Anterra Corporation
TSX VENTURE : ATR

Anterra Corporation

May 24, 2006 08:30 ET

Anterra Releases First Quarter Results and Provides Operations Update

CALGARY, ALBERTA--(CCNMatthews - May 24, 2006) - Anterra Corporation, ("Anterra" or the "Company")(TSX VENTURE:ATR) is pleased to announce today its financial and operating results for the three month period ended March 31, 2006, and also wishes to provide the results of its first quarter capital program.

HIGHLIGHTS:

- Production volumes were up 19% to 230 boepd in the first quarter of 2006 from 193 boepd in the same period of 2005, while current production has increased to over 300 boepd.

- Before tax funds flow from operations for the first quarter of 2006 were $348,219 but were reduced to $259,685 following an $88,534 provision for 2005 cash taxes payable, compared to $260,546 for the same period in 2005.

- Earnings were a negative $73,023 in the first quarter of 2006, compared to a profit of $113,504 for the same period last year. Earnings were reduced by higher depletion and general and administrative costs combined with reduced operating contribution.

- Following recent workovers, production at the recently acquired Matziwin property has increased 67% from 30 boepd at the time of acquisition to 50 boepd at the time of this release.

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

Bob McCuaig, Executive Vice President and General Manager of Anterra commenting on the results indicated that: "Our current production is now well over 300 boepd, and during the quarter we have added new reserves at both Breton and Matziwin. The resulting increase in cash flow will allow us to fund the three well second quarter drilling program at Breton, and to run and review seismic in preparation for the six well drilling program in south east Alberta and Breton, now planned for the fall." On the prospects for the balance of the year, McCuaig commented: "We have an inventory of over 20 development drilling locations and are confident that we will meet or exceed our 600 boepd exit target for 2006".

FINANCIAL HIGHLIGHTS

Anterra's funds flow from operations were $259,685 ($0.01 per share) for the first quarter of 2006, compared to $260,546 reported for the same period in 2005. Operating netbacks for oil and gas production were $35.51 per boe compared to $31.88 for the first quarter of 2005. Operating netbacks for midstream operations were a negative $0.70 per m3 processed compared to a contribution of $0.88 per m3 in the first quarter of 2005. During the first quarter, midstream operations were adversely affected by high maintenance costs at Suffield, an early spring slowdown at the same location and the booking of uninsurable costs associated with the water injection line break at Breton. Midstream netbacks are expected to improve in the second quarter of 2006 while oil and gas netbacks are expected to remain the same. Net earnings for the first quarter of 2006 were a negative $73,023 after deduction for cash taxes owing of $88,534.



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Three Months Ended
March 31
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2006 2005
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Financial
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Total net revenue $ 1,304,176 $ 1,034,480
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Oil and gas operating margin $ 738,797 $ 557,295
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Net back $/boe for the period $ 35.51 $ 31.88
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Funds flow from operations $ 259,685 $ 260,546
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Funds flow per share, basic $ 0.011 $ 0.012
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Net income (loss)(1) $ (73,023) $ 113,504
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Net income (loss) per share, basic $ (0.003) $ 0.005
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Operating costs per boe $ 19.35 $ 17.92
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G and A per boe $ 15.33 $ 10.67
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Total assets $12,407,015 $ 8,380,398
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Capital Expenditures $ 1,500,181 $ 374,073
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Bank debt plus working capital ($4,098,678) ($2,295,224)
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Shareholders' equity $ 4,274,962 $ 3,033,801
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Weighted average shares o/s 23,865,000 21,930,000
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Share Trading
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High $ 0.66 $ 0.35
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Low $ 0.45 $ 0.25
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Close $ 0.50 $ 0.33
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Trading volume 531,595 678,300
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Operating (6:1 conversion)
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Production volumes
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Natural gas (mcf/d) 439 273
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Oil & NGL (bbls/d) 157 147
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Total (boe/d) 230 193
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Average sale price
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Natural gas ($/mcf) $ 9.54 $ 5.94
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Liquids ($/boe) $ 64.12 $ 59.64
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Barrel of oil equiv. $ per boe) $ 61.93 $ 54.00
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(1) Includes provision for cash income taxes payable of $88,534.


Anterra invested $1.50 million of capital in the first quarter of 2006, of which $1.27 million was incurred for the acquisition of Panterra Energy Corp. Ltd. (the Matziwin property) while the balance was spent on workovers at Breton. The capital program was funded by funds flow from operations, working capital and bank debt. During the first quarter the Company received an increase in its credit facilities to $4.5 million.

PRESIDENTS REPORT

During the first quarter of 2006, Anterra acquired the Matziwin oil property for $1.27 million subject to a hold back to be settled in the third quarter of 2006, and spent $0.23 million on workovers at Breton. An additional $1.05 million of capital scheduled for March 2006 was rescheduled for April 2006 due to weather delays and equipment availability. As a result, the first quarter capital program was completed in early May and oil and gas production has since increased 30% to over 300 boepd compared to the 230 boepd averaged during the first quarter. During the first quarter, midstream operations at Breton have been steady while water disposal operations at Suffield have been impaired by unusually wet weather and an early spring breakup. The Company's midstream volumes averaged 508 m3 per day for the quarter and unit revenue increased to $5.04 per m3 for the quarter compared to $4.49 per m3 for the first quarter of 2005.

OPERATIONS REVIEW

As described in our 2005 annual report, the Company's growth over the next 2 years is anticipated to come from small strategic acquisitions and the development of the Breton, Matziwin and Suffield properties. The Company's first quarter operational focus has been on Breton with three existing well recompletions and extensive planning for a three well drilling program scheduled for early June 2006. This drilling program is the first phase in a development plan aimed at exploiting the extensive remaining oil reserves at Breton through development of the nine section property on 40 acre spacing and the re-engineering of the water flood system. In parallel with these activities, the exploitation program at Matziwin commenced with two wells being recompleted during April, 2006. Although it is too early for management to fully assess the final results of the activity at Matziwin, preliminary results are very encouraging with significant production increases, and further field activity including drilling now scheduled for the fall.

Breton, central Alberta

Following completion of the first quarter capital program in early May, production at Breton is 230 boepd. Management is presently planning for the drilling of three wells in the southern portion of the field, commencing in early June. The program contemplates establishing one of the new wells as a water injector to allow implementation of a nine spot waterflood in this portion of the field. Most of the wells in the southern portion of the field have produced less than 100,000 boe while wells in the north eastern portion of the field where there has been a continual waterflood have produced in excess of 500,000 boe per well. Subject to the successful implementation of this first phase development plan, the Company plans to drill an additional three wells on the west side of the pool and again establish a six or nine spot waterflood program. The 2006 exit target for Breton remains at 400 boepd.

Southeast Alberta

Following completion of the first quarter capital program in early May, production from southeast Alberta (Matziwin, Suffield and Scots Lake) is 80 boepd. At Matziwin, the technical team is evaluating 2-D seismic over the property before finalizing the next phase of the development plan. Management contemplates several more workovers including "fracs" on producing wells and the drilling of at least one new well in the fall. The 2006 exit target for southeast Alberta remains at 200 boepd.

At Scots Lake and Suffield, both properties were shut-in during the latter half of the quarter due to downhole pump problems but were returned to production during the first week of May. The technical team has completed its evaluation of the 3-D seismic run in the Suffield area and has a three well drilling program planned for the fall.

OUTLOOK

The capital program planned for the first quarter was completed on May 5, 2006 and oil and gas production is currently well over 300 boepd. The Company's technical team remains very optimistic on the remainder of the 2006 capital program with nine wells remaining to be drilled between Breton and southeast Alberta. The three development wells at Breton are expected to "spud" in early June. The year end exit target remains a risked 600 boepd with the potential for further upside from better than anticipated drilling results at Breton, Matziwin and Suffield.

CORPORATE UPDATE

The Company is pleased to welcome John McGilvary to the board of directors. Mr. McGilvary was elected at the annual meeting of shareholders held May 18, 2006. He brings significant oil and gas operational experience to Anterra's board of directors. Options to acquire up to 100,000 common shares at $0.40 per share were granted to Mr. McGilvary on May 18, 2006.

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 www.anterra.org.

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 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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