Churchill Energy Inc.
TSX VENTURE : CEI

Churchill Energy Inc.

May 29, 2006 16:15 ET

Churchill Announces Q1 Results and Appoints Chief Financial Officer

CALGARY, ALBERTA--(CCNMatthews - May 29, 2006) - Churchill Energy Inc. (TSX VENTURE:CEI) ("Churchill") is pleased to announce operational and financial results for the three months ended March 31, 2006. Comparative numbers are for Outback Exploration Ltd. ("Outback") as a result of the acquisition of Outback in December 2005 being accounted for as a reverse takeover.



Financial and Operating Highlights

FINANCIAL

Three months ended Three months ended
March 31, 2006 March 31, 2005 %Change
------------------------------------------------------------------------
Revenue, net of royalties $ 1,175,311 $ 587,833 100
Funds from operations 134,985 209,035 (35)
Funds from operations per share
Basic & Diluted ($/per share) 0.01 0.02 (50)
Net earnings (loss) (254,159) (360,339) 29
Basic & Diluted ($/per share) (0.01) (0.04) 75
Capital expenditures,
net of dispositions 2,476,767 814,386 204
Total assets 44,705,624 12,131,929 268
Bank Debt - 1,400,000 (100)
Working capital,
excluding bank debt 7,592,371 (476,477) 169
Shareholders' equity 36,986,268 8,471,121 337
Common shares issued and
outstanding
Basic 27,839,808 8,883,384 213
Diluted 29,674,808 10,012,641 196

OPERATIONS

Average daily production
Natural gas (mcf/d) 1,152 1,091 6
Crude oil and NGLs (bbls/d) 154 8 1,825
Barrels of oil equivalent
(BOE/d) 346 190 82
Average selling prices
Natural gas ($/mcf) 7.31 7.08 3
Crude oil and NGLs ($/bbl) 46.18 49.96 (8)
Barrels of oil equivalent
($/BOE) 44.79 42.80 5
Wells drilled
Gross 4 2 100
Net 0.78 0.75 4
Success (%) 100 50 100
Undeveloped Land (net acres) 50,005 18,209 175


Q1 Highlights

Highlights for Q1 2006 are as follows:

- Generated gross proceeds of $12.9 million by completing an equity financing in March that resulted in the issuance of 2,325,600 flow through shares at a price of $2.15 per share and 4,644,500 common shares at a price of $1.70 per share;

- Announced the signing of a purchase and sale agreement to acquire a complementary oil and gas property in the Smoky area of West Central Alberta for $9.55 million (prior to adjustments). The property includes 110 boe/d of production, production facilities, operatorship and 5,126 acres of undeveloped land;

- Reported consolidated revenues, net of royalties, of $1,175,311, up from $587,833 in 2005, which is an increase of 100%;

- Drilled 4 (0.78 net working interest) wells during the quarter resulting in 3 (0.6 net) oil wells and 1 (0.2 net) gas well, for an overall success rate of 100%; and

- Increased daily average production by 82% to 346 boe/d, up from 190 boe/d in 2005.

Churchill is currently producing approximately 525 boe/d as a result of the closing of the Smoky property acquisition and production additions from the Grand Forks area. The Board of Directors of the Company has also approved an increase to the capital expenditure budget of $4 million to $16 million for 2006, excluding acquisitions.

Churchill is pleased to announce the appointment of Mr. Thanh Kang to the position of Vice President Finance and Chief Financial Officer. In conjunction with this appointment the Company has issued 150,000 stock options in accordance with the stock option plan.

Churchill will be filing its quarterly report for the three months ended March 31, 2006 including the financial statements, accompanying notes and MD&A on SEDAR (www.sedar.com) and on the company's website at www.churchillenergy.ca. Churchill is a Calgary-based junior oil and natural gas company with operations in Alberta and Saskatchewan. The common shares of Churchill are listed on the TSX Venture Exchange and trade under the symbol "CEI".

Forward Looking Statements: Certain information regarding Churchill in this news release including management's assessment of future plans and operations, production estimates, drilling inventory and wells to be drilled, timing of drilling and tie-in of wells, productive capacity of new wells, capital expenditures and the timing thereof, may constitute forward-looking statements under applicable securities laws and necessarily involve risks including, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, the timing and length of plant turnarounds and the impact of such turnarounds and the timing thereof, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources. As a consequence Churchill's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly no assurance can be given that any events anticipated by the forward-looking statements will transpire or occur, or, if any of them do so, what benefits Churchill will derive therefrom. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could effect Churchill's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com), at Churchill's website (www.churchillenergy.ca). Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and Churchill does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

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.

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

Contact Information

  • Churchill Energy Inc.
    780, 700 - 4th Avenue S.W.
    Calgary, Alberta T2P 3J4
    or
    Churchill Energy Inc.
    Kelly D. Cowan
    Chief Executive Officer
    (403) 693-3001
    Email: kcowan@churchillenergy.ca
    or
    Churchill Energy Inc.
    James P. Baker
    President
    (403) 698-8242
    Email: j.baker@churchillenergy.ca