Find Energy Ltd.

Find Energy Ltd.

March 23, 2005 17:13 ET

Find Energy Ltd. Announces 2004 Year End and Fourth Quarter Results


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: FIND ENERGY LTD.

TSX SYMBOL: FE

MARCH 23, 2005 - 17:13 ET

Find Energy Ltd. Announces 2004 Year End and Fourth
Quarter Results

CALGARY, ALBERTA--(CCNMatthews - March 23, 2005) - Find Energy Ltd.
("Find" or the "Company") (TSX:FE) today announced its financial and
operating results for the fourth quarter and full year period. This
message should be read in conjunction with the financial statements and
the Management's Discussion and Analysis. For additional information,
these documents, along with other statutory filings, will be available
on SEDAR at www.sedar.com and the Company's website at
www.findenergy.ca. Our current presentation, which contains maps and a
summary of Find's activity in its principal operating areas can also be
found on our Company website.

The Company is pleased to report significant gains in reserves and
production in 2004, including reserve additions of 2.7 million boe
achieved through the drill-bit. Also, Find realized positive reserve
revisions of 478,000 boe.

Highlights of the quarter-period and full year include:



2004 Highlights

For the year ended December 31 2004 Q4, 2004 Q3, 2004
----------------------------
Financial Results:
Revenue ($000) 36,353 10,029 8,814
Cash Flow ($000) 16,098 4,828 4,637
Per Share ($) 0.56 0.15 0.16
Net Income ($000) 2,905 960 1,398
Per Share ($) 0.10 0.03 0.05
Cash Flow Netback - per boe ($) 18.81 20.44 23.48
Royalties - per boe ($) 9.08 9.47 8.58
Operating Expenses - per boe ($) 9.78 9.36 8.88
General and Administrative - per boe ($) 1.96 0.83 1.57
Capital Expenditures ($000) 41,774 16,765 8,598
Production Volumes:
Natural gas (mcfd) 5,921 7,234 5,097
Oil & NGL (bopd) 1,351 1,362 1,296
Total (boed) 2,338 2,568 2,146

Natural Gas
Reserve Volumes: Oil Natural Gas Liquids Total
(total company interest) (Mbbl) (Mmcf) (Mbbl) (Mboe)
-------------------------------------------
Total proved 3,224 16,164 434 6,353
Probable 968 6,116 147 2,134
Total proved plus
probable 4,192 22,280 581 8,487




Summary of Net Present Values of Future Net Revenue ($000)
(forecast prices and costs)

Net Present Values Before Income Taxes
Discounted at
----------------------------------------
0% 5% 10% 15%
----------------------------------------
Total proved 125,273 101,491 86,536 76,120
Probable 44,663 27,544 19,795 15,452
Total 169,936 129,035 106,331 91,572


Production Growth

Find had a year of substantial growth in both reserves and production.

In 2004, Find produced an average of 2,338 boe per day, consisting of
5.9 mmcf per day of natural gas and 1,351 barrels of oil and natural gas
liquids per day.

Production in the fourth quarter of 2004 averaged 2,568 boe per day,
which included 7.2 mmcf of natural gas and 1,362 barrels of oil and
natural gas liquids. This represented a 26 percent increase over Q4 2003
volumes of 4.1 mmcf per day of natural gas and 1,356 barrels of oil and
natural gas liquids per day or 2,046 boe per day.

To date in 2005, Find estimates that it has produced an average of 2,780
boe per day, consisting of 7.9 mmcf of natural gas and 1,460 barrels of
oil and natural gas liquids. Currently Find estimates its production at
3,300 boe per day, made up of 10.4 mmcf of natural gas and 1,560 boe of
oil and natural gas liquids.

Find drilled several wells in the fourth quarter that have now been
placed on production. Typically, natural gas and oil wells produce at
maximum rates in the initial days of production. In the energy sector,
this is referred to as flush production. Many of Find's most recent
wells have short production histories and it is very difficult to
estimate the rate at which these wells will produce once production
stabilizes. Nonetheless, we are pleased with the rates these wells are
currently delivering.

Reserve Gains

Proved plus probable reserves increased by 30 percent to 8.5 million boe
versus 6.5 million boe at year-end 2003.

Proved plus probable reserve additions, which were primarily achieved
through the drill-bit, totalled 2.7 million boe, replacing 2004
production by 3.2 times. The reserves were evaluated by the Company's
independent reserve engineers, Gilbert Laustsen Jung Associates Ltd.
(GLJ), effective December 31, 2004, and conform to the requirements of
National Instrument 51-101 Standards of Disclosure for Oil and Gas
Activities (N.I. 51-101). All of Find's reserves are in Alberta and
Saskatchewan.

Finding and Development Costs

Find's 2004 finding and development costs were $18.56 per boe including
future capital on a proved basis and $14.51 per boe on a proved plus
probable basis. Find's two-year weighted average finding and development
costs are $15.78 per boe for proved and $12.58 per boe for proved plus
probable reserves.

Reserve Life Index

Based on fourth quarter 2004 average production volumes, Find's reserve
life index is 6.8 years on a proved basis and 9.1 years on a proved plus
probable basis. Find's reserve life index at year-end 2003, based on
GLJ's figures, was 6.7 years for proved and 8.7 years for proved plus
probable reserves.

Net Asset Value

Based on the GLJ report and an independent estimate of the Company's
land valued at $11.6 million, provided by Seaton-Jordan and Associates,
Find has a net asset value at year-end 2004 of $2.99 per basic share.
This is based on proved plus probable reserves, a forecast of future
prices dated January 1, 2005 and a discount rate of 10 percent. At
year-end 2003, Find's net asset value, based on similar parameters, was
$2.11 per basic share. This represents a year-over-year increase in net
asset value per share of 42 percent.

Financial Results

Net Income and Cash Flow

In 2004, Find generated revenue from the sale of its crude oil and
natural gas of $36.4 million. This produced cash flow from operations of
$16.1 million, or $0.56 per share and net income of $2.9 million or
$0.10 per share.

Product Pricing

In 2004, Find received an average price of $6.89 per mcf for its natural
gas, which includes a $0.02 per mcf gain on hedging. The average price
Find received for its oil and natural gas liquids during the year was
$40.03 per barrel, after adjusting for a $3.38 per barrel loss on
hedging. This compares to net prices (after hedging) in 2003 of $6.22
per mcf for natural gas and $31.35 per barrel for oil and natural gas
liquids.

Operating Costs

Find made progress in lowering its operating costs in 2004, reflecting
production increases from a number of properties, and efficiencies
gained in field operations, including replacing rental equipment with
purchased equipment; improving production from existing well bores
through workovers and drilling additional wells on properties. Operating
costs for 2004 were $9.78 per boe, an eight percent decrease from $10.63
in 2003. Find expects operating costs will decline further in 2005 based
on production increases at Pembina West and Aerial in Alberta and Hazlet
in southwest Saskatchewan.

Working Capital and Bank Debt

At December 31, 2004, Find had bank debt of $9.2 million and a working
capital deficiency of $8.5 million for total debt of $17.7 million or
0.9 times the Q4 2004 cash flow expressed as an annualized amount of
$19.3 million. Total debt at the end of 2003 was $19.1 million comprised
of $14.6 million of bank debt and $4.5 million of working capital
deficiency.

Currently, the Company operates with a $30 million dollar revolving
demand loan. Since the end of the year, Find's bankers have indicated,
but not guaranteed, that they will recommend the loan be increased to
$37 million.

Equity Financing

During the year the Company completed two equity offerings. The first,
in June 2004, was for 3.5 million flow-through common shares at a price
of $3.45 per share which raised gross proceeds of $12 million. The
other, which closed in November 2004, sold 4.1 million common shares at
$3.90 per share for gross proceeds of $16 million.

Drilling

During 2004, Find drilled 53 (32.6 net) wells, including 27 (16.6 net)
natural gas wells, 12 (5.6 net) oil wells, 2 (1.1 net) service wells and
12 (9.3 net) dry holes. Find operated the drilling of 46 of these wells
or 87 percent. The combined depth of all wells drilled by Find in 2004
was 95,000 metres, resulting in an average drilling depth of 1,790
metres per well. Find had a 77 percent drilling success rate in 2004 on
a gross well basis, and 72 percent on a net well basis. These are
acceptable success rates based on the fact that 55 percent of the wells
drilled were exploratory in nature.

Focus Area Review

Pembina West, Alberta

In 2004 Find operated the drilling of 11 (7.3 net) wells at Pembina
West. Although early results in this area were somewhat inconclusive,
recent results are more in line with the Company's expectations for this
area. Find owns a major working interest and is the operator of 35
sections of land in the Pembina West area. The company currently
produces oil, natural gas and natural gas liquids from seven different
pay zones.

Since the beginning of 2005, Find has placed seven (5.4 net) wells on
production, bringing the total number of producing wells to 11 (7.6
net). The Company will continue to grow production volumes at Pembina
West as additional wells are brought on-stream and further wells are
drilled following spring break-up. Find has identified more than 50
locations to be drilled in this area over the next two years.

Production from the Pembina West area is currently 900 boe per day net
to Find, compared to 275 boe per day at year-end 2004.

Aerial, Alberta

A 100 percent Find-operated well at Aerial that tested inconclusively at
year end has been equipped for production and is currently producing at
approximately 100 boe per day. Earlier this year Find also undertook
recompletion operations on two (1.7 net) wells, with three (2.5 net)
more to follow. As well, two (2.0 net) drilling operations are scheduled
for 2005.

Current production from Aerial is approximately 550 boe per day net to
Find, versus 475 boe per day at year-end 2004.

Hazlet, Saskatchewan

By year-end 2004, Find drilled eight (4.2 net) horizontal wells into its
Roseray sand oil pool in southwest Saskatchewan. Initial production from
these wells showed higher rates of water and lower rates of oil
production than the Company anticipated.

Since the beginning of 2005, Find has improved the efficiency of this
pool by setting packers and adjusting the water injection pattern. This
work has improved oil cuts substantially. In early January, Find was
producing approximately 360 barrels of oil per day net to its 53 percent
working interest. Current net production is approximately 450 barrels of
oil per day.

Outlook

Find currently estimates that it will invest approximately $37 million
to drill 38 (26 net) wells along with other production and exploration
related costs during 2005. Since the beginning of the year, the Company
has participated in the drilling of 13 (8.5 net) wells. Of them, 10 (6.6
net) have been or will be completed as producers.

In 2005, we have to date undertaken projects representing expenditures
of close to $18 million. We are seeing promise in Pembina West and
intend to emphasize capital expenditures in this area. Find plans to
drill a total of 17 (11.2 net) wells at Pembina West this year. Four
(2.9 net) of these wells were already drilled at the time of this
writing, including three (2.6 net) that are on production.

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This news release contains certain forward-looking statements, which are
based on Find's current internal expectations, estimates, projections,
assumptions and beliefs. Some of the forward-looking statements may be
identified by words such as "expects", "anticipates", "believes",
"projects", "plans" and similar expressions. These statements are not
guarantees of future performance and involve a number of risks and
uncertainties, many of which are beyond Find's control. Such
forward-looking statements necessarily involve known and unknown risks
and uncertainties, which may cause Find's actual performance and
financial results in future periods to differ materially from any
projections of future performance or results expressed 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, or if any of them do, what benefits
Find will derive from them. Find has adopted the standard of 6 Mcf:1 BOE
when converting natural gas to BOEs. BOEs may be misleading,
particularly if used in isolation. A BOE conversion ratio of 6 Mcf:1 BOE
is based on an energy equivalency conversion method primarily applicable
at the burner tip and does not represent a value equivalency at the
wellhead. These risks and uncertainties include, among other things,
changes in general economic, market and business conditions; changes or
fluctuations in production levels, unexpected drilling results,
commodity prices, currency exchange rates, capital expenditures,
reserves or reserves estimates and debt service requirements; changes to
legislation, investment eligibility or investment criteria; Find's
ability to comply with current and future environmental or other laws;
Find's success at acquisition, exploration and development of reserves;
actions by governmental or regulatory authorities including increasing
taxes, changes in investment or other regulations; and the occurrence of
unexpected events involved in the exploration for, and the operation and
development of, oil and gas properties. Many of these risks and
uncertainties are described in Find's Revised Annual Information Form
and Find's Management's Discussion and Analysis. Readers are also
referred to risk factors described in other documents Find files with
the Canadian securities authorities. Copies of these documents are
available without charge from Find. Find disclaims any responsibility to
update these forward-looking statements.

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Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Find Energy Ltd.
    William T. Davis
    CEO
    (403) 232-4802
    (403) 232-4824 (FAX)
    or
    Find Energy Ltd.
    Jeffrey P. Jongmans
    CFO
    (403) 232-4809
    (403) 232-4824 (FAX)