Masters Energy Inc.

Masters Energy Inc.

March 16, 2009 18:20 ET

Masters Energy Inc. Announces 2008 Year End Results

CALGARY, ALBERTA--(Marketwire - March 16, 2009) - Masters Energy Inc. ("Masters" or the "Company") (TSX:MSY) is pleased to report financial and operating results for the year ended December 31, 2008.

Years ended December 31 2008 2007
Financial ($ thousands, except per share amounts)
Gross revenue 34,536 26,786

Funds generated by operations (1) 18,226 12,527
Per share - basic 1.18 0.81
- diluted 1.17 0.80

Net earnings 5,055 1,500
Per share - basic 0.33 0.10
- diluted 0.32 0.10

Capital expenditures, net 7,938 12,242

Working capital deficit 1,390 2,560

Long-term bank debt 9,420 18,228

Crude oil (bbls/d) 664 761
NGL (bbls/d) 13 12
Natural gas (mcf/d) 4,614 4,597
Total production (boe/d at 6:1) 1,446 1,539

Average sales price
Crude oil ($/bbl) 81.76 51.76
NGL ($/bbl) 92.71 66.35
Natural gas ($/mcf) 8.01 6.73

(1) Funds generated by operations is calculated using cash flow from
operating activities as presented in the statement of cash flows before
non-cash working capital and settlement of asset retirement costs.

Presidents Message to Shareholders

Masters Energy made significant progress towards achieving the goals and objectives which were defined for 2008. The objectives for the year were as follows:

- increase the exploration and development drilling prospect inventory;

- complete the engineering and planning work required to be in a position to implement the alkaline surfactant polymer ("ASP") flood at our Little Bow property; and

- reduce the corporate debt in order to be in a strong financial position when the initial capital for the ASP flood was required.

I am pleased to report that the following was accomplished in 2008:

- we increased our prospect inventory and our undeveloped land holdings by acquiring 30,000 net acres at crown sales during the year;

- we have completed the front end engineering design work for the ASP flood and are now in a position to proceed with the project when economic conditions permit. The initial capital cost to implement the project has been reduced from $30 million to $19 million net to Masters; and

- we have strengthened the Company's balance sheet by decreasing net debt to $10.8 million, at year end 2008, from $20.8 million, at year end 2007.

The current business environment has created some challenges for Masters. The sharp drop in commodity prices has negatively impacted our cash flow and limits the amount of drilling the Company is able to do. Although our net debt is at reasonable levels we are reticent to increase it and will limit our 2009 capital program to our cash flow from operations. The ASP project requires an initial capital commitment of $19 million in the first twelve months after project initiation. Due to this high capital commitment, we plan to defer project initiation until economic conditions improve.

We recognize that in the current business environment companies larger than Masters have an advantage and we believe that we should strive to be involved in a larger entity. To that end we recently announced a merger between Masters and Zargon Energy Trust. The merger would allow Masters shareholders the opportunity to participate in a larger entity. Zargon has the financial and operational strength to implement the ASP flood when economic conditions allow. The Masters shareholders who choose to own Zargon trust units will have the opportunity to benefit in the upside associated with the ASP flood and the remainder of Masters' oil and gas assets. An information circular is being prepared and will be mailed to shareholders by the end of March 2009.

I wish to thank all members of the team and other stakeholders for their support over the past year.

On behalf of the Board of Directors,

Geoff C. Merritt, President and Chief Executive Officer

March 16, 2009

Filing of Annual Information

Masters Energy Inc. has filed its Annual Information Form which contains the annual National Instrument 51-101 Form 1, Form 2 and Form 3 information. The information can be accessed electronically from the SEDAR system at or Masters' website at

The 2008 financial statements and notes to the financial statements and Management's Discussion and Analysis have been filed on SEDAR ( and also can be accessed on the Company's website at

Annual and Special Meeting of Shareholders

The Company's Annual and Special Meeting of shareholders is scheduled for 10:00 AM (Calgary Time) on Tuesday, April 28, 2009 at The Metropolitan Conference Centre, Plaza Room, 333 - 4th Avenue SW, Calgary, Alberta.

Masters Energy Inc. is an Alberta based corporation engaged in the business of acquiring or exploring for and developing oil and natural gas reserves in western Canada. Masters' common shares are listed on the Toronto Stock Exchange under the trading symbol "MSY".


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 ("bbl") 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.

Certain information regarding the Company, including management's assessment of future plans and operations, may constitute forward-looking statements under applicable securities law and necessarily involve risks associated with oil and gas exploration, production, marketing and transportation such as loss of market, volatility of commodity prices, currency fluctuations, uncertainties of reserve estimates, environmental risks, competition from other producers and ability to access sufficient capital from internal and external sources: as a consequence, actual results may differ materially from those anticipated. The Company assumes no obligation to update the forward-looking statements contained herein or to update the reasons why actual results could differ from those contemplated by the forward-looking statements, unless so required by applicable securities law.

Contact Information

  • Masters Energy Inc.
    Geoff Merritt
    President and CEO
    (403) 290-1785
    Masters Energy Inc.
    Randall Boyd
    Chief Financial Officer
    (403) 290-1785