Excelsior Energy Limited
TSX VENTURE : ELE

Excelsior Energy Limited

August 27, 2009 09:00 ET

Excelsior Announces Second Quarter 2009 Results

CALGARY, ALBERTA--(Marketwire - Aug. 27, 2009) - Excelsior Energy Limited (TSX VENTURE:ELE) ("Excelsior" or the "Company") announces it has filed financial statements and management's discussion and analysis for the three and six month periods ended June 30, 2009 and 2008. These materials can be found online at www.sedar.com.

"We have made significant progress towards the development of our Hangingstone property with the submission of our COGD experimental project application to the Alberta Government" said Dr. David Winter, Excelsior's President and Chief Executive Officer. "The application was an important milestone for Excelsior and the culmination of extensive geological, engineering and environmental work that was completed on time and on budget. That work was enhanced by the excellent results from last winter's delineation drilling program which increased our contingent resources assigned by independent engineers by 45% from their previous year's assessment and underscores Excelsior's growing resource potential."

Second Quarter 2009 Highlights

- Excelsior submitted an in situ combustion experimental project application ("COGD Project Application") to the Alberta Energy Resources Conservation Board ("ERCB") and Alberta Environment ("AENV") in June, 2009. The COGD Project Application will seek approval to operate three COGD well arrays with a production target of up to 1,000 barrels of bitumen per day. Regulatory approval is anticipated in approximately one year.

- Excelsior's proprietary COGD technology is supported by a recently completed computer reservoir simulation model. The work was contracted to Computer Modeling Group Inc. and used their advanced computer simulation technology (STARS). Excelsior's geological reservoir characterization model, which integrated all core, log, and seismic data formed the geological framework for the simulation model. A number of runs were made to test sensitivities to different reservoir and operating parameters. The modelling results were positive and supported Excelsior's pre-ignition process and indicated that a COGD horizontal well has the potential to produce in excess of 800 barrels of bitumen per day and attain potential recovery factors in excess of 64%.

- Excelsior's core delineation drilling over the past two winter seasons continues to confirm the bitumen resource potential at Hangingstone, near Fort McMurray, Alberta. Excelsior obtained an independent engineering report by McDaniel & Associates Consultants Limited ("McDaniel Report") for the Hangingstone property in the second quarter of 2009. As summarized in the Company's news release dated June 25, 2009, the McDaniel Report, effective July 1, 2009, assigned 172 million barrels of best-estimate (mid-case) contingent resources at Hangingstone (Excelsior's working interest share, before royalty) which represents a 45% year-on-year increase. Furthermore, the McDaniel Report classified the contingent resources as economic with a best-estimate net present value before income tax discounted at 10% ("NPV10") of $208 million. On a NPV10 unit basis the McDaniel Report valued Excelsior's best-estimate contingent resources at $1.21 per barrel or $1.45 per common share (based on 143,060,590 outstanding common shares at June 30, 2009).

- The Company had working capital of $2.4 million at June 30, 2009, which is sufficient to fund the COGD pilot application and general and administrative expenses for the next four quarters. The Company has no debt. Further operations and implementation of the COGD experimental pilot project will require additional funding.

- The Company had a commitment to incur and renounce $9,237,766 of eligible expenditures by December 31, 2009, to subscribers of its flow through private placement which closed in September 2008. As at June 30, 2009, the Company had fulfilled this obligation.

Outlook

- Excelsior awaits a response to an application submitted to the Alberta Government's Innovative Energy Technology Program ("IETP") in support of the COGD experimental program. The submission was made in September 2008 and provides for royalty credits to be awarded for capital spent on this new technology. Confirmation is expected in the near future.

- The Company through its subsidiary Excelsior Energy North Sea Limited ("EENS") has completed seismic reprocessing and interpretation on licence P1500 in the UK North Sea. A drilling location has been identified to test one of the prospects which is a step-out from an existing oil discovery drilled in 1996. EENS is required to commit to drill on the block by November 30, 2009, or relinquish the licence at no further cost. EENS is currently conducting a farm-out process to seek an industry partner for the well.

- Excelsior continues to investigate acceptable arrangements to finance the COGD pilot project, further delineate the resource at Hangingstone and the nearby Surmont property, and to appraise its North Sea exploration licenses.



Selected Information

----------------------------------------------------------------------------
($'s except weighted Three Months Ended Six Months Ended
average shares) June 30, June 30,
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2009 2008 2009 2008
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Gas revenue 4,462 45,074 10,615 82,112
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Royalties (80) (6,410) (329) (12,461)
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Operating expenses (4,644) (10,020) (8,839) (18,066)
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Net gas revenue (262) 28,644 1,447 51,585
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Interest income 2,505 51,418 30,484 191,947
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General and administrative
expense 274,650 424,894 536,264 703,922
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Net loss and comprehensive
loss (337,730) (834,659) (748,530) (1,412,154)
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Loss per share (basic and
diluted) - (0.01) (0.01) (0.01)
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Capital expenditures
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Petroleum and natural gas
properties 824,279 416,799 8,563,640 11,256,704
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Cash flows
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Cash flows from (used in)
operations (23,679) 117,474 (433,051) (289,684)
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Cash flows used in
investing (2,366,592) (5,644,061)(10,688,377)(12,341,523)
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Cash flows from financing - 1,000,000 - 2,111,725
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Change in cash and cash
equivalents (2,390,271) (4,526,587)(11,121,428)(10,519,482)
----------------------------------------------------------------------------
Cash and cash equivalents,
beginning of period 5,016,900 9,855,753 13,748,057 15,848,648
----------------------------------------------------------------------------
Cash and cash equivalents,
end of period 2,626,629 5,329,166 2,626,629 5,329,166
----------------------------------------------------------------------------
Basic and diluted weighted
average number of shares
outstanding 143,060,590 108,824,891 143,060,590 107,917,809
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About Excelsior

Excelsior is an early stage, oil sands company with 58 operated sections on two contiguous blocks in the Hangingstone and West Surmont areas of the Athabasca Oil Sands Region near Fort McMurray, Alberta. The Company has developed a proprietary in situ combustion technology ("Combustion Overhead Gravity Drainage" or "COGD") which has game-changing potential in the development and recovery of heavy oil and bitumen. An application for an experimental pilot project to field demonstrate the COGD technology will be submitted in at the end of the second quarter of 2009 with a targeted start up in early 2011. In addition the Company indirectly holds a 100% working interest in UK North Sea Licences P1500 and P1691 covering four part-blocks through its 75% owned subsidiary ENS Energy Ltd. Excelsior's strategy is to capture oil and gas appraisal and development opportunities where we can leverage Management's diverse international operating, heavy oil and field development expertise with developing technologies to produce oil and gas.

Forward Looking Information

This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking statements or information. More particularly and without limitation, this press release contains forward-looking statements and information concerning: anticipated regulatory approvals, anticipated production and recovery results using the Company's COGD process, the sufficiency of its current funding to meet planned expenditure requirements, the plans of its subsidiary companies in meeting their contractual commitments, joint venture opportunities and financing arrangements.

The forward-looking statements and information in this press release are based on certain key expectations and assumptions made by Excelsior, including expectations and assumptions concerning: prevailing commodity prices and exchange rates; applicable royalty rates and tax laws; future drilling results and production rates; reserve and resource volumes; the success obtained in drilling new wells; the sufficiency of budgeted capital expenditures in carrying out planned activities; the availability and cost of labour and services; and the receipt, in a timely manner, of regulatory approvals. Although Excelsior believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward-looking statements and information because Excelsior can give no assurance that they will prove to be correct.

Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to the risks associated with the oil and gas industry in general such as: 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 and resource estimates; the uncertainty of estimates relating to production, costs and expenses; health, safety and environmental risks; commodity price and exchange rate fluctuations; marketing and transportation or petroleum and natural gas and loss of markets; environmental risks; competition; incorrect assessment of the value of acquisitions; failure to realize the anticipated benefits of acquisitions; ability to access sufficient capital from internal and external sources; failure to obtain required regulatory approvals; and changes in legislation, including but not limited to tax laws, royalty rates and environmental regulations.

Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect the operations or financial results of Excelsior are included in reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com).

The forward-looking statements and information contained in this press release are made as of the date hereof and Excelsior undertakes no obligation 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.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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