MGM Energy Corp.
TSX : MGX

MGM Energy Corp.

July 28, 2009 17:07 ET

MGM Energy Corp.: Financial Results for the Three and Six Months Ended June 30, 2009

CALGARY, ALBERTA--(Marketwire - July 28, 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 three and six months ended June 30, 2009.

The Company reported a net loss for the three month period ended June 30, 2009 of $6.3 million ($43.1 million for the six month period ended June 30, 2009). The net loss during the three month period was primarily due to additional dry-hole costs on the North Ellice J-17 and Ellice A-25 wells drilled in the first quarter.

As previously announced on May 5, 2009, MGM Energy restructured the Chevron/BP Farmout Agreement. As part of the restructuring, MGM Energy assumed an incremental $5 million liability (for a total liability of $10 million) for a land payment penalty due to the Inuvialuit Regional Corporation ("IRC") in August 2010 and agreed to set up a separate account, designated as "Restricted Cash" on the balance sheet, to fund the payment when it is due. The land payment penalty will be reduced by $5 million for each well drilled on IRC lands during the 2009/10 winter season. The Company is currently reviewing the drilling costs and prospects on the lands to determine if it is economic to drill one or two wells rather than make the penalty payment in August 2010. The Company expects to announce its plans for this area by the end of the third quarter.

As at June 30, 2009, the Company had positive working capital of $8.4 million and restricted cash of $10 million, for total available cash resources of $18.4 million, consistent with the Company's previously forecasted working capital position of $18 million. Based on current forecasts and assuming no drilling or seismic activity during the winter of 2009/10, this will be sufficient to fund the operations and obligations of the Company until the third quarter of 2010, including the $10 million land payment penalty due in August 2010.

"Other than the potential drilling on the Inuvialuit lands, MGM Energy will not be conducting any other major capital programs during the winter of 2009/10. We will continue to review prospects on our lands for future development and maintain relationships, however, we will not be undertaking any large capital programs until we see positive, concrete steps towards the construction of the Mackenzie Valley Pipeline." said Henry Sykes, President of MGM Energy.

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

MGM Energy is a Calgary-based Canadian oil and gas exploration and development company with operations in Northern Canada. MGM Energy's common shares are listed on 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 business strategy and objectives, exploration and drilling plans and the timing thereof, as well as the anticipated timing for seeking regulatory approvals. 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 document 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 As at
June 30 December 31
2009 2008
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ASSETS
Current assets
Cash and cash equivalents $ 14,299 $ 82,001
Accounts receivable and other current assets 2,054 1,850
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16,353 83,851
Restricted cash 10,000 -
Property, plant and equipment 232,164 220,725
Future income taxes - 9,014
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$ 258,517 $ 313,590
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 7,936 $ 12,628
Due to related parties 4 108
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7,940 12,736
Asset retirement obligations 2,742 1,996
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10,682 14,732
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Shareholders' Equity
Share capital 446,322 455,336
Contributed surplus 5,718 4,664
Deficit (204,205) (161,142)
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247,835 298,858
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$ 258,517 $ 313,590
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MGM Energy Corp.
Statements of Loss and Other Comprehensive Loss (Unaudited)
($000s, except as noted)


Three Months Ended Six Months Ended
June 30 June 30
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2009 2008 2009 2008
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Revenue
Interest income $ 31 $ 435 $ 220 $ 1,469
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Expenses
General and administrative 1,266 1,151 2,346 2,716
Stock-based compensation 483 635 1,054 1,006
Pipeline regulatory and access - 11 - 55
Exploration 504 3,366 1,008 28,293
Lease rental and land costs 803 2,960 1,053 3,210
Dry hole 2,849 (602) 37,089 32,432
Interest and financing charges 268 73 388 139
Accretion of asset retirement
obligations 49 31 90 55
Depreciation 128 65 255 127
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6,350 7,690 43,283 68,033
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Loss before tax (6,319) (7,255) (43,063) (66,564)
Future income tax recovery - (2,936) - (16,616)
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Net loss and other comprehensive
loss $ (6,319) $ (4,319) $(43,063) $(49,948)
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Net loss per Common Share
($/share)
Basic (0.02) (0.03) (0.16) (0.39)
Diluted (0.02) (0.03) (0.16) (0.39)

Weighted average Common Shares
outstanding (000s)
Basic 263,195 128,945 263,195 128,945
Diluted 263,195 128,945 263,195 128,945

Statements of Deficit (Unaudited)

($000s)

Three Months Ended Six Months Ended
June 30 June 30
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2009 2008 2009 2008
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Deficit, beginning of period $ (197,886)$(106,610)$(161,142)$ (60,981)
Net loss (6,319) (4,319) (43,063) (49,948)
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Deficit, end of period $ (204,205)$(110,929)$(204,205)$(110,929)
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MGM Energy Corp.
Statements of Cash Flows (Unaudited)
($000s)

Three Months Ended Six Months Ended
June 30 June 30
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2009 2008 2009 2008
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Operating activities
Net loss and other comprehensive
loss $ (6,319) $ (4,319) $(43,063) $(49,948)
Add (deduct):
Stock-based compensation 483 635 1,054 1,006
Exploration 504 3,366 1,008 28,293
Dry hole 2,849 (602) 37,089 32,432
Accretion of asset retirement
obligations 49 31 90 55
Depreciation 128 65 255 127
Future income tax recovery - (2,936) - (16,616)
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(2,306) (3,760) (3,567) (4,651)
Change in non-cash working capital (4,489) (2,499) (4,265) 261
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(6,795) (6,259) (7,832) (4,390)
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Financing activities
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- - - -
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Investing activities
Restricted cash contributions (10,000) - (10,000) -
Capital expenditures (3,945) (2,907) (49,134) (75,327)
Change in non-cash working capital (16,816) (45,303) (736) (7,705)
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(30,761) (48,210) (59,870) (83,032)
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Decrease in cash and cash
equivalents (37,556) (54,469) (67,702) (87,422)
Cash and cash equivalents,
beginning of period 51,855 78,348 82,001 111,301
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Cash and cash equivalents, end of
period $ 14,299 $ 23,879 $ 14,299 $ 23,879
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Contact Information

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