Kootenay Energy Inc.
TSX VENTURE : KTY

Kootenay Energy Inc.

April 30, 2007 17:29 ET

Kootenay Energy Inc. Announces Year End Results

CALGARY, ALBERTA--(CCNMatthews - April 30, 2007) - Kootenay Energy Inc.(TSX VENTURE:KTY) -

HIGHLIGHTS

- Annual average production was 230 barrels of oil equivalent per day ("boe/d") a 164% increase over 2005 production of 87 boe/d exiting the year at 410 boe/d.

- Cash flow was $1,086,594 for the year ended December 31, 2006 as opposed to $212,500 for the equivalent period last year.

- Maintained 74% of production in light oil.

- High field netbacks of $34.02 per BOE.

- Completed asset acquisition of $11.7 million before adjustments.

- Drilled 4(4 net) wells comprising 2 (2 net) oil wells, 1 (1 net) gas well and 1 (1 net) suspended gas well.

- Increased proved plus probable reserves to 1,559 MBOE over the previous year an increase of 78%.

- Increased P+P PV10 value to $28,985,000, a 94% increase over prior year.

The calculations of barrels of oil equivalent ("boe") are based on a conversion rate of six thousand cubic feet ("mcf") of natural gas to one barrel of crude oil. Boe's may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

The above disclosure contains certain forward-looking statements that involve substantial known and unknown risks and uncertainties. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond the Corporation's control, including: the impact of general economic conditions in Canada, industry conditions, increased competition, the lack of available qualified personnel or management, equipment failures, fluctuations in product prices and in foreign exchange or interest rates and stock market volatility. The Corporation's actual results, performance or achievements could differ materially from those expressed in, or implied by, these 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 so, what benefits the Corporation will derive there from.



KOOTENAY ENERGY INC.
Balance Sheets

December 31, 2006 and 2005

----------------------------------------------------------------------------
2006 2005
----------------------------------------------------------------------------

Assets

Current assets:
Cash $ - $ 1,704,651
Accounts receivable 1,163,826 527,777
----------------------------------------------------------------------------
1,163,826 2,232,428

Property and equipment (note 3,4) 21,050,966 9,451,442
----------------------------------------------------------------------------
$ 22,214,792 $ 11,683,870
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Liabilities and Shareholders' Equity

Current liabilities:
Bank indebtedness $ 46,077 $ -
Operating line (note 5) 9,139,000 -
Accounts payable and accrued liabilities 1,188,147 1,855,737
Convertible debentures (note 6) 2,130,200 1,465,229
----------------------------------------------------------------------------
12,503,424 3,320,966

Asset retirement obligations (note 7) 739,402 513,574

Future income tax liability (note 9) 303,703 43,130

----------------------------------------------------------------------------
13,546,529 3,877,670
----------------------------------------------------------------------------

Shareholders' equity:
Share capital (note 8b) 8,198,894 6,831,475
Equity portion of convertible debentures (note 6) 403,500 44,471
Contributed surplus (note 8e) 2,229,378 1,806,257
Deficit (2,163,509) (876,003)
----------------------------------------------------------------------------
8,668,263 7,806,200
----------------------------------------------------------------------------

Commitments (note 10)
Subsequent events (note 14)

----------------------------------------------------------------------------
$ 22,214,792 $ 11,683,870
----------------------------------------------------------------------------


KOOTENAY ENERGY INC.
Statement of Operations and Deficit

Years ended December 31, 2006 and 2005

----------------------------------------------------------------------------
2006 2005
----------------------------------------------------------------------------

Revenues:
Oil and gas sales $ 5,182,828 $ 1,681,380
Royalties (1,067,751) (446,626)
----------------------------------------------------------------------------
4,115,077 1,234,754
----------------------------------------------------------------------------

Expenses:
Operating 1,185,712 386,939
Depletion, depreciation and accretion 1,710,058 514,946
General and administrative 1,489,612 473,180
Stock-based compensation (note 8f) 423,121 404,747
Interest 407,976 39,143
Interest on flow-through share financing 5,283 51,179
Loss on redemption of convertible debenture 3,071 168,000
Accretion of convertible debentures (note 6) 65,400 9,700
----------------------------------------------------------------------------
5,290,233 2,047,834

----------------------------------------------------------------------------
Loss before income taxes (1,175,156) (813,080)
----------------------------------------------------------------------------

Income taxes (note 9):
Current expense - 71,813
Future tax expense (recovery) 156,821 (136,103)
----------------------------------------------------------------------------
156,821 (64,290)
----------------------------------------------------------------------------

Net loss (1,331,977) (748,790)

Deficit, beginning of year (876,003) (127,213)
Adjustment on redemption of convertible
debenture (note 6) 44,471 -
----------------------------------------------------------------------------
Deficit, end of period $ (2,163,509) $ (876,003)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Net loss per share (note 8g):
Basic and diluted $ (0.03) $ (0.05)
----------------------------------------------------------------------------
----------------------------------------------------------------------------


KOOTENAY ENERGY INC.
Statements of Cash Flows

Year ended December 31, 2006 and 2005

----------------------------------------------------------------------------
2006 2005
----------------------------------------------------------------------------

Cash provided by (used in):

Operating activities:
Net loss $ (1,331,977) $ (748,790)
Adjustment for:
Stock-based compensation 423,121 404,747
Loss on exchange of convertible debenture 3,071 168,000
Future income tax expense (recovery) 156,821 (136,103)
Accretion on convertible debentures 65,400 9,700
Depletion, depreciation and accretion 1,710,058 514,946
----------------------------------------------------------------------------
1,026,494 212,500
Changes in non-cash working capital (note 13) (1,235,368) 634,895
----------------------------------------------------------------------------
(208,874) 847,395
----------------------------------------------------------------------------

Investing activities:
Additions to property and equipment -
acquisitions (10,241,877) (1,519,655)
Additions to property and equipment -
expenditures (3,732,023) (3,327,811)
Disposition of property and equipment 1,000,000 -
Changes in non-cash working capital (note 13) (68,272) 300,140
----------------------------------------------------------------------------
(13,042,172) (4,547,326)
----------------------------------------------------------------------------

Financing activities:
Proceeds from (repayment of) operating line 9,139,000 (446,166)
Proceeds on issuance of convertible debenture 2,500,000 -
Proceeds on issuance of share capital, net of
issue costs 1,361,318 5,024,265
Repayment of promissory note - (775,000)
Repayment of convertible debenture (1,500,000) -
----------------------------------------------------------------------------
11,500,318 3,803,099

----------------------------------------------------------------------------
Increase (decrease) in cash (1,750,728) 103,168

Cash (bank indebtedness), beginning of year 1,704,651 1,601,483

----------------------------------------------------------------------------
Cash (bank indebtedness), end of year $ (46,077) $ 1,704,651


Complete Financial Statements and MD&A for December 31, 2006 are available on SEDAR at www.sedar.com.

Kootenay Energy Inc. is an emerging junior oil and natural gas company.

The TSX Venture Exchange Inc. does not accept responsibility for the adequacy or accuracy of this news release.

Contact Information

  • Kootenay Energy Inc.
    Jack Marsh
    President and Chief Executive Officer
    (403) 355-9800
    or
    Kootenay Energy Inc.
    David Wilson CMA
    Vice President, Finance and Chief Financial Officer
    (403) 355-9800