Diaz Resources Ltd.

Diaz Resources Ltd.

May 22, 2012 15:32 ET

Diaz Announces Q1 2012 Financial Results

CALGARY, ALBERTA--(Marketwire - May 22, 2012) - Diaz Resources Ltd. (TSX VENTURE:DZR) announces that is has filed on SEDAR its Interim Financial Statements and MD&A for the three months ended March 31, 2012.

Diaz is pleased to report that for the three months ended March 31, 2012, it increased production, revenues and cash flow from operations, compared with the same period in the prior year.

Of significance, 83% of the Company's Q1 2012 revenues were derived from oil production as compared with 44% in Q1 2011. Additionally, this percentage should increase as a result of incremental production from the Macklin project.

The key to Diaz's current growth is the success of the three recently drilled horizontal oil wells at Macklin, Saskatchewan. The three wells have been on production since late March 2012 and each well is currently producing heavy oil at rates between 90 bopd and 120 bopd. Based on the Company's interpretation of 3D seismic and well information, Diaz anticipates that at least ten additional wells can be drilled in this pool. The next of the development wells should commence following breakup.


For the quarter, revenues increased 22% to $1.7 million from $1.4 in Q1 2011. Cash flows from operations increased 13% to $362,000 compared with $320,000 in Q1 2011. Net loss increased to $921,000 compared with a net loss of $53,000 in Q1 2011.

Diaz incurred $1.8 million of capital expenditures during the quarter compared with $778,000 for Q1 2011. Capital expenditures for the quarter were financed primarily from cash flow from operations, working capital and an increase in the Company's bank debt.

At March 31, 2012, Diaz had net current debt of $3.3 million compared with net current debt of $1.7 million at the beginning of the year. The Company's bank line was drawn to $1.2 million at March 31, 2012.

Business Outlook

Diaz expects WTI oil prices to remain above $90 per barrel through the balance of 2012, as demand for oil continues to be strong. Using current heavy oil discounts, this should result in the Company realizing average prices for its heavy oil production in excess of $65 per barrel for the remainder of the year. At this price the Company believes continued development of the Company's heavy oil projects have very positive economics.

Diaz is focused on growth through oil exploration and development. Diaz believes it can currently achieve growth by continuing to develop its Lloydminster and Macklin heavy oil properties.

Longer term growth will result from development of new production and reserves from Diaz's additional heavy oil prospects, developed over the past three years.

Diaz is an oil and gas exploration and production company based in Calgary, Alberta. Diaz's current focus is on oil development and exploration in Alberta and Saskatchewan.

ADVISORY: Certain information in this news release, including drilling plans and projected drilling, completion and equipping costs, and production rates from the Lloydminster and Macklin fields 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, environmental risks, competition from other producers, inability to retain drilling rigs and other services, capital expenditure costs, including drilling, completion and facilities costs, 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 exhaustive.

Where amounts are expressed on a barrel of oil equivalent (boe) basis, natural gas volumes have been converted to barrels of oil at six thousand cubic feet (mcf) per barrel (bbl). Boe figures may be misleading, particularly if used in isolation. A boe conversion of six thousand cubic feet per barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. References to oil in this discussion include crude oil and natural gas liquids (NGLs).

The forward looking statements contained in this press release are made as of the date hereof and Diaz undertakes no obligations to update publicly or revise any forward looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.


Contact Information