Cobalt Energy Ltd.

Cobalt Energy Ltd.

March 25, 2008 14:10 ET

Cobalt Announces 2007 Year-End Financial Results

CALGARY, ALBERTA--(Marketwire - March 25, 2008) -


Cobalt Energy Ltd. (TSX VENTURE:CB.A) (TSX VENTURE:CB.B) ("Cobalt" or the "Company") is pleased to announce that it has filed with applicable Canadian securities regulatory authorities its audited year-end financial statements and related Management Discussion and Analysis for the year ending December 31, 2007. These filings are available for review at

Highlights for the 2007 year represents Cobalt's initial seven months of operations and are as follows:

2007 Highlights

- Cobalt assembled its management team and closed its initial public offering on May 29, 2007 raising gross proceeds of $5.3 million. The Company's shares began trading on the TSX Venture Exchange under the symbols CB.A and CB.B on June 8, 2007.

- Cobalt was active during the year acquiring Crown mineral rights, conducting seismic programs and drilling two (1.7 net) exploration wells as it executes the initial phase of its exploration drilling program.

- The Company acquired 1,920 acres (three sections) of undeveloped Crown land at 100% working interest located at its core exploration area at Boundary Lake, Alberta. Cobalt also acquired 2,560 acres (four sections) at 100% working interest of undeveloped Crown land in its core exploration area in East Central Alberta.

- Seismic activity included shooting 25 km of new proprietary seismic and interpretation of 55 km of industry trade seismic data at Boundary Lake. At East Central Alberta the Company evaluated 33 km of trade seismic and subsequently shot 25 km of new proprietary seismic.

- The Company drilled 2 (1.7 net) exploration wells in the second half of the year resulting in one (1.0 net) abandoned well and one (0.7 net) suspended well.

- Capital invested in 2007 totaled $2.3 million. The program included $1.1 million for drilling, $0.7 million for seismic, $0.3 million on land acquisitions, and $0.2 million for facilities.

- At December 31, 2007, Cobalt had $3.7 million in cash and short term deposits, a working capital surplus of $2.7 million, no outstanding bank debt and has completed $1.9 million of tax eligible expenditures with $3.4 million flow-through obligation remaining to be renounced by December 31, 2008.

- During the fourth quarter, Cobalt entered into an agreement to acquire approximately 20 boe/d production and 1,200 net acres of undeveloped land at Woking, Alberta, located in the Peace River Arch region, in exchange for $375,000 in cash. This property acquisition subsequently closed on January 8, 2008.

Activity Update

Cobalt's growth strategy employs both drill bit activity and property or corporate acquisitions. The Woking property acquisition establishes Cobalt's initial production of approximately 20 boe/d (70% light crude oil) within the Company's primary core area of the Peace River Arch. The acquisition also provides an estimated 16,000 boe Proven plus Probable reserves, and land holdings comprised of 8,480 gross acres (3,600 net acres) with approximately 1,200 undeveloped net acres.

In December 2007, Cobalt drilled its first exploration well into the Triassic formation at its Boundary Lake prospect located in the Peace River Arch. Upon testing, the well did not prove economic rates of hydrocarbons and was suspended. Further exploration drilling will commence after the initial low risk exploitation work at the Woking property is completed. The Woking recompletions include up to five oil well recompletions. This work is planned to begin during the second quarter, after the spring break-up period.


Cobalt's 2008 business plan is comprised of three strategic elements. The first element is to build our base production during the first and second quarters by exploiting the low risk opportunities at our recently acquired Woking property. These opportunities are primarily targeting crude oil and with the recent oil pricing levels this activity is expected to increase our production base with attractive operating netbacks. Second, we will be building our exploration drilling inventory with internally generated prospects and plan to drill up to six exploration wells in the second half of the year to fulfill our remaining $3.4 million flow-through obligation by December 31, 2008. The majority of capital expenditures will be directed towards the Peace River Arch area exploring for liquids-rich natural gas and crude oil well recompletions at Woking. Concurrently, we anticipate adding to our current undeveloped land position in multi-zone regions of Alberta, and to build our production base beyond the Woking property. Finally, acquisitions are a part of Cobalt's growth strategy and the Company will be continually evaluating property or corporate acquisition opportunities which are well-suited to its business plan. We look forward to an active and productive year ahead.

Reader Advisory - This news release contains certain forward-looking statements, which include assumptions with respect to completion of an acquisition, increase to production and reserves and use of capital. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect. All such forward looking statements involve substantial known and unknown risks and uncertainties, certain of which are beyond the Company's control. Such risks and uncertainties include, 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, tax treatment (including royalties), inability to retain drilling rigs and other services, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, the impact of general economic conditions in Canada, the United States and overseas, industry conditions, changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof, and obtaining required approvals of regulatory authorities. The Company's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits, including the amount of proceeds, that the Company will derive therefrom. Readers are cautioned that the foregoing list of factors is not exhaustive. All subsequent forward-looking statements, whether written or oral, attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and the Company 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. BOE or boe/d may be misleading particularly if used in isolation. A BOE conversion of 6mcf:1bbl is based as an energy equivalency conversion method primarily applicable at the burner tip and does not necessarily represent a value equivalency at the well head.

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

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