NuLoch Resources Inc.

NuLoch Resources Inc.

May 15, 2008 23:00 ET

NuLoch Resources Releases Q1 2008 Results

CALGARY, ALBERTA--(Marketwire - May 15, 2008) - NuLoch Resources Inc. (TSX VENTURE:NLR.A) (TSX VENTURE:NLR.B) advises that it has filed its unaudited interim financial statements for the three months ended March 31, 2007 at The Annual General and Special Meeting of Shareholders will be held on May 21, 2008 at 10:00 am at the Metropolitan Conference Centre, 333 - 4 Ave SW, Calgary.

NuLoch Resources Inc. was incorporated on May 13, 2005 and commenced operations on July 1, 2005. Production averaged 412 boe/d in the first quarter of 2008 and April production averaged approximately 500 boe/d and current rates are approximately 535 boe/d.

Accomplishments in Q1 2008

- Achieved quarterly profit of $285,000;

- Funds flow from operations in Q1 was $1,216,000 compared to $1,483,000 for all of 2007;

- 40 percent of Q1 volume was oil and NGL compared to only 8 percent a year ago;

- Averaged 445 boe/d in March with plans to reach 700 boe/d before the end of Q2;

- Announced 51 section Bakken farm-in on February 11 and spud earning well on March 17;

- Drilled and cased 3 wells (2.2 net) in Southern Alberta with completions scheduled for Q2;

- Raised $10,001,000 with private placements of Class A common shares.

Three months ended
March 31,
2008 2007
------- -------
Production - daily average
Oil and NGL (bbls/d) 165 22
Natural gas (Mcf/d) 1,483 1,612
Combined oil equivalent (boe/d)(1) 412 290
Average sales prices
Oil and NGL ($/bbl) 95.02 63.05
Natural gas ($/Mcf) 7.90 7.28
Combined oil equivalent ($/boe) 66.46 45.10

($ thousands except per share amounts)
Petroleum and natural gas revenue 2,493 1,177

Funds flow from operations(2) 1,216 420
Per share - basic 0.04 0.02
Per share - diluted 0.04 0.02

Net earnings (loss) 285 (102)
Per share - basic 0.01 -
Per share - diluted 0.01 -

Working capital deficiency 1,182 (3,179)
Line of credit available 6,500 5,500

Capital expenditures 5,050 1,328

Class A, end of period 30,780 15,197
Class B, end of period 653 653
Options, end of period 2,885 823
Basic, weighted average combined 27,989 21,722
Diluted, weighted average 28,520 21,722

(1) Six Mcf of natural gas is considered equivalent to 1 barrel of oil.
(2) Cash flow from operations before changes in non-cash operating working
capital. (see Advisories)

Tableland, Saskatchewan

Our farm-in on 51 sections of land in Saskatchewan has the potential to greatly expand the Company's scope of operations. The earning well targets oil in the Sanish and Lower Bakken zones. If successful, the well may lead to an extensive follow-up development program. The well was drilled horizontally for 1,434 metres at a depth of 2,250 metres and was rig-released on April 13. An un-cemented liner, fitted with expandable packers, has been run in the hole and will permit well completion with 11 sequential fracture stimulation operations over the length of the horizontal section. This operation is scheduled to commence in the last week of May with an analysis of results available by late-June.

Alberta Operations

Three natural gas wells (2.6 net) drilled in Q4 2007 are being brought on production in Q2 2008. The first well (0.6 net) is a Belly River producer that was started up on April 3. The current production rate is restricted to approximately 800 Mcf/d (480 Mcf/d net). Upon tie-in, the second well (1.0 net) was found not capable of production from the Mannville formation. However, in mid-April, the well was re-completed up-hole in the Bow Island formation and, although some production has been obtained at 400 Mcf/d, the Company does not have long-term expectations for this well. The third well (1.0 net) had the strongest rates on test. The Mississippian reservoir is slightly sour and maximum production rates will require a complicated four mile tie-in to the nearest plant. However, the well is producing at a restricted rate of approximately 350 Mcf/d utilizing a wellsite sweetening unit and a shorter, two mile, tie-in to an existing sweet gathering system. Additional de-bottlenecking is planned for Q2.

Industry Conditions

Oil prices are at historical highs with recent trading at US$125 per barrel. After strong winter storage draws, natural gas is trading on the spot market at AECO at over C$10 per Mcf. Although tempered by the negative effects of Alberta's "New Royalty Framework", activity is picking up and will likely result in resurgence of service industry costs.


Drilling in the balance of 2008 will be determined, in part, by the results obtained when the three cased wells drilled in Q1 are completed and evaluated. In addition, three sections of Crown land have been acquired with potential for follow-up Mississippian drilling this year. During Q2, NuLoch plans to re-complete 7 shallow gas wells in its Enchant core area. A successful result from the Tableland Saskatchewan horizontal well will also play a large part in shaping the capital program in the balance of the year.

At March 31, 2008, NuLoch has positive working capital of $1.2 million and an un-drawn line of credit in the amount of $6.5 million.

Production averaged 412 boe/d in Q1 and is currently at 535 boe/d. Given the success-dependent nature of future drilling plans, providing production guidance for the year is a challenge. However, our target average production rate for 2008 is 650 boe/d with a December exit of 800 boe/d. Assuming selling prices of WTI US$95.00 per barrel of oil and C$9.00 per Mcf of natural gas in the last half of 2008, funds flow from operations may exceed $7.0 million in 2008 and would permit a capital program of up to $15.0 million for the year.


Use of Barrels of Oil Equivalent (boe)

Disclosure provided herein in respect of boe units may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf of natural gas to 1 bbl of crude oil is based on an energy equivalency conversion method primarily applicable at the burner tip and may not represent a value equivalency at the wellhead.

Non-GAAP Measurement - Funds Flow

Funds flow from operations, calculated as cash flow from operating activities before changes in non-cash working capital, is used by the Company as a key measure of performance. Funds flow from operations does not have a standardized meaning prescribed by Canadian GAAP and therefore may not be comparable with the calculation of similar measures for other companies. Funds flow from operations as presented is not intended to represent operating profits for the period, nor should it be viewed as an alternative to cash provided by operating activities, net earnings or other measures of financial performance calculated in accordance with GAAP. Many of the Company's peers in the oil and natural gas industry use the same definition and, therefore, disclosure herein enhances comparability with those peers. Funds flow from operations per share is calculated using the same share bases which are used in the determination of earnings per share.

Forward-Looking Statements

Certain statements in this document or incorporated herein by reference constitute "forward-looking statements". These forward-looking statements can generally be identified as such because of the context of the statements, including words indicating that the Company "believes", "anticipates", "expects", "plans" or words of a similar nature. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions which will, among other things, impact demand for and market prices of the Company's products; industry capacity; the ability of the Company to implement its business strategy, including exploration and development activities; the ability of the Company to complete its capital programs; successful negotiations with bankers and other third parties; the success of exploration and development activities; production levels; government regulations and the expenditures required to comply with them (especially safety and environmental laws and regulations); asset retirement obligations; and other circumstances affecting revenues and expenses.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • NuLoch Resources Inc.
    R. Glenn Dawson
    President and CEO
    (403) 920-0455
    (403) 920-0457 (FAX)
    NuLoch Resources Inc.
    2200, 444 - 5th Avenue SW
    Calgary, Alberta T2P 2T8