Ember Resources Inc.
TSX : EBR

Ember Resources Inc.

May 09, 2008 08:30 ET

Ember Resources Inc. Reports 2008 First Quarter Results

CALGARY, ALBERTA--(Marketwire - May 9, 2008) -

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Ember Resources Inc. ("Ember") (TSX:EBR) announced today that it has filed its unaudited financial statements and related management's discussion and analysis ("MD&A") for the quarter ended March 31, 2008 on www.sedar.com.



Financial Highlights

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Three Three
months months
ended ended
March 31, March 31, Percentage
(000s except per share amounts) 2008 2007 Change
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Natural gas sales $ 5,475 $ 3,820 43
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Funds from operations $ 2,651 $ 1,929 37
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- per share basic & diluted $ 0.07 $ 0.06 17
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Net income (loss) $ 68 $ (107) 164
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- per share basic & diluted $ 0.00 $ (0.00) -
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Capital investment additions $ 3,052 $ 4,571 (33)
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Property acquisition $ - $ 8,806 (100)
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Total assets $ 111,372 $ 93,251 19
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Net debt $ 20,082 $ 7,582 165
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Shares outstanding 36,103 36,075 -
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Operating Highlights

----------------------------------------------------------------------------
Three Three
months months
ended ended
March 31, March 31, Percentage
(000s except per unit amounts) 2008 2007 Change
----------------------------------------------------------------------------
Daily avg gas production (mcf/d) 7,963 5,890 35
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Daily avg production (boe/d) 1,327 982 35
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Average sales price ($/mcf) 7.56 7.21 5
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Royalties ($/mcf) 0.79 0.68 16
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Operating expenses ($/mcf) 1.80 1.23 46
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Transportation expenses ($/mcf) 0.19 0.19 -
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Operating netback ($/mcf) 4.78 5.11 (6)
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Operating netback ($/boe) 28.62 30.62 (6)
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CBM wells drilled (gross/net) 18.0/8.8 1.0/1.0 1,700/780
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- Mannville -/- 1.0/1.0 (100)/(100)
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- Horseshoe Canyon 18.0/8.8 -/- NA
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Land (000s of net acres) 285 301 (5)
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Highlights

Financial performance

- First quarter funds from operations increased 37% to $2.7 million ($0.07/share diluted) from $1.9 million ($0.06/share diluted) in 2007.

- The Company recorded net income of $68 thousand for the first quarter of 2008 ($0.00/share diluted) as compared to a net loss of $107 thousand ($0.00/share diluted) in 2007.

- Capital expenditures totaled $3.1 million in the first quarter of 2008 as compared to $13.4 million spent in Q1 2007, which included the $8.8 million acquisition of the Acme property.

- At the end of Q1 2008 Ember had net bank debt and a working capital deficiency totaling $20.1 million. The Company recently renegotiated and increased its bank line of credit to $30 million.

- Significant improvement in the debt to cash flow ratio and balance sheet flexibility has resulted from increasing cash flows and an expansion of existing lines of credit. First quarter annualized debt to cash flow ratio decreased to 1.9 times from 3.2 times recorded in Q4 2007. The Company's financial flexibility will continue to improve with annualized debt to cash flow expected to decline to less than 1.5 times by the end of the year.

Operating performance

- Average production for the quarter increased 35% to 8.0 mmcf/d from 5.9 mmcf/d in 2007. Production per share increased by the same 35% over the same period. First quarter production grew 11% over average production recorded in the fourth quarter of 2007. The Company exited the quarter with average production of 8.5 mmcf/d.

- Drilling activity was focused at Ember's Acme property with 18 gross wells (8.8 net wells) drilled. All but one well were operated by Ember. This program commenced in mid-January and was completed within six weeks with all wells on-stream in March.

- The Company reported year-end proved plus probable reserves of 51.2 Bcf. Drilling activity in the quarter concentrated on converting probable and proved undeveloped reserves into proved producing reserves. The Company estimates that 2.9 Bcf of gas was added to the total proved category, of which 2.1 Bcf were converted probable reserves and 0.8 Bcf were new reserve additions. Proved developed producing reserves increased by 1.8 Bcf or 12% to 16.3 Bcf.

- Ember continues to expand its low cost, low risk Horseshoe Canyon CBM production base. With the successful start-up of its Acme property in Q4 2007, Ember operates two production bases with 190 future development locations in inventory. A $10 million increase in the 2008 capital program to $25 million has increased the drilling program to 60-65 net Horseshoe Canyon wells for the year.

- Minimal activity was conducted on the Company's Mannville CBM assets during the quarter. Field operations were optimized to reduce operating costs and to increase performance of remaining producing Mannville wells. During the quarter, discussions were held with a number of interested parties to explore joint venture opportunities to exploit the Mannville potential. The Company has not received any acceptable proposals at this time. Higher gas prices and favorable treatment of multi-lateral horizontal wells under the new Alberta royalties improves Mannville CBM economics substantially. The Company is evaluating options to increase capital spending on its 900 Bcf contingent resource later in the year or in 2009.

Ember to Increase Capital Spending and Accelerate Production Growth

North American natural gas markets and prices have improved dramatically over the past few months. Normal winter heating demands together with reduced imports of LNG have all but eliminated storage surpluses which had kept natural gas prices weak for the past two years. Current strip pricing is forecasting 2008 AECO natural gas prices to average $9.50/mcf as compared to $6.44/mcf averaged in 2007.

The Company's Board of Directors has approved a $10 million increase in capital spending in 2008 to $25 million for the year. Ember will accelerate its Horseshoe Canyon drilling programs at both Acme and Fenn-Big Valley. Beginning in the second quarter, the Company expects to drill an additional 55-60 net wells bringing 2008 total drilling to 60-65 net Horseshoe Canyon CBM wells. Forecasted exit rate production has been increased to 12 mmcf/d from 10 mmcf/d. Based on a $9.00/mcf AECO gas price, cash flows are forecasted at $15.7 million. Ember's debt to cash flow ratio will continue to decline during the year with fourth quarter annualized debt to cash flow estimated at 1.3 times.

"The increase in capital spending will showcase Ember's ability to bring on a significant number of low cost, predictable Horseshoe Canyon wells over a short period of time," said Doug Dafoe, Chairman and CEO. "Our operational flexibility allows us to react quickly to any changes up or down in the volatile commodity market."

As referred to above, Embers' audited financial statements and related MD&A for the quarter ended March 31, 2008 can be located at www.sedar.com or www.emberresources.com. To the extent investors do not have access to the internet, copies of the unaudited 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 first quarter 2008 results will take place on May 9, 2008 at 9:00 AM MDT (11:00 AM EDT). The conference call can be accessed by dialing in 15 minutes prior to the scheduled start at 1-866-334-3876. 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 1-866-245-6755 and entering the pass code 765852.

Reader Advisory

FORWARD-LOOKING STATEMENTS

This press release may contain forward-looking statements including future production, anticipated capital expenditures and development plans. 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. Actual results, performance or achievement could differ materially from those expressed in, or implied by, such 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. Except as required by law, Ember undertakes no obligation to update or revise any forward looking statements. 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.

BOE Disclosure: 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.

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)
    Website: www.emberresources.com