MGM Energy Corp.
TSX : MGX

MGM Energy Corp.

March 05, 2009 17:46 ET

MGM Energy Corp. Announces 2008 Financial Results

CALGARY, ALBERTA--(Marketwire - March 5, 2009) -

THIS PRESS RELEASE IS NOT FOR DISTRIBUTION TO ANY UNITED STATES NEWSWIRE SERVICES OR OTHERWISE FOR DISTRIBUTION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF UNITED STATES SECURITIES LAWS.

MGM Energy Corp. (TSX:MGX) ("MGM Energy" or the "Company") announced today its financial results for the twelve months ended December 31, 2008.

The Company reported a net loss for the twelve months ended December 31, 2008 of $100.2 million ($0.52 per share). The net loss for the year was principally due to the previously announced dry-hole costs of $32.4 million related to the Aput and Atik wells drilled in early 2008 and $26.7 million of exploration costs related to the seismic acquisition program in early 2008, both of which were reflected in the September 30, 2008 financial statements, plus the following significant items recorded in the fourth quarter of 2008: (i) dry-hole costs of $4.4 million related to costs incurred in 2008 for the North Ellice J-17 well which was previously announced as being unsuccessful (ii) dry hole costs of $36.2 million recorded in the fourth quarter for the Langley E-07 discovery drilled in 2008 and the Maunoir oil discovery drilled in 2004/05 as both discoveries would be uneconomic at current oil and gas prices, even with the completion of the Mackenzie Valley Pipeline and (iii) a write-down of a $10 million land payment made on the Inuvik Blocks in 2007 for which there is no immediate plans to drill and the land value is indeterminant. The dry hole charges related to Langley E-07 and the Maunoir discovery and the writedown of the Inuvik Block land payment are the result of the regular review of the Company's assets and relates only to suspended wells or properties to which MGM Energy has not previously assigned any contingent or prospective resources.

MGM Energy's net loss for the three months ended December 31, 2008 was $49.2 million ($0.19 per share).

"As previously announced, we are very pleased with the results of Ellice J-27, our first well of the 2008/09 winter drilling program" said Henry Sykes, President of MGM Energy Corp. "The last well of our program, Ellice A-25, was spud on March 2, 2009, and will be completed in late March or early April. We look forward to providing further updates on the Ellice A-25 well and an estimate of the resource size of the Ellice J-27 discovery."

MGM Energy's full audited financial statements and accompanying Management's Discussion and Analysis will be filed shortly on the SEDAR website (www.sedar.com).

MGM Energy is a Canadian oil and natural gas exploration and development company active in Northern Canada. MGM Energy's common shares are listed on the Toronto Stock Exchange under the symbol "MGX".

Certain statements or information included in this press release constitute forward-looking statements under applicable securities legislation. Forward-looking statements or information in this press release include but are not limited to exploration and drilling plans and the timing thereof, and future plans and operations. Such forward-looking statements or information are based on a number of assumptions which may prove to be incorrect. Although MGM Energy believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because MGM Energy can give no assurance that such expectations will prove to be correct. Forward-looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by MGM Energy and described in the forward-looking statements or information. The forward-looking statements or information contained in this press release are made as of the date hereof and MGM Energy undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.



MGM Energy Corp.
Balance Sheets (Unaudited)
($000s)

As at December 31 2008 2007
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ASSETS
Current assets
Cash and cash equivalents $ 82,001 $ 111,301
Accounts receivable and other current assets 1,850 730
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83,851 112,031
Property, plant and equipment 220,725 237,320
Future income taxes 9,014 13,302
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$ 313,590 $ 362,653
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 12,628 $ 15,799
Due to related parties 108 81
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12,736 15,880
Asset retirement obligations 1,996 1,172
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14,732 17,052
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Shareholders' Equity
Share capital 455,336 404,275
Contributed surplus 4,664 2,307
Deficit (161,142) (60,981)
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298,858 345,601
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$ 313,590 $ 362,653
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MGM Energy Corp.
Statements of Loss (Unaudited)
($000s, except as noted)

For periods prior to January 12, 2007, the results of operations and cash
flows of MGM Energy Corp have been prepared on a carve-out basis from
Paramount Resources Ltd. These financial statements may not be indicative
of the results that would have been attained if MGM Energy Corp. had
operated as a stand-alone entity for this period.

Years Ended December 31 2008 2007
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Revenue
Interest income $ 2,763 $ 3,116
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Expenses
General and administrative 5,513 5,881
Stock-based compensation 2,357 2,561
Pipeline regulatory and access 55 598
Exploration 28,827 11,591
Lease rental and land costs 3,273 1,051
Dry hole 73,942 66,423
Writedown of petroleum and natural gas properties 10,000 -
Interest and financing charges 336 236
Accretion of asset retirement obligations 128 199
Depreciation 382 132
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124,813 88,672
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Loss before income tax (122,050) (85,556)
Future income tax recovery (21,889) (23,225)
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Net loss and other comprehensive loss $ (100,161) $ (62,331)
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Net loss per Common Share ($/share)
Basic $ (0.52) $ (0.79)
Diluted $ (0.52) $ (0.79)

Weighted average Common Shares outstanding (000s)
Basic 190,935 79,088
Diluted 190,935 79,088


Statements of Deficit
($000s)

Years Ended December 31 2008 2007
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Deficit, beginning of year $ (60,981) $ -
Net loss (100,161) (62,331)
Allocation to net investment by Paramount
Resources Ltd. - 1,350
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Deficit, end of year $ (161,142) $ (60,981)
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MGM Energy Corp.
Statements of Cash Flows (Unaudited)
($000s)

For periods prior to January 12, 2007, the results of operations and cash
flows of MGM Energy Corp. have been prepared on a carve-out basis from
Paramount Resources Ltd. These financial statements may not be indicative
of the results that would have been attained if MGM Energy Corp. had
operated as a stand-alone entity for this period.

Years Ended December 31 2008 2007
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Operating activities
Net loss and other comprehensive loss $ (100,161) $ (62,331)
Add (deduct):
Stock-based compensation 2,357 2,561
Exploration 28,827 11,591
Dry hole 73,942 66,423
Accretion of asset retirement obligations 128 199
Asset retirement obligation expenditures - (405)
Writedown of petroleum and natural gas properties 10,000 -
Depreciation 382 132
Future income tax recovery (21,889) (23,225)
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(6,414) (5,055)
Change in non-cash working capital 2,792 1,555
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(3,622) (3,500)
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Financing activities
Repayment of note to Paramount Resources Ltd.
resulting from Spinout transaction - (12,000)
Proceeds on settlement of note - 163
Common shares issued, net of issuance costs 77,237 355,106
Net investment by Paramount Resources Ltd.
for period prior to Spinout. - 3,195
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77,237 346,464
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Investing activities
Capital expenditures (95,859) (244,258)
Reorganization costs - (1,000)
Change in non-cash working capital (7,056) 13,595
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(102,915) (231,663)
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(Decrease) increase in cash and cash equivalents (29,300) 111,301
Cash and cash equivalents, beginning of year 111,301 -
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Cash and cash equivalents, end of year $ 82,001 $ 111,301
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Contact Information

  • MGM Energy Corp.
    H.W. (Henry) Sykes
    President
    (403) 781-7800
    (403) 781-7801 (FAX)
    or
    MGM Energy Corp.
    Rick Miller
    Chief Financial Officer
    (403) 781-7800
    (403) 781-7801 (FAX)