Forent Energy Ltd.
TSX VENTURE : FEN

Forent Energy Ltd.

April 28, 2011 07:00 ET

Forent Energy Announces 2010 Financial and Operating Results

CALGARY, ALBERTA--(Marketwire - April 28, 2011) - Forent Energy Ltd. (TSX VENTURE:FEN) ("Forent" or the "Company") is pleased to announce that it has filed its audited Financial Statements and Management's Discussion & Analysis for the period ending December 31, 2010, with applicable securities regulatory authorities in Canada. Copies of these documents can be accessed under the Company's profile on the SEDAR website at www.sedar.com and on the Company's website www.forentenergy.com.

Overview of 2010

The past year was highlighted by a number of significant factors that had a major influence on Forent's activities and financial results. One of the most important factors was the global economic improvement that resulted in a significant increase in crude oil and natural gas liquids prices, allowing for a significant increase in revenues as the Company focused on developing crude oil and natural gas liquids production in 2010. In addition, the Company was able to conduct two non-brokered equity placements in 2010, raising a total of $5.7 million in new equity that was allocated to short-term western Canadian exploration and development opportunities as well as the $1.6 million gravity differential survey on its Alton Block in Nova Scotia and a $1.5 million 3D seismic survey on its Montgomery, Alberta lands.

Mervin, Saskatchewan

During the third and fourth quarters of 2010, the Company re-entered seven existing well bores, one of which was converted to a salt water disposal well late in the year. The six producing Mervin wells made a significant contribution to Forent's 200% production increase in 2010, as compared to 2009, and the Company's ability to become cash flow positive. The conversion of one of the wells to a water disposal well resulted in significant cost savings and improved net backs.

Montgomery, Alberta

Forent completed a 23 section 3D seismic program in the Montgomery, Alberta project area in December 2010. The seismic data appears very promising, identifying at least six drilling locations, each with significant exploration and development potential. These locations include multi-zone, three-way structural closures of significant areal extent. The Company will continue to interpret the 3D seismic program to establish additional drilling locations throughout the first half of 2011. The Company anticipates bringing on a partner to participate in the drilling program that is expected to commence in the summer of 2011.

Alton and Beech Hill Blocks, Nova Scotia

Forent's Nova Scotia properties offer a number of different high potential exploration and development opportunities including reef oil and shale oil and gas. The Company is the largest onshore oil and gas land owner in Nova Scotia and while there are considerable risks associated with the Nova Scotia opportunities, there is the potential to deliver significant shareholder value.

Forent completed an aerial gravity gradiometry survey in December 2010, allowing the Company to economically evaluate and identify potential reefal structures on the southern half of the Alton Block. The Company anticipates completing a 2D seismic program in the summer of 2011 to provide additional clarity to the features identified by the gravity gradiometry survey to pin point drilling locations, with the drilling of those targets anticipated to begin in the fall of 2011.

Specific financial and operating highlights of 2010 are as follows:

  • Annual average oil and gas production increased by 200 percent compared to 2009;
  • average commodity selling prices increased by 59 percent vs. 2009;
  • overall oil and gas revenues increased by 384 percent to $3.0 million from $0.6 million;
  • operating expenses decreased 14 percent to $20.54 per boe;
  • operating netbacks for the year improved appreciably from a net cost of $1.72 per boe in 2009 to a positive netback of $14.60 per boe in 2010;
  • general and administrative expenses increased 17 percent overall, but fell on a per boe basis by 61 percent to $15.47 per boe; and
  • the Company was cash flow positive in the second half of 2010 and ended the year using cash of just $27,985, compared to a cash burn of $982,317 in 2009.

Outlook for 2011

The current year is shaping up to be one of the most ambitious in Forent's history.

In Mervin, Saskatchewan the Company intends to tie the six producing wells into the salt water disposal well in order to affect further significant cost savings. In addition, based on cash flow from operations, Forent will review the potential to drill additional wells at Mervin and will assess other low risk heavy oil opportunities as internally generated cash flow dictates.

The Montgomery, Alberta exploration opportunity will be marketed during the second quarter, with the intention of completing a multiple well farm-out later in the quarter, with drilling to commence in the third quarter of 2011. The 3D seismic indicates a number of deeper multi-zone drilling prospects and the Company believes there is potential for major discoveries of oil and gas. The Company has 24.5 contiguous sections with an average working interest of 85% at Montgomery.

In Nova Scotia, Forent plans to spend upwards of $5 million on the Alton Block in an effort to produce oil from the reef like structures identified by the gravity gradiometry survey flown in 2010. Initially, Forent intends to acquire 65 km of 2D seismic and then early in the fourth quarter drill the first of three exploration wells. We are optimistic that our efforts over the past four years will bear fruit in 2011 and that the Company will become the first in Nova Scotia to produce oil on shore. The Company plans to raise approximately $5.0 million in additional equity capital in the second quarter of 2011 to fund this project.

Issuance of Options

The Company also announces, pursuant to its stock option plan, the grant of 250,000 options to Mr. Scott McDonald, Forent's new executive vice president of Nova Scotia operations, as announced on April 20, 2011. The options are exercisable at a price of $0.25 per share and expire in April 2016. The granted options vest as to one third on the date of grant and one third on each of the first and second anniversary dates and may not be traded for 4 months and one day from the date of grant.

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

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.

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