Anterra Corporation
TSX VENTURE : ATR

Anterra Corporation

November 17, 2006 08:30 ET

Anterra Announces Third Quarter Results and Operational Update

CALGARY, ALBERTA--(CCNMatthews - Nov. 17, 2006) - Anterra Corporation, (TSX VENTURE:ATR) ("Anterra" or the "Company") is pleased to provide its third quarter results and an operations update.

HIGHLIGHTS

- The highlight of the quarter was the drilling of a successful oil and gas well at Breton. The Anterra Breton 11-23-47-3W5 well (100 percent working interest), penetrated 5 meters of oil bearing marine sands in the producing Basal Belly River formation and 6 meters of gas in the Basal Belly River channel sands, 20 meters above the oil bearing formation. Following the completion, the oil zone was swabbed at rates of 120 barrels of fluid per day cutting 50% oil. A single point 40 hour flow test through a 9.53 mm choke was conducted on the gas zone. During this test, the well flowed at restricted average rates of 3/4 million cubic feet per day of raw gas with no water, at a flowing pressure which increased from 1,309 KPA to 1,400 KPA during the test. The well is currently shut in for pressure build up and the Company is evaluating tie-in options for this well. Management estimates that the well will produce at rates in excess of 3/4 million scfd once the pipeline tie in has been completed in early 2007.

- At MacLeod, Anterra executed a farm-in agreement to acquire a fifty two and one half (52.5%) percent working interest in two sections of land in Township 55 Range 14W5M and 12.5 square miles of 3-D seismic. The primary target is a Swan Hills Devonian reef and after project payout, Anterra's working interest in this high impact project will reduce to thirty one and one half (31.5%) percent.

- Daily production volumes were up 5% to 219 boepd in the third quarter of 2006 from 209 boepd in the same period of 2005. On a year-to-date basis, production volumes have averaged 226 BOE/day. The additional production expected from the recently drilled LSD 11-23 well at Breton, which is scheduled to be on production early in the new year, should permit the Company to achieve production of 350 BOE/day (the exit target for 2006).

FINANCIAL REVIEW

Anterra's funds flow from operations were $772,689 ($0.029 per share) for the nine months ended September 30, 2006, compared to $1,013,538 ($0.046 per share) reported for the same period in 2005. Funds flow from operations for the third quarter of 2006 was $340,721 compared to $485,967 for the same period in 2005. Operating netbacks for oil and gas production were $29.54 per boe compared to $40.27 for the third quarter of 2005. Oil and gas production was impaired due to well work-over requirements at Breton, which also impacted operating costs and netbacks. Operating netbacks for midstream operations were $0.95 per m3 processed compared to a contribution of $1.75 per m3 in the third quarter of 2005, however this was a significant improvement over the second quarter ($1.19 loss), as processing volumes increased at both Breton and Suffield. For the quarter, the Company experienced a loss of $81,891, compared to a profit of $126,492 for the same period last year. For the nine month period, the Company experienced a loss of $257,475 compared to a profit of $324,122 for the same period last year. Earnings were reduced by higher depletion and general and administrative costs combined with a reduced operating contribution.



Three Months Ended Nine Months Ended
September 30 September 30
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2006 2005 2006 2005
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Financial
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Total net
revenue $ 1,332,735 $ 1,385,924 $ 3,918,569 $ 3,506,404
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Oil and gas
operating
margin $ 596,740 $ 770,611 $ 1,944,425 $ 1,913,602
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Net back $/boe
for the period $ 29.54 $ 40.27 $ 31.42 $ 35.24
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Funds flow from
operations $ 340,721 $ 485,967 $ 772,689 $ 1,013,538
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Funds flow per
share, basic $ 0.012 $ 0.022 $ 0.029 $ 0.046
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Net income
(loss) $ (81,891) $ 126,492 $ (257,475) $ 324,122
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Net income
(loss) per
share, basic $ (0.003) $ 0.006 $ (0.010) $ 0.015
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Operating costs
per boe $ 26.55 $ 20.86 $ 24.14 $ 19.64
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G and A per boe $ 13.29 $ 15.90 $ 15.12 $ 11.80
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Total assets $ 14,195,996 $ 9,334,932 $ 14,195,996 $ 9,334,932
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Capital
Expenditures $ 692,278 $ 588,385 $ 3,880,068 $ 1,571,435
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Bank debt plus
working capital ($3,976,796) ($2,640,242) ($3,976,796) ($2,640,242)
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Shareholders'
equity $ 5,705,824 $ 3,466,948 $ 5,705,824 $ 3,466,948
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Weighted
average
shares o/s 27,842,833 21,979,000 26,444,035 21,979,000
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Share Trading
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High $ 0.38 $ 0.79 $ 0.66 $ 0.79
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Low $ 0.20 $ 0.26 $ 0.20 $ 0.23
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Close $ 0.22 $ 0.58 $ 0.22 $ 0.58
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Trading volume 1,054,670 1,428,900 3,413,115 2,684,150
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Operating (6:1
conversion)
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Production
volumes
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Natural gas (mcf/d) 368 264 417 270
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Oil & NGL (bbls/d) 158 165 156 153
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Total (boe/d) 219 209 226 198
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Average sale price
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Natural gas
($/mcf) $ 5.25 $ 6.55 $ 7.17 $ 6.21
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Liquids ($/boe) $ 72.55 $ 73.24 $ 69.49 $ 65.77
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Barrel of oil
equiv.
($ per boe) $ 61.04 $ 66.07 $ 61.35 $ 59.30
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PRESIDENTS REPORT

The highlight of the quarter was the drilling of the first in-fill development well at Breton and this success has driven management to pursue a modified strategic plan. The plan involves more drilling and the pursuit of grass roots exploration concepts in parallel with the Company's historic oil and gas exploitation and midstream activities at Breton and in southeast Alberta. This decision was driven by the need to provide shareholders with more consistent and sustainable financial results while exposing the Company to higher impact projects that could have a more material impact on long term operating and financial performance.

Four new projects have been assembled during the quarter and the Company has executed several joint venture agreements with Resolve Energy Inc. ("Resolve") a private company in which two of Anterra's directors are investors and board members. The joint ventures are under typical industry terms and will allow Anterra as operator to pursue an expanded capital program.

MacLeod: During the quarter, Anterra reached agreement to acquire a fifty two and one half (52.5%) percent working interest in the MacLeod project, a high impact Swan Hills Devonian reef prospect. The MacLeod project lies four miles northeast of the Rosevear Beaverhill Lake 'A' Pool which has produced 169 BCF of gas and six miles north of the Rosevear Beaverhill Lake 'B' Pool which has produced 160 BCF of gas. Anterra has acquired 3-D seismic over the structure and has identified a potential pool of similar geographical extent over its lands. A cased well on the lands at LSD 11-20-55-14W5M was recently drilled to 2,450 meters by the farmor and cased with 7 inch casing. Anterra will earn its interest in the two section project by deepening the well to 3,200 meters at a cost of $700,000 (gross) and testing the Swan Hills Devonian reef formation. Resolve is participating with a fifty (50%) percent interest in Anterra's interest at MacLeod and will pay $50,000 to Anterra for this participation.

Judy Creek: Further north of MacLeod on the same Devonian reef trend, Anterra has acquired a 100% interest in a key quarter section of land and an abandoned well which will be re-entered in the spring of 2007. This re-entry is forecast to cost $300,000 and the target is the Devonian Swan Hills formation which is oil bearing in the area. The Company also plans a $1 million 3-D program in the area and is presently assembling a larger land base over a two township area. Resolve is earning a fifty (50%) percent working interest in the Judy Creek project by paying one hundred (100%) percent of the $300,000 cost to re-enter the well.

Suffield: Also during the quarter, Anterra was successful in acquiring four key quarter sections of land at Suffield. As the Company had extensive 3 D seismic over the lands, an agreement has been made to farm out an interest in these lands to Resolve who is expected to drill the first Sunburst test during the first quarter of 2007. The terms of the farm-in include an option for Resolve to earn a fifty (50%) percent interest in all of the lands by drilling a second Sunburst test.

Frontier: At Frontier, in southwest Saskatchewan, the Company and Resolve have agreed to jointly acquire lands and explore for Shaugnavon oil over a twenty township area. This is a new exploration area for Anterra and the lower risk nature of the project provides balance to the higher risk projects discussed above.

OPERATIONS REVIEW

While the recently drilled development well at Breton has been successful, the difficulty in delivering predictable, sustainable and growing production from exploitation projects on the Company's producing properties at Breton and in southeast Alberta has proven to be a challenge. It has been difficult to achieve targets and acceptable operating metrics, despite the addition of reserves and production. It is for this reason that management is now pursuing a business strategy that will focus more on the drilling of new wells. Finding and development costs and unit operating costs will only decrease through the addition of new reserves and new production resulting from new drilling.

The midstream business at Breton has been steady during the quarter while at Suffield the Class 1(b) water disposal operation continues to be profitable. The midstream business is not presently a focus for the Company however the income contributes to overhead and funds flow and the facilities are integrated into our oil and gas operations.

At Breton the first successful development well was drilled during the third quarter. The 100% working interest LSD 11-23-47-4W5M Basal Belly River well was drilled to a total depth of 1,095 meters and encountered 5 meters of oil bearing marine sands in the producing Basal Belly River formation. The well also encountered 6 meters of gas in the Basal Belly River channel sands, 20 meters above the oil bearing formation. The well is expected to be produced at a restricted rate of 600 mcfd which is expected to bring total productive capacity at Breton to over 300 boepd. The well was drilled in the southern portion of the Breton Unit and with this success further locations are being surveyed and licensed for drilling over the next two quarters.

In southern Alberta, production remains at 65 boepd, primarily from Matziwin and no further exploitation work is planned for the balance of the year. The Company has identified two Pekisko drilling locations on the Matziwin property but these locations will be inventoried and drilled at a later date. At Suffield, the Company's joint venture partner will drill the first exploration well in early 2007.

OUTLOOK

To ensure more stable growth with greater upside for shareholders, we now think it is prudent to expand the Company's business strategy to include a greater focus on development and exploration drilling. Development drilling at Breton has delivered quick and very positive results and further drilling on this property and our exploration properties will be a focus in 2007, allowing us to add reserves and production at more attractive unit costs.

As a result of the recent success at Breton, we expect to achieve our exit target of 350 boepd by early 2007, subject to getting the new gas well pipeline connected. The oil zone in the new well is expected to be on production in mid November, adding 40 boepd to our daily production. Next year's budget is in preparation and we are therefore not yet in a position to issue guidance for 2007. We intend to continue to focus on growing our business and with a new strategic direction we are targeting significant growth in shareholder value in 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 press release, 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.

Anterra Corporation ("Anterra") is an emerging energy company with a focus on the exploration and development of oil and gas reserves and the exploitation 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 www.anterra.org.

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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