Aspen Group Resources Corporation

Aspen Group Resources Corporation

April 05, 2007 17:38 ET

Aspen Group Reports 2006 Results and Provides Operations Update

CALGARY, ALBERTA--(CCNMatthews - April 5, 2007) - Aspen Group Resources Corporation (TSX:ASR) ("Aspen" or the "Company"), announced that its audited financial results for the year ended December 31, 2006 have been filed. The audited financial statements, notes to the financial statements, and management's discussion and analysis are available for viewing at Aspen reports its results in US dollars.

For the year ended December 31, 2006, Aspen reported a net loss of $10.9 million or $0.14 per share versus a net loss of $3.6 million or $0.06 per share in 2005. The increased loss is primarily due to a ceiling-test write-down on oil and gas assets of $6.3 million in 2006. As at December 31, 2006, Aspen reported a working capital deficit of $5.63 million compared to $0.40 million of working capital in 2005. The reduction in working capital is primarily attributable to costs associated with drilling operations in Manitoba.

Due to the recurring losses from operations, negative cash flows, and the working capital deficit, the Company's auditors have noted in the financial statements their doubt as to the ability of the Company to continue as a going concern. Management believes that despite the financial hurdles and funding uncertainties going forward, it has under development a business plan that if successfully funded and executed will secure the financial restructuring required to significantly improve operating results. Aspen has successfully obtained a bank line of credit for working capital and additional funding which is detailed below. In addition, the Company has cash flow generated from productive oil and gas properties, and the potential to monetize unutilized tax losses.

Corporate and Operations Updates

Aspen has successfully tested its disposal well in the Daly Field, Manitoba. The well was tied into one producing well for a period of 6 days. The ability of the disposal well to manage the large volumes of water associated with oil production in this area resulted in a two-fold increase in daily oil production rates from this well. Aspen is currently in the process of submitting documents for final permitting.

Aspen is currently evaluating development plans to increase production at both its Namaka and Brooks, Alberta properties. The Company is considering options for either increased spacing drilling and/or commingling, which would allow production from two or more zones through the well bore at the same time. The properties currently produce approximately 93 BOEPD.

Effective February 28, 2007, Aspen sold 100% of the shares in United Cementing and Acid Co., Inc. for total consideration of US$175,000, and the assumption of bank indebtedness. After closing adjustments, Aspen received a total of US$155,000 from the sale.

Aspen and its wholly owned Canadian subsidiary Aspen Endeavour Resources, Inc. ("Aspen Endeavour") entered into a loan agreement with Quest Capital Corp. for proceeds of Cdn $1,000,000. The loan calls for monthly interest payments at 18% per annum and for all outstanding balances to be paid in full on December 14, 2007. The loan is collateralized by substantially all of the Aspen Endeavour assets.

Aspen also announced the following changes to its management and board: Peter Toy has replaced Al Thorne as CFO of Aspen. Mr. Toy is a CMA with over 16 years experience in corporate accounting in various senior roles. He has served as CFO for a Canadian oil and gas company and has extensive financial experience with both upstream and downstream companies. Dow West Management, a firm that Mr. Toy is associated with, will assume Aspen's day-to-day accounting functions.

Effective March 31, 2007 Ron Mercer has resigned as vice president of operations and James Unger has stepped down from Aspen's board of directors.

"We appreciate the valuable contributions Ron, Jim, and Al have made to Aspen during their tenure with the Company," stated Robert Calentine, CEO of Aspen. "We wish them well in their future endeavors."

Aspen Group Resources Corporation is an independent oil and natural gas producer engaged in the acquisition, exploration, production and development of oil and natural gas properties in North America. Aspen's shares trade on the Toronto Stock Exchange under the symbol "ASR".

Portions of this document include "forward-looking statements", which may be understood as any statement other than a statement of historical fact. These statements are based on managements' current expectations and are subject to uncertainty and changes in circumstances. Forward-looking statements may include, but are not limited to, statements concerning estimates of recoverable hydrocarbons, expected hydrocarbon prices, expected costs, statements relating to the continued advancement of the Joint Venture's projects and other statements which are not historical facts. When used in this document, and in other published information of Westchester and Aspen, the words such as "could," "estimate," "expect," "intend," "may," "potential," "should," and similar expressions are indicative of a forward-looking statement. Although Westchester and Aspen believe that their expectations reflected in the forward-looking statements are reasonable, the potential results suggested by such statements involve risk and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Forward-looking statements contained in this document are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other applicable securities laws. Certain factors that can affect Westchester's and Aspen's ability to achieve projected results are described in Aspen's Annual Report and Form 20-F, and other reports filed by both companies with the applicable Canadian securities regulatory authorities and by Aspen with the US Securities and Exchange Commission. Factors that can affect the ability of Aspen and Westchester to achieve projected results include, among others, production variances from expectations, uncertainties about estimates of reserves, volatility of oil and gas prices, the need to develop and replace reserves, the substantial capital expenditures required to fund operations, environmental risks, drilling and operating risks, risks related to exploratory and developmental drilling, competition, government regulation, the ability of Aspen and Westchester to implement its business strategy, the potential that projects will experience technical and mechanical problems, geological conditions in the reservoir which may negatively impact levels of oil and gas production and changes in product prices and other risks not anticipated by the Joint Venture or disclosed in published material of Westchester or Aspen. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties.

Contact Information

  • Aspen Group Resources Corporation
    Robert Calentine
    (403) 777-9200