Ember Resources Inc.
TSX : EBR

Ember Resources Inc.

August 09, 2006 13:38 ET

Ember Resources Inc. Releases Second Quarter 2006 Results

CALGARY, ALBERTA--(CCNMatthews - Aug. 9, 2006) -

Not for distribution to U.S. newswire services or for dissemination in the United States. Any failure to comply with this restriction may constitute a violation of U.S. securities law.

Ember Resources Inc. ("Ember") (TSX:EBR) announced today that it has filed its unaudited interim financial statements and related management's discussion and analysis for the quarter ended June 30, 2006 on www.sedar.com.



Financial Highlights

------------------------------------------------------------------------
Three months Six months Six months
ended ended ended
June 30, 2006 June 30, 2006 Dec 31,2005
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Gross revenue $ 2,249 $ 4,288 $ 4,424
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Net income (loss) $(2,029) $(3,610) $ 215
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- per share basic $ (0.07) $ (0.12) $ 0.01
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- per share diluted $ (0.07) $ (0.12) $ 0.01
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Funds from operations $ 23 $ 401 $ 2,359
------------------------------------------------------------------------
- per share basic $ 0.00 $ 0.01 $ 0.08
------------------------------------------------------------------------
- per share diluted $ 0.00 $ 0.01 $ 0.08
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Property and equipment
additions $ 4,576 $15,623 $30,937
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Total assets $70,646 $70,646 $77,539
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Working capital $ 3,947 $ 3,947 $19,172
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Average shares outstanding
- basic 30,418 30,418 28,176
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Average shares outstanding
- diluted 30,982 30,982 29,121
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Operating Highlights

------------------------------------------------------------------------
Six months
Three months Six months ended
ended ended December
June 30, 2006 June 30, 2006 31, 2005
------------------------------------------------------------------------
Daily avg gas production
(mcf/d) 4,315 3,836 2,415
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Daily avg production (boe/d) 719 639 403
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Operating netback ($/mcf) $ 2.07 $ 2.69 $ 7.15
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Operating netback ($/boe) $ 12.38 $ 16.11 $ 42.92
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CBM wells drilled (gross total) 3 7 44
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- gross Mannville 0 0 8
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- gross Horseshoe Canyon 3 7 36
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CBM wells drilled (net total) 3 7 43
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- net Mannville 0 0 7
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- net Horseshoe Canyon 3 7 36
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Land (000s of net acres) 302 302 308
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Quarterly Highlights

Ember's asset base, operations and management team are 100% focused on extracting coalbed methane (CBM), also known as natural gas from coal. The Company's independent engineers have estimated contingent resources of 1.3 tcf of gas in place on Ember's undeveloped lands.

Ember's continued its strategy of advancing the commerciality of its significant resource base in the Mannville coals, while systematically developing its low-risk Horseshoe Canyon coals.

Second quarter 2006 production averaged 4.32 mmcf/d (719 boe/d), up 29% from 3.35 mmcf/d (559 boe/d) in the first quarter 2006 and is the second consecutive quarter of double digit growth. July production averaged 5.0 mmcf/d (833 boe/d) reflecting start-up of pipelines and production facilities completed during the quarter.

Second quarter capital spending was directed towards completion of previously drilled wells and the construction of facilities and pipelines for Horseshoe Canyon CBM development at Fenn-Big Valley. In late June, Ember began the next phase of Horseshoe Canyon development at Fenn-Big Valley which will add an estimated 1.5-2.0 mmcf/d from a total of 24 wells (21.75 net). The expected onstream date is October 1, 2006. Three wells (3.0 net) in the program were drilled during the second quarter. To date 18 wells (18.0 net) have been drilled and are in various stages of completion. Beyond that program, Ember has 110 net drilling locations in inventory which it plans to drill on a continuous basis over the next two years.

The Company continues to evaluate its Mannville CBM production and acreage position building on its technical expertise for this significant resource play. The Mannville projects at Manola and Rosalind produced an average of 0.77 mmcf/d (128 boe/d), a 47% increase over the first quarter. Ember also performed stimulation operations on previously drilled wells which improved the wellbore inflow characteristics. Further stimulation work is planned for the third quarter. Enhancements to drilling techniques were also implemented for the summer program based on Ember's ongoing experience in the Mannville coals in our core areas. Two new horizontal wells (1.5 net) were drilled in July using these new techniques with the first well at Manola now on production. Early indications are for significantly higher rates of water production and higher downhole pressures than previously drilled wells. The second well at Rosalind will be on production in the next few weeks. Follow-up development wells are scheduled for mid-September.

2006 Capital Program Update

Capital programs for 2006 remain unchanged at $40 million; $15.8 million was spent in the first half of the year with $24.2 million budgeted for the rest of the year. Funding will be from existing cash on hand, cash flow and Ember's line of credit which was increased to $15 million in the second quarter. Low prices and volatility in the natural gas markets make it more difficult to forecast future cash flows and, as a result, the Company is deploying its capital on a project by project basis and will adjust capital spending in the event cash flows are not sufficient to fund the 2006 budgeted program.

In 2006, a total of 28 (25.75 net) Horseshoe Canyon development wells are expected to be drilled at Fenn-Big Valley, seven (7.0 net) of which had been drilled by the end of the second quarter. A total of 10-12 horizontal wells (8.0 net) will be drilled into Ember's Mannville coals at Rosalind and Manola in the second half of the year. The balance of the capital program is reserved for land and further production enhancements.

"Our large resource base has delivered solid production growth in the first six months of the year and is expected to continue that growth into the future. In addition, we have made significant progress in the commercialization or our Mannville resources. The long-term nature of our producing assets and undeveloped resources allow us to economically pursue our prospects despite the recent weakness and volatility in the natural gas markets," said Doug Dafoe, Chairman and CEO.

Outlook

Volatile natural gas markets will likely continue through the summer months as storage levels and supply/demand factors affect the short-term pricing dynamics. Longer term, the outlook for natural gas remains positive, providing strong economic incentives to develop longer-term resource plays. Production additions estimated at 1.5-2.0 mmcf/d scheduled for October 1st will add to Ember's growing production base at a time when gas prices are expected to strengthen as we move into the winter heating season.

Adoption of Shareholder Rights Plan

Effective August 9, 2006, the Board of Directors has adopted a Shareholder Rights Plan (the "Plan"), similar to existing shareholder rights plans adopted by other Canadian public companies.

The objectives of the Plan are to ensure, to the extent possible, that all shareholders of the Corporation are treated equally and fairly in connection with any takeover bid for the Corporation. The Plan discourages discriminatory, coercive or unfair takeovers of the Corporation and gives the Board of Directors time if, in the circumstances, the Board of Directors determines it is appropriate to take such time, to pursue alternatives to maximize shareholder value in the event an unsolicited takeover bid is made for all or a portion of the outstanding Common Shares of the Corporation.

Under the Plan, those bids that meet certain requirements intended to protect the interests of all shareholders are deemed to be "Permitted Bids". Permitted Bids must be made by way of a take-over circular prepared in compliance with applicable securities laws and, among other conditions, must remain open for a minimum of 60 days.

The Plan is subject to approval of the Toronto Stock Exchange, and requires confirmation by Ember shareholders. Ember intends to call and hold a special meeting of shareholders to approve and confirm the Plan within six months. If the Plan is not confirmed by shareholders, the Plan and all outstanding rights will terminate and be void and of no further force and effect.

Additional details regarding the Plan will be available in the Notice of Special Meeting and Information Circular that will be posted to SEDAR and mailed to shareholders prior to the Special Meeting.

The adoption of the Plan is not being proposed in response to, or in anticipation of, any specific takeover bid for the Corporation. The Board of Directors did not adopt the Plan to prevent a takeover of the Corporation, to secure the continuance of management or the directors in their respective offices or to deter fair offers for the Common Shares of the Corporation.

As referred to above, Embers' unaudited interim financial statements and related MD&A for the three and six month periods ended June 30, 2006 can be found at www.sedar.com or www.emberresources.com. To the extent investors do not have access to the internet, copies of the unaudited interim financials and related MD&A can be obtained on request without charge by contacting Ember Resources Inc. at 403-270-0803.

Conference Call

A conference call to review Ember's 2006 second quarter results will take place on August 9, 2006 at 2PM MDT (4PM EDT). The conference call can be accessed by dialing in 15 minutes prior to the scheduled start at 1-866-226-1793. A live webcast will also be provided on: www.emberresources.com. A playback recording of the conference call will be available for 90 days and can be accessed by calling 1-800-408-3053 and enter the pass code 3185731#.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements including expectations of future production, capital expenditures, cash flow and earnings. These statements are based on current expectations that involve a number of risks and uncertainties, which could cause actual results to differ from those anticipated. These risks include, but are not limited to: the risks associated with the oil and gas industry (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses and health, safety and environmental risks), commodity price and exchange rate fluctuation and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Additional information on these and other factors that could affect the Company's operations or financial results are included in the Company's reports on file with Canadian securities regulatory authorities.

Ember Resources Inc. is a resource company specializing in coalbed methane (CBM) with extensive land and resource holdings in Alberta, Canada. Ember's shares are traded on the Toronto Stock Exchange under the trading symbol "EBR."


Contact Information

  • Ember Resources Inc.
    Mr. Douglas A. Dafoe
    Chairman & CEO
    (403) 270-0803
    (403) 270-2850 (FAX)
    or
    Ember Resources Inc.
    Mr. Terry S. Meek
    President & COO
    (403) 270-0803
    (403) 270-2850 (FAX)