Cheyenne Energy Inc.
TSX VENTURE : CHY

Cheyenne Energy Inc.

November 22, 2006 09:00 ET

Cheyenne Releases Third Quarter Results

CALGARY, ALBERTA--(CCNMatthews - Nov. 22, 2006) - Cheyenne Energy Inc. ("Cheyenne" or the "Company") (TSX VENTURE:CHY) is pleased to announce their financial and operating results for the three and nine months ended September 30, 2006.



HIGHLIGHTS

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Three Months Ended Nine Months Ended
September 30, September 30,
2006 2005 % Change 2006 2005 % Change
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FINANCIAL
($'000s, Except Per
Share Amounts)
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Petroleum and Natural
Gas Revenue($) 637 1,281 (50) 2,816 3,120 (10)
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Cash Flow from
Operations($) 132 289 (54) 1,097 726 51
Per Share-Basic
and Diluted 0.01 0.02 (50) 0.07 0.05 40
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Net Income($) 17 104 (84) 310 199 56
Per Share-Basic
and Diluted 0.00 0.01 (100) 0.02 0.01 100
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Capital Expenditures,
Net($) 826 753 10 2,764 1,859 49
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Working Capital
Deficiency($) 3,984 1,893 110 3,984 1,893 110
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Common Shares
Outstanding ('000s)
Basic 15,493 15,493 - 15,493 15,493 -
Diluted 15,793 15,681 1 15,793 15,681 1
Weighted Average
Common Shares
Outstanding ('000s)
Basic 15,493 15,263 2 15,493 14,538 7
Diluted 15,493 15,266 1 15,493 14,538 7
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OPERATIONS
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Average Daily
Production
Natural Gas(MCF/d) 1,013 1,301 (22) 1,384 1,279 8
Crude Oil
and NGLs(BBLS/d) 12 11 9 12 11 9
Barrels of Oil
Equivalent(BOE/d 6:1) 181 228 (21) 242 224 8

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Average Product
Prices Realized
Crude Oil(CDN$/BBL) 75.74 74.61 (2) 70.88 65.64 8
Natural Gas(CDN$/MCF) 5.91 10.09 (41) 6.85 8.45 (19)
Barrels of Oil
Equivalent(CDN$/BOE) 38.26 61.20 (37) 42.59 51.46 (17)
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In this report, all references to barrels of oil equivalent ("BOE") are calculated converting natural gas to oil at a ratio of six thousand cubic feet of natural gas to one barrel of oil. This is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

"Cash flow from operations" is a non-GAAP measure that represents cash generated from operating activities before changes in non-cash working capital. The Company's determination of cash flow from operations may not be comparable to that reported by other companies.

PRESIDENT'S MESSAGE TO SHAREHOLDERS

Cheyenne had a busy third quarter with the fracture stimulation of the exploratory well at Hawk and the installation of a pump jack on the well. The Company believes the well is producing at lower rates while the reservoir cleans itself of the extra drilling fluids and polymers which were lost into the reservoir. The Company is excited and pleased with the initial oil analysis conducted on the well indicating 56 degree API light oil being produced from the reservoir. At this time, the Company is in the process of filing the necessary documents to obtain its next well license in the area.

With the recent announcement of a $5.0 million financing, the Company is looking forward to further exploration and development of the Hawk play in northwestern Alberta with additional drilling in the fourth quarter of 2006 and first quarter of 2007. As announced, the Company will be issuing 2,222,222 units at a price of $2.25 per unit. Each unit will consist of four flow-through common shares, one common share and one warrant at an exercise price of $0.85 expiring within 18 months of the closing date of the financing. The Company expects the closing of the financing to be on or about December 15, 2006, or other dates as determined.

Production for the quarter decreased 25% to 181 boe per day from second quarter production levels of 242 boe per day due to natural declines on existing production.

Financially, cash flow from operations for the quarter was reduced as a result of a combination of natural production declines and depressed natural gas prices received. With natural gas prices decreasing over 5% from the second quarter and over 49% since the beginning of 2006, the Company's cash flow has been significantly impacted. The increased capital program during the year resulted in a greater draw on the Company's revolving operating loan thereby increasing the interest expense paid as well. Cash flow from operations received a positive boost during the nine months ended September 30, 2006 with the refund of ARTC associated with compensatory royalties paid. Net income for the Company has also been negatively impacted during the period as a result of higher depletion and depreciation rates associated with increased capital spending and no reserve additions yet available from the Hawk well.

The changes in both the economy and the energy industry in the first nine months of 2006, and particularly in the most recent few months, has had and will continue to have dramatic effects on the oil and gas industry. The Company will be impacted directly in 2007 with the elimination of the ARTC effective January 1, 2007. Despite the negative impacts, there is a positive effect emerging for many junior companies. With many larger companies cutting their capital expenditure budget, the utilization rate of the rigs has decreased, creating opportunities for the smaller companies to contract rigs and complete their planned capital programs. Cheyenne plans to take advantage of this shift in the industry's capital allocation and negotiate to commit a rig to its northwestern Alberta Hawk area in order to further delineate this field.

Additional Information

Complete financial statements and additional information relating to Cheyenne is available on the Company's website at www.cheyenneenergy.com or on SEDAR at www.sedar.com.

This press release contains forward-looking statements. These forward-looking statements can generally be identified as such because of the context of the statements including words such as the Company "believes", "anticipates", "expects", "plans", "may", "estimates" or words of a similar nature. These statements are based on current expectations and are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Accordingly, readers are cautioned and no assurances can be given that any of the events anticipated by the forward-looking statements will occur, or if any of them do so, what benefits that we will derive there from. The Company does not undertake any obligation to publicly update or revise any forward-looking statements.


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

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