Greencastle Resources Ltd.
TSX VENTURE : VGN

Greencastle Resources Ltd.

November 26, 2007 16:06 ET

Greencastle Reports Third Quarter Results

TORONTO, ONTARIO--(Marketwire - Nov. 26, 2007) - Greencastle Resources Ltd. (TSX VENTURE:VGN) ("Greencastle" or, the "Company"), is pleased to report on the results from its third quarter unaudited financial statements.

Revenues from oil and gas royalties recovered to $455,899 for the three months ended September 30, 2007 versus $224,017 in the second quarter ended June 30, 2007. Third quarter revenues were $633,022 in 2006. For the nine months ended September 30, 2007, revenues were $1,230,591 versus $1,395,841 for the same period in 2006. The revenue decline was primarily due to lower royalty income in the second quarter at the Primate property in Saskatchewan. Production difficulties occurred in two of the main producing wells following drilling of a nearby infill well on the section. The operator continues to work diligently to bring the wells back to the former production rate. These efforts have resulted in an improvement in the third quarter over Q2.

During the three months ended September 30, 2007, one additional well, currently undergoing testing, was drilled on the Primate oil section in Saskatchewan.

For the three months ended September 30, 2007 (the third quarter) the Company recorded a net income of $147,253 versus a net income of $515,891 for the same period in the previous year. The decrease in net income for the current quarter was partly due to a depletion expense amount of $105,500 on oil and gas assets (no depletion taken in the 2006 quarter), lower pricing for heavy oil in 2007 quarter, as well as a royalty income decline as described previously. Stock option compensation expenses also increased in 2007 to $82,349 from $20,168 in the year earlier period. Shareholder relations ($31,088 versus $10,933) and write-off of mining interests ($15,370) also added to expenses in the quarter. All depletion in 2006 was recorded in the fourth quarter, however, the Company now records an estimated depletion amount each quarter in order to provide a more balanced picture of earnings and cash flow on a quarterly basis.

For the nine months ended September 30, 2007, net income was $298,182 versus $953,367 for the same period in 2006. The reasons for the decline were decreased oil production, increased stock option compensation from $67,838 to $190,145 and increased depletion expenses from nil to $316,500.

Excluding non cash costs, Greencastle generated positive cash flow of $351,902 for the three months ended September 30, 2007 compared with $536,877 for the same period in the previous year. For the nine months ended September 30, 2007, Greencastle generated positive cash flow of $823,574 compared with $1,044,051 for the same period a year earlier.

While the decline in revenues from oil and gas in the second quarter was disappointing, management is encouraged by the recent recovery and is optimistic that revenues should improve from these levels as new wells are added at Primate and production difficulties are addressed.

Total assets of the Company increased at September 30, 2007 to $6,392,041 from $4,434,998 at December 31, 2006. The Company's working capital at September 30, 2007 was $3,598,126 compared with $1,872,251 at December 31, 2006.

Greencastle announces that it has granted 1,100,000 options to purchase common shares of the Company to officers, directors and consultants, at an exercise price of $0.15 per share, expiring on November 26, 2012.

This news release includes certain "forward looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. Without limitation, statements regarding potential mineralization and resources, exploration results, and future plans and objectives of the Company are forward looking statements that involve various degrees of risk. The following are important factors that could cause the Company's actual results to differ materially from those expressed or implied by such forward looking statements: changes in the world wide price of commodities, general market conditions, risks inherent in exploration, risks associated with development, construction and mining operations, the uncertainty of future profitability and the uncertainty of access to additional capital. The Company relies on litigation protection for forward looking statements.

Issued & Outstanding 42,267,005

No Stock Exchange has reviewed nor accepted responsibility for the adequacy or accuracy of this news release. The TSX Venture Exchange, Inc. has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Greencastle Resources Ltd.
    Anthony Roodenburg
    CEO
    (416) 367-4571