Culane Energy Corp.
TSX VENTURE : CLN

Culane Energy Corp.

May 28, 2009 17:01 ET

Culane Energy Releases 2009 First Quarter Results

CALGARY, ALBERTA--(Marketwire - May 28, 2009) - Culane Energy Corp. ("Culane"or the "Company") (TSX VENTURE:CLN) announces its financial and operating results for the first quarter ended March 31, 2009. The unaudited Financial Statements and related Management's Discussion and Analysis have been filed with Canadian securities regulatory authorities on SEDAR at www.sedar.com and posted on the Company's website at www.culaneenergycorp.com.

Q1 - 2009 Highlights (per share information stated below is based on weighted average - basic outstanding shares)

- Production averaged 1,706 BOE/d for Q1/09 compared to 2,477 BOE/d for Q1/08 (Q4/08 production was 1,787 BOE/d). Production mix was 72% oil and 28% natural gas for Q1/09.

- Prices for Q1/09 averaged $44.27 per bbl for oil and $5.08 per Mcf for natural gas compared to Q1/08 prices of $80.80 per bbl for oil and $8.30 per Mcf of natural gas.

- Gross revenues were $6.2 million for Q1/09 compared to $15.8 million for Q1/08, a 60% decrease. This was due to a 32% decrease in the Company's production for Q1/09 compared to Q1/08, and a 42% decrease in commodity prices received in the two comparative quarters.

- Cash flow for Q1/09 remained consistent with Q4/08 at $2.7 million, or $0.12 per share, compared to $8.9 million for Q1/08, or $0.43 per share.

- The Company recorded a loss of $1.7 million for Q1/09, or $0.07 per share, compared to earnings of $2.9 million, or $0.14 per share in Q1/08.

- Capital expenditures of $1.7 million were invested in Q1/09 for the drilling of four water injection wells, compared to $12.7 million in Q1/08 to drill 18 oil and gas wells at Killam. The Company is now in the water-flood development phase at its Killam oil field.

- The Company began injecting water at its Killam North water-flood pilot project through two injector wells drilled in 2008.

- Net debt (bank debt less working capital) at March 31, 2009 was $12.8 million compared to $13.2 million at December 31, 2008 and $27.3 million at March 31, 2008. Debt to annualized cash flow is 1.17 to 1 (based on first quarter cash flow), while debt to equity is 0.25 to 1.

- The Company was drawn to $14.6 million on its credit facility of $30 million at March 31, 2009. The credit facility is currently under review.

- During the quarter, the Company reacquired and returned to treasury, 723,500 Culane shares at an average price of $0.99 per share, through the Normal Course Issuer Bid process.

During the first quarter of 2009, Culane focused its efforts on government regulatory issues, reservoir engineering and facilities design for the Killam waterflood project. Culane began injecting water into the two Lloydminster Formation wells on January 6, 2009 and has to date injected approximately 165,000 barrels of water at a rate of 1250 barrels per day. Culane is closely monitoring fluid levels in all of its Killam wells but at this time it is premature to provide any report other than that the formation is taking the water. In the first quarter of 2009, Culane drilled and cased an additional 4 Killam vertical injector wells in Section 16-46-12W4M.

Culane has submitted applications to the ERCB (Government Regulator) for a full field Killam water flood. Culane anticipates receiving Government approval for the full field water flood by late third quarter or early fourth quarter. Culane will begin construction of its water injection facilities near the end of the third quarter. Once the water injection facilities are constructed and Culane has received the required Government approvals then Culane will be able to increase water injection rates from approximately 1,250 up to 6,000 barrels per day. This will be achieved through a combination of vertical well injectors and converted horizontal wells. When Culane has replaced sufficient reservoir voidage and a clear increase in well fluid levels is observed Culane intends to introduce surfactant polymer to the water flood. Existing pool analogies indicate that the addition of surfactant polymer has the potential to increase the oil recovery factor to in excess of 40%. Culane has begun core testing of compatible polymers for the Killam Lloydminster reservoir and has already conducted fluid compatibility testing at an independent lab.

Production in the first quarter was 1,706 BOE/d with a mix of 72% oil and 28% natural gas. First quarter production dropped 5% from the fourth quarter 2008 production of 1,787 BOE/d, and has an additional 300 BOE/d of shut-in production pending the resolution of regulatory issues. These regulatory issues are being resolved and the Government has recently begun approving previously announced shut-in wells to be brought back on production.

Gross revenues were $6.2 million for Q1/09 with cash flow of $2.7 million for the quarter. Bank debt plus working capital (net debt) at March 31, 2009 was $12.8 million. Debt to annualized cash flow is 1.17 to 1 (based on first quarter cash flow) while debt to equity is 0.25 to 1. The Company's credit facility of $30 million is currently under review. Also during the quarter, the Company reacquired and returned to treasury, 723,500 Culane shares at an average price of $0.99 per share, through the Normal Course Issuer Bid process.

After several years of capturing and developing the Killam project, the project has entered a facilities and production engineering phase. This has allowed Culane to turn its attention back to exploration. With the declining economic conditions in the local and world economies including the oil and gas sector, Culane has maintained a healthy financial position. Because of these current circumstances, Culane sees an attractive window of opportunity in Western Canada to potentially grow the company to the next level. As 2009 progresses, we look forward to updating our shareholders on our progress. Culane will continue to exploit in-house developed, high working interest oil opportunities, and grow the company mainly through the drill bit as it has done since its inception. Culane will also continue to evaluate strategic oil acquisition opportunities.

About Culane Energy Corp.

Culane is a junior oil and gas company engaged in the exploration, development and production of oil and natural gas in Alberta.

ADVISORY: Certain information regarding Culane in this news release including management's assessment of future plans and operations, timing of drilling and tie-in of wells, productive capacity of the new wells, expected production rates, drilling success rates, dates of commencement of production, 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, unexpected decline rates in wells, wells not performing as expected, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements. Readers are cautioned that the foregoing list of factors is not exhausted. Additional information on these and other factors that could effect Culane'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). Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and Culane 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.

Disclosure provided herein in respect of barrels of oil equivalent (boe) 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.

23,122,754 Class A Shares

Neither the TSX Venture Exchange nor its Regulation Services Provider accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Culane Energy Corp.
    Donald D. Staus
    President and Chief Executive Officer
    (403) 263-2773
    (403) 263-2776 (FAX)
    Email: dstaus@culaneenergycorp.com
    or
    Culane Energy Corp.
    Stewart Larsen
    Vice President of Finance and Chief Financial Officer
    (403) 263-2773
    (403) 263-2776 (FAX)
    Email: slarsen@culaneenergycorp.com
    or
    Culane Energy Corp.
    Thomas H. Field
    Vice President, Engineering and Operations
    (403) 263-2773
    (403) 263-2776 (FAX)
    Email: tfield@culaneenergycorp.com
    or
    Culane Energy Corp.
    420, 333 - 5th Avenue S.W.
    Calgary, Alberta T2P 3B6
    Website: www.culaneenergycorp.com