Diaz Resources Ltd.
TSX : DZR

Diaz Resources Ltd.

March 31, 2006 09:00 ET

Diaz Reports Improved Financial and Operating Results, and Increased Reserves, for 2005

CALGARY, ALBERTA--(CCNMatthews - March 31, 2006) - Diaz Resources Ltd. (TSX:DZR) is an oil and gas exploration and production company based in Calgary, Alberta. Diaz's current focus is on the exploration for natural gas along a deep Wilcox Trend in Texas and shallow gas in southern Alberta.

Financial and Operating

Diaz Resources Ltd. today reported record financial and operating results for the year ended December 31, 2005. Revenue for the year increased by approximately 30%, to $18.6 million from $14.3 million in 2004. Higher revenues resulted from increases in commodity prices and production, during the year.

Cash flow for the year increased to $12.1 million, or $0.20 per share, fully diluted, compared with $8.8 million, or $0.15 per share in 2004. The Company reported earnings of $4.4 million, or $0.07 per share, compared with earnings of $1.5 million, or $0.03 per share in the prior year.

Oil and gas production increased to average 1,212 BOEd, compared with 1,175 BOEd in 2004. Natural gas production remained relatively unchanged at 6.3 MMcfd for the year, while oil production increased by 46%, to 161 Bopd from 110 Bopd in 2004.

Exploration

United States

The most significant event of 2005 was the drilling of two deep multiple pay Wilcox gas wells on the Allen Ranch prospect in Lavaca County, Texas. In addition, a second Wilcox well on the Hound Dog prospect, which was drilled subsequent to year end, also encountered multiple Wilcox zones. These wells provide information and encouragement for an increased development program on these prospects, during 2006. Diaz also has plans for development drilling operations on its Mustang Creek property and an exploration well on a new prospect, at Northwest Speaks, also on the Wilcox Trend.

Canada

Diaz participated in the drilling of a new oil pool discovery in southern Alberta and its first horizontal oil well at Parkman, Saskatchewan. In 2006, the Company plans to continue to drill infill gas wells at Retlaw and Enchant, to explore for natural gas in central Alberta, and to follow up on two oil wells drilled in 2005, with new wells in the Hays area of Alberta and at Parkman in Saskatchewan.

Reserves

Diaz also announced that an independent evaluation of the Company's oil and gas reserves, conducted by AJM Petroleum Consultants, dated March 20, 2006, has assigned proved and probable plus reserves of 5.5 million BOE to the Company's properties, having a net present value, before income tax, of $128.4 million, at a 10% discount rate. The Company's proved plus probable reserves increased by 15% and the net present value of the reserves increased by 95%, during the year.



SUMMARY OF OIL AND GAS RESERVES
AND NET PRESENT VALUES OF FUTURE NET REVENUE
AS OF DECEMBER 31, 2005
FORECAST PRICES AND COSTS

RESERVES
-----------------------------------------------------
COMPANY TOTAL LIGHT AND NATURAL GAS
------------- MEDIUM OIL HEAVY OIL NATURAL GAS LIQUIDS
-----------------------------------------------------
RESERVES Gross Net Gross Net Gross Net Gross Net
CATEGORY (MBbl)(MBbl) (MBbl)(MBbl) (MMcf) (MMcf) (MBbl)(MBbl)
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PROVED
Developed
Producing 206 171 - - 6,828 5,601 27 19
Developed
Non-producing 11 9 - - 1,464 1,177 - -
Undeveloped 63 57 - - 7,128 6,178 14 10
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TOTAL PROVED 280 238 - - 15,421 12,956 41 29
PROBABLE 101 86 - - 14,955 12,186 17 12
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TOTAL PROVED
PLUS PROBABLE 382 323 - - 30,376 25,142 58 41
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NET PRESENT VALUES OF FUTURE NET REVENUE
------------------------------------------
COMPANY TOTAL BEFORE INCOME TAXES DISCOUNTED AT
------------- (% per year)
------------------------------------------
0 5 10 15 20
RESERVES CATEGORY (MM$) (MM$) (MM$) (MM$) (MM$)
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PROVED
Developed Producing 55.7 49.0 44.2 40.5 37.6
Developed Non-producing 10.5 9.2 8.2 7.4 6.7
Undeveloped 40.6 30.8 24.5 20.2 17.0
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TOTAL PROVED 106.8 89.0 76.9 68.0 61.3
PROBABLE 98.5 69.0 51.5 40.3 32.8
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TOTAL PROVED PLUS
PROBABLE 205.3 158.0 128.4 108.4 94.1
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NET PRESENT VALUES OF FUTURE NET REVENUE
------------------------------------------
COMPANY TOTAL AFTER INCOME TAXES DISCOUNTED AT
------------- (% per year)
------------------------------------------
0 5 10 15 20
RESERVES CATEGORY (MM$) (MM$) (MM$) (MM$) (MM$)
---------------------------------------------------------------------
PROVED
Developed Producing 44.2 38.7 34.9 32.1 29.7
Developed Non-producing 6.8 5.9 5.2 4.6 4.2
Undeveloped 26.9 20.0 15.6 12.7 10.4
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TOTAL PROVED 77.8 64.7 55.8 49.4 44.4
PROBABLE 65.7 45.6 33.7 26.2 21.0
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TOTAL PROVED PLUS
PROBABLE 143.6 110.3 89.6 75.5 65.4
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SUMMARY OF PRICING AND INFLATION RATE ASSUMPTIONS
AS OF DECEMBER 31, 2005
FORECAST PRICES AND COSTS

OIL NATURAL GAS NGLs
-------------------------------------------------------------
Edmonton
WTI Par Price AECO NYMEX Edmonton Par Price
Cushing 40 degrees Gas Gas ---------------------------
Oklahoma API Price Price Propane Butane Condensate
($US ($Cdn ($Cdn ($US ($Cdn ($Cdn ($Cdn
YEAR /bbl) /bbl) /Mcf) /Mcf) /bbl) /bbl) /bbl)
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Forecast
2006 60.00 69.60 11.50 11.50 45.25 55.70 73.10
2007 61.20 71.00 10.50 10.20 46.15 56.80 74.55
2008 62.45 72.50 8.90 8.85 47.15 58.00 76.15
2009 61.60 71.50 8.50 8.50 46.50 57.20 75.10
2010 59.55 69.10 8.70 8.65 44.90 55.30 72.55
2011 55.15 63.90 8.90 8.85 41.55 51.10 67.10
2012 56.35 65.30 9.10 9.00 42.45 52.25 68.55
2013 57.45 66.60 9.30 9.20 43.30 53.30 69.95
2014 58.60 67.95 9.50 9.35 44.15 54.35 71.35
2015 59.75 69.30 9.75 9.55 45.05 55.45 72.75
2016 60.90 70.70 10.00 9.75 45.95 56.55 74.25
2017 62.10 72.10 10.20 9.95 46.85 57.70 75.70
2018 63.40 73.60 11.45 10.15 47.85 58.90 77.30
2019 64.65 75.10 10.70 10.35 48.80 60.10 78.85
2020 65.95 76.60 10.90 10.55 49.80 61.30 80.45
2021 67.30 78.20 11.15 10.75 50.85 62.55 82.10
2022 68.65 79.80 11.45 11.00 51.85 63.85 83.80
2023 70.00 81.40 11.70 11.20 52.90 65.10 85.45
2024 71.40 83.05 12.00 11.45 54.00 66.45 87.20
2025 72.80 84.70 12.20 11.65 55.05 67.75 88.95
2026+ 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
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Notes:

(1) These summary tables identify benchmark reference pricing
schedules that might apply to a reporting issuer.
(2) Inflation rates (for forecasting prices and costs) increasing at
the rate of 2% per year.
(3) Exchange rates (used to generate the benchmark reference prices
in these tables) remaining constant at 0.85.
(4) Definitions and other information concerning the reserve report
may be obtained in the Company's AIF filed on SEDAR.


SEDAR Filings

Further information regarding financial and operating results may be obtained at www.sedar.com, where the Company's MD&A and financial statements have been filed.

Diaz has also filed its Annual Information Form ("AIF"), which includes the Company's reserves data and other oil and gas information for the year ended December 31, 2005, as mandated by National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities of the Canadian Securities Administrators. Copies of Diaz's AIF may be obtained at www.sedar.com.

BOE Presentation - The term 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. All BOE conversions in this report are derived by converting gas to oil in the ratio of six Mcf of gas to one Bbl of oil.

Financial Reporting - All numbers are reported in Canadian dollars.



Summary of Operations

Years Ended December 31
-------------------------
(Thousands, except per share amounts) 2005 2004
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Financial
Total revenue $ 18,567 $ 14,281
Cash flow from operations $ 12,134 $ 8,785
per share, basic and diluted $ 0.20 $ 0.15
Net earnings for the year $ 4,416 $ 1,544
per share, basic and diluted $ 0.07 $ 0.03
Property, plant and equipment
Additions $ 13,194 $ 11,804
Dispositions $ 962 $ 212
Net debt $ 7,475 $ 9,095
Total assets $ 56,588 $ 46,675

Total shares outstanding 61,550 59,601

Operations

Production
Gas (MMcfd) 6.3 6.4
Oil (Bopd) 161 110
BOEd (6Mcf = 1Bbl) 1,212 1,175

Product Prices
Gas ($/Mcf) $ 8.64 $ 6.77
Oil ($/Bbl) $ 62.13 $ 47.05

Reserves (proved plus probable,
future costs and prices)
Gas (Bcf) 30.3 26.8
Oil (MBbl) 439 370
BOE (Millions) 5.5 4.8
Present value, before tax
($Millions at 10%) $ 128.4 $ 65.9

Undeveloped land holdings (net acres)
Canada
Alberta 66,424 79,505
Saskatchewan 4,235 4,801
United States 1,648 3,228
-------------------------
Total net acreage 72,307 87,534
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Forward-looking statements - the press release today contains "forward-looking" information. Actual results could differ materially from the conclusions, forecasts or projections in the forward-looking information. Certain material factors and assumptions were applied in drawing the conclusions or making the forecasts or projections as reflected in the forward-looking information. Additional information about the material factors that could cause actual results to differ materially from the conclusion, forecast or projection in the forward-looking information and the material factors or assumptions that were applied in drawing the conclusion or making the forecast or projection as reflected in the forward-looking information is contained in the press release.

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

Contact Information

  • Diaz Resources Ltd.
    Robert W. Lamond
    Chairman
    (403) 269-9889
    (403) 269-9890 (FAX)
    or
    Diaz Resources Ltd.
    Charles A. (Tony) Teare
    Executive Vice President
    (403) 269-9889
    (403) 269-9890 (FAX)
    Email: info@diazresources.com
    Website: www.diazresources.com