Forent Energy Ltd.
TSX VENTURE : FEN

Forent Energy Ltd.

November 19, 2010 07:00 ET

Forent Announces Positive Cash Flow in Its Third Quarter 2010 Results

CALGARY, ALBERTA--(Marketwire - Nov. 19, 2010) - Forent Energy Ltd. (TSX VENTURE:FEN) ("Forent" or the "Company") announced today its third quarter 2010 financial results.

The following table provides a summary of Forent's financial and operating results for the three months and nine months ended September 30, 2010 with comparisons to the three months and nine months ended September 30, 2009. Forent's financial statements and Management Discussion and Analysis for the three months and nine months ended September 30, 2010 have been filed on SEDAR at www.sedar.com and are available on Forent's website at www.forentenergy.com.

All amounts referred to in the press release are in Canadian dollars unless otherwise stated.

Selected Financial Information

  Three months ended September 30 Nine months ended September 30
  2010 2009 2010 2009
  ($) ($) ($) ($)
Revenues 843,006 98,180 1,693,933 411,348
Net earnings (loss) (517,232) (460,918) (1,393,648) (1,267,952)
  Net earnings (loss) per share – basic and diluted (0.01) (0.01) (0.02) (0.03)
Capital expenditures 1,662,840 268,117 4,365,961 637,786
Total assets 14,826,148 11,188,122 14,826,148 11,188,122
Working capital 1,076,066 259,164 1,076,066 259,164
Funds from (used in) operations 49,174 (329,165) (208,383) (824,460)

(For the purpose of calculating unit costs, natural gas volumes have been converted to a barrel equivalent ("boe") using six thousand cubic feet equal to one barrel.)

Generating Positive Cash Flow

As a result of the Company's successful oil development efforts, funds from operations increased to $49,174 in the three months ended September 30, 2010 as compared to $329,165 that were used in operations during the third quarter last year. For the first time in its public history the Company achieved positive cash flow in a quarter. 

During the third quarter the Company continued to build upon its success during the first half of the year in transitioning into an oil focused operator. By the end of the third quarter 53% of its production originated from oil and NGL's. Overall production grew from 64 boed in the third quarter of 2009 to 216 boe/d in the third quarter of 2010. Currently, Forent's oil and NGL production is approximately 200 bopd, while total production is approximately 285 boe/d. During the third quarter of 2010 corporate netbacks improved 101% from a deficit of $56.00 per boe to a positive $0.42 per boe between the periods.

Significant Western Canadian Exploration Opportunity

During the third quarter Forent secured an important land base of over 22 contiguous sections (14,484 acres), approximately 32 km west of Claresholm in southern Alberta. The lands are considered attractive because seismic coverage is generally absent and no oil or gas wells have been drilled on these lands. The Company acquired all mineral rights on the freehold lands for a three year period, expiring in the middle of 2013. Importantly, the Company has obtained permission from landowners to conduct a 23 section 3D seismic program, which it expects to complete by the end of February 2011, at an estimated cost of $1.5 million. The Company is optimistic that the lands hold multi zone potential for light oil and sweet gas. The property is offset to the east with production from the Belly River, Cardium, Second White Specs, Barons, Glauconite and Sunburst formations; including a Second White Specs well that has produced over 1.5 million bbls of oil and 2.5 bcf of gas, since 1968. 

Continued Development in Nova Scotia

By the end of the third quarter, Forent had completed 80% of a sophisticated differential gravity survey that was conducted by ARKeX Limited, in order to provide the first geophysical assessment of the large reef prone basin on the Alton Block in Nova Scotia which is anticipated to lead to a 2-D seismic acquisition program, followed by a reef oil exploration drilling program. Currently, the data acquired is being processed in the ARKeX head office in the UK and interpretation is expected early in the New Year.

Operations Summary for the Third Quarter of 2010

Western Canada

Forent continued its re-completion program in Mervin with the re-entering, perforating and testing of two more wells during the third quarter. After several weeks of flow testing, the 8A-34-50-21W3 well has not responded economically and will be turned into a salt water disposal well. Forent plans to have the 8A water disposal well on stream before the end of the year, which will result in significant operating cost savings. 

Nova Scotia

The Company initiated and completed 80% of the 9,613 km airborne gravity gradiometry survey over the Gays River reef prone Shubenacadie sub-basin in the Alton Block. The Company conducted geological field and core analysis work on the Beech Hill Bock including examination of the organic rich Horton in the Big Marsh area and Gays River outcrops at the Ridge Brokers Ltd. quarry. Forent intends to build on data and knowledge gained from the Alton Block to further understanding the petroleum potential of the Beech Hill Block.

Shares of Forent trade on the TSX Venture Exchange under the symbol "FEN.V".

The term barrels of oil equivalent ("BOE") may be misleading, particularly if used in isolation. In accordance with NI 51-101, a BOE conversion ratio of six thousand cubic feet per barrel (6 mcf/bbl) of natural gas to barrels of oil equivalence 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 herein are derived from converting gas to oil in the ratio mix of six thousand cubic feet of gas to one barrel of oil.

Except for statements of historical fact, this news release contains certain "forward-looking information" within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements such as the estimates of reserves, the references to Forent's exploration program and drilling program and capital expenditures relating to, and timing of, such programs are based on the opinions and estimates at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking statements. There are uncertainties inherent in forward-looking information, including factors beyond Forent's control, and no assurance can be given that the programs will be completed on time, on budget or at all. In addition, there are numerous uncertainties inherent in estimating reserves, including many factors beyond Forent's control, and no assurance can be given that the indicated level of reserves or the recovery thereof will be realized. Forent undertakes no obligation to update forward-looking information if circumstances or management's estimates or opinions should change except as required by law. The reader is cautioned not to place undue reliance on forward-looking statements. Additional information identifying risks and uncertainties that could affect financial results is contained in Forent's filings with Canadian securities regulators, which filings are available at www.sedar.com.

The 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 press release.

Contact Information