio of 6 mcf : 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. This release should be read in conjunction with previously released public documents. Financial statements and notes to the financial statements can be accessed on SEDAR or on our website at

Anterra Corporation ("Anterra") is an emerging energy company with a focus on the exploration and exploitation of oil and gas reserves and the development of associated fee-based projects in western Canada. Anterra is a public Canadian company listed on the TSX Venture Exchange under the symbol ATR and currently operates through its two wholly owned subsidiaries; Anterra Resources Inc. and Anterra Midstream Inc. More information about Anterra is available on the internet at

This news release contains forward looking information related to the planned drilling program, production and operating costs. These statements are based on current expectations that involve a number of risks and uncertainties, which could cause actual results to differ from those anticipated. These risks include, but are not limited to, risks associated with the oil and gas industry (e.g. operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of estimates in relation to reserves, production and expenses; and health, safety and environmental risks). Due to the risks, uncertainties and assumptions inherent in forward-looking statements, prospective investors in the company's securities should not place undue reliance on these forward-looking statements.

Common Shares Outstanding: 27,842,833

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

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