Nevarro Energy Ltd.
TSX VENTURE : NEL

Nevarro Energy Ltd.

May 30, 2006 15:54 ET

Nevarro Announces First Quarter Results

CALGARY, ALBERTA--(CCNMatthews - May 30, 2006) -

Not for distribution to United States newswire services or for dissemination in the United States.

Nevarro Energy Ltd. (TSX VENTURE:NEL) ("Nevarro") is pleased to announce its financial performance for the first three months of 2006, and its spring/summer drilling program.

The following are highlights from the financial statements and md&a which are available to be viewed at www.sedar.com.



First First
Quarter Quarter
Ended Ended
Mar 31, Mar 31, %
HIGHLIGHTS 2006 2005 change
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Combined oil & natural gas revenue 2,908,261 1,818,493 60
Royalties (net of ARTC) 536,594 289,321 85
Production expenses 788,170 409,795 92
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Field netback 1,583,497 1,119,377 41
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Interest expense 106,691 18,206 486
General & Administrative expense 505,842 304,100 66
Stock Compensation 35,520 70,557 (50)
Depletion & depreciation & accretion 1,636,104 799,625 105
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2,284,157 1,192,488

Earnings (loss) before income tax (700,660) (73,111) 858

Income tax expense (recovery) 80,202 (399,313) (120)
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Net earnings (loss) (620,458) (472,424) 31
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Cash flows from operating activities 970,964 797,071 22


For this most recent quarter, Nevarro's average production (based on sales) increased by 37% over first quarter 2005 to 1,024 boe/d for the first quarter 2006 (85% of which was oil). This is up from 748 boe/d (82% oil) in the first quarter of 2005.

Revenues from crude oil and natural gas sales were up by 60% to $2,908,261 in the first quarter ended March 31, 2006, compared to $1,818,493 for the first quarter ended March 31, 2005. This resulted in an average price of $31.55 per boe for the first quarter ended March 31, 2006, compared to $27.01 per boe for the first quarter ended March 31, 2005.

Operating costs per unit of production averaged $8.55 per boe in first quarter 2006, compared to $6.09 per boe in first quarter 2005. Total operating costs of $788,170 (compared to $409,795 in first quarter 2005) resulted in field netback of $1,583,497 or $17.18 per boe (compared to $1,119,377 or $16.62 per boe in first quarter 2005).

Nevarro expects to have an active second and third quarter this year and it has secured the services of a drilling rig and will immediately commence a 20 well spring/summer drilling program in its heavy oil core areas in west central Saskatchewan.

Nevarro's capital expenditure program for 2006 has allocated $10,000,000 for the drilling of up to 50 development wells in its heavy oil core areas in west central Saskatchewan. The program is intended to be funded by cash flow, bank line and the previously announced equity offering expected to close on or about June 7, 2006.

Nevarro currently has 10,452,059 common shares outstanding. Fully diluted, Nevarro has 11,350,500 common shares outstanding.

This news release contains certain forward-looking statements, which are based on the Corporation's current internal expectations, estimates, projections, assumptions and beliefs. Some of the forward-looking statements may be identified by words such as 'expects', 'anticipates', 'believes', 'projects', 'plans' and similar expressions. These statements are not guarantees of future performance and involve a number of risks and uncertainties. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause the Corporation's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things, changes in general economic, market and business conditions; changes or fluctuations in production levels, commodity prices, currency exchange rates, capital expenditures, reserves or reserves estimates and debt service requirements or changes to legislation, the Corporation's ability to comply with current and future environmental or other laws; the Corporation's success at acquisition, exploitation and development of reserves; actions by governmental or regulatory authorities including increasing taxes or other regulations; and the occurrence of unexpected events involved in the operation and development of oil and gas properties. The Corporation disclaims any responsibility to update these forward-looking statements.

The TSX Venture Exchange has neither approved nor disapproved of the information contained herein.

Contact Information

  • Nevarro Energy Ltd.
    J.W. Grant Robertson
    Vice-President Business Development
    (403) 231-1230
    or
    Nevarro Energy Ltd.
    Rick Bennett
    President of the Corporation
    (403) 231-1235