Nexstar Energy Ltd.

Nexstar Energy Ltd.

August 28, 2007 21:17 ET

Nexstar Energy Files Second Quarter 2007 Results and Provides Financial and Operational Update

CALGARY, ALBERTA--(Marketwire - Aug. 28, 2007) -


Nexstar Energy Ltd. ("Nexstar Energy" or the "Company") (TSX VENTURE:NXE.A) (TSX VENTURE:NXE.B) announces its financial and operating results for the six months ended June 30, 2007. The second quarter report, interim unaudited financial statements, and Management Discussion and Analysis will be filed August 29, 2007 on SEDAR at and posted on the Company's website at

Financial Summary

On the financial side, Nexstar Energy recorded $508,465 in petroleum and natural gas sales during the second quarter, an increase of 9.6% over the previous quarter and more than three times the amount reported in the last quarter of 2006. Operating costs for the quarter were $12.96 per BOE, up slightly from $12.06 per BOE in the first quarter of 2007. The increase reflected maintenance costs at Pembina. Operating netbacks were $180,308, a minor increase over the first quarter operating netbacks of $176,385 and an increase of 256% over the fourth quarter of 2006. Operating netbacks, on a BOE basis, were $17.72 per BOE for the second quarter 2007 compared to $18.87 per BOE for the first quarter of 2007. A net loss of $500,452 was recorded in the second quarter of 2007 after depletion and depreciation of $516,734 and a loss of $482,644 for the first half of 2007 after depletion and depreciation of $1.1 million. During the quarter, the Company spent $482,771 on capital expenditures. As at June 30, 2007, Nexstar Energy had no debt and a working capital surplus of $7.3 million, including $1.0 million of restricted cash held to secure the Company's operating bank loan.

Short Term Investments

The Company advises on the impact of global credit markets on approximately $5.0 million of its current $6.7 million in cash and investments. Nexstar Energy advises that an "A" Class Note (the "Note") issued by Apsley Trust was purchased on July 30, 2007 on Nexstar Energy's behalf by its bank. This Note is due to mature on August 31, 2007 for a principal amount of $5.0 million including accrued interest.

The Company has been informed that Apsley Trust has recently been unable to fund the repayment of maturing notes due to continuing market disruption and that Apsley Trust had requested funding under existing liquidity facilities to support the note maturities. The Company understands that certain banks that were to provide such liquidity facilities have refused to provide the requested funding. The Company is currently investigating the implications of these events, which appears to be a result of the current lack of liquidity for this asset backed commercial paper that was rated by the Dominion Bond Rating Service as R1-High. On August 16, 2007, a group of financial institutions announced that they agreed in principle to a long-term proposal and an interim agreement regarding asset backed commercial paper. The effect of this, if agreed to by the parties and note holders would, among other things, be to roll the note maturities to mid October, 2007 and then to convert the notes into term floating rate notes maturing no earlier than the scheduled termination dates of the underlying assets.

Credit Facility

Nexstar Energy is pleased to announce it has accepted an Offering Letter from its bank to increase its demand revolving operating credit facility ("Credit Facility") from $1.0 million to $4.25 million. The Credit Facility has no specific repayment aside from the bank's right of demand and periodic review. The bank has also agreed to release the $1 million referenced above, which was previously held as security.

Nexstar Energy is unable to predict how long the current market disruption will continue; however, the Company has sufficient cash and bank lines to meet its approved capital budget and short term obligations. The Company will continue to monitor these events and will update shareholders as appropriate.

Operational Summary

Production for the three months ended June 30 averaged 112 BOE per day, up approximately 8% from the previous quarter despite the fact that field activity during the second quarter was restricted due to spring break-up conditions and resulting road bans. Nexstar Energy also drilled and cased its 02/4-19 well (0.6 net) in the Pembina area of west central Alberta, in the latter part of the second quarter with completion scheduled for the third quarter of this year.

Drilling activities to date in 2007 include the Company's participation in six wells (2.7 net) resulting in four wells cased and awaiting completion and two abandonments. Two wells (0.6 net) are currently drilling and an additional two locations (1.10 net) are being surveyed with an anticipated commencement date in late September 2007. Recently drilled and cased wells include one well at Goodwin and one well at each of Rycroft, Macleod and Pembina, while both wells drilled at Giroux (0.9 net) were abandoned. Completion results from the cased wells are expected in late September.

With our recent drilling program expected to provide production and reserve additions and with an undeveloped land inventory of 55,500 gross acres either owned or held under option for future drilling, the Company anticipates being an active participant in exploratory drilling for the remaining balance of the fiscal year.

Nexstar Energy is an emerging junior oil and gas company that is focused on drilling multi-zone crude oil and natural gas prospects in west central Alberta, complemented by strategic acquisitions.

This news release may contain certain forward-looking statements, including management's assessment of future plans and operations, and capital expenditures and the timing thereof, that involve substantial known and unknown risks and uncertainties, certain of which are beyond the Company's control. Such risks and uncertainties include, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, the impact of general economic conditions in Canada, the United States and overseas, industry conditions, changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof, and obtaining required approvals of regulatory authorities. The Company'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, including the amount of proceeds, that the Company will derive therefrom. Readers are cautioned that the foregoing list of factors is not exhaustive. All subsequent forward-looking statements, whether written or oral, attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

BOEs 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.

9,200,000 Class A Shares

1,080,000 Class B Shares

ADVISORY: The TSX Venture Exchange has neither approved nor disapproved the contents of this news release. The TSXV does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Nexstar Energy Ltd.
    Peter A. Carwardine
    President and CEO
    (403) 263-6133 ext. 201
    (403) 263-3629 (FAX)
    Nexstar Energy Ltd.
    Brian J. Spilchen
    VP Finance and CFO
    (403) 263-6133 ext. 202
    (403) 263-3629 (FAX)
    Nexstar Energy Ltd.
    603 - 7 Avenue SW, Suite 525
    Calgary, Alberta T2P 2T5