Peregrine Energy Ltd.

Peregrine Energy Ltd.

March 28, 2006 08:00 ET

Peregrine Energy Ltd. Announces 2005 Results and Continues Turnaround in 2006

CALGARY, ALBERTA--(CCNMatthews - March 28, 2006) -


Peregrine Energy Ltd. ("Peregrine" or the "Company")(TSX:PEG) announces its 2005 results as follows:

For the years ended December 31 2005 2004

Petroleum and natural gas revenue $ 29,569,624 $ 11,297,904
Funds from operations (1) $ 12,057,248 $ 3,710,391
Per share - basic (1) $ 0.39 $ 0.19
Per share - diluted (1) $ 0.38 $ 0.19
Net income (loss) $ (2,069,376) $ 3,692,374
Per share - basic $ (0.07) $ 0.19
Per share - diluted $ (0.07) $ 0.18
Capital expenditures $ 21,636,998 $ 26,254,388
Property acquisitions $ - $ 29,498,487
Weighted average common shares
outstanding - basic $ 30,745,532 $ 19,388,053
Weighted average common shares
outstanding - fully diluted $ 31,374,743 $ 19,960,531

Average Daily Production
Crude oil & NGLS (bbls/day) 825 439
Natural gas (mcf/day) 4,159 1,606
Barrels of oil equivalent
(boe/day)(6:1) 1,518 707
Average Selling Price
Crude oil & NGLs ($/bbl) $ 56.09 $ 46.46
Natural Gas ($/mcf) $ 8.36 $ 6.51
Average field netback ($/boe@6:1) $ 30.03 $ 21.22

(1) Funds from operations and funds from operations per share are not recognized measures under Canadian generally accepted accounting principles ("GAAP"). Funds from operations is calculated by taking net income (loss) and adding back non-cash balances such as depletion, depreciation and accretion, stock compensation expense, future income taxes and unrealized financial derivate costs. Management believes that funds flow from operations is a useful supplemental measure to analyze operating performance and provide an indication of the results generated by the Company's principal business activities. Peregrine's method of calculating these measures may differ from other companies, and accordingly, they may not be comparable to measures used by other companies.

In 2005 the Company realized significant increases in revenue and funds flow from operations as compared to the comparable period in 2004. Funds from operations for 2005 were $12,057,248 ($0.39/basic share) and include a one-time management restructuring expense of $640,000 ($0.02 per basic share). In 2005, the Company incurred a loss of $2,069,376 as the recognition of an unrealized loss on financial instruments of $1,624,085, higher depletion expense, and a one time management reorganization expense of $640,000 offset the effects of higher production volumes and prices.


Corporate Turnaround Positions Peregrine for Growth

A change in the company's momentum began in July 2005 with the successful integration of Peregrine's new executive. Combining over 100 years of industry experience, this technical leadership team, dealt with a balance sheet debt of two times cash flow, rationalized non-core assets by selling 38 properties and continued to move exploration and development drilling prospects forward.

As part of a re-focused strategy, the new management and staff responded to a 2005 Q2 production rate that had decreased to 1400 boe/d and critically assessed the 100 properties within its portfolio. With 85% of the production coming from 20 properties, management chose to concentrate efforts on the productive properties and rationalize other, non-core assets - a decision critical to both human and financial resources.

Second Half Turnaround

While focussing on the turnaround strategy, the Company needed to show organic growth and in the second half of 2005 operated or participated in the drilling of nine gross wells. For the year, Peregrine drilled or participated in 18 wells; seven gross exploration wells (five net) and 11 gross development wells (five net). The drilling success rate was 43% on exploration and 90% on development.

Peregrine's 2005 Q4 production averaged 1583 boe/d with an exit rate of 1650 boe/d and 300-350 boe/d behind pipe. Peregrine's 2005 funds from operations were $12.1 MM or $0.39/share with a CAPEX of $21.6 MM and year-end debt of $29 MM.

In the fourth quarter, Peregrine initiated the marketing of non-core assets and as of December 31, 2005, two properties were sold. This marketing effort continued into 2006 and as of March 1st, an additional 36 properties had been sold, reducing the debt to $13-14 MM or approximately 1:1 debt to cash flow.

As of year end 2005, the Company's reserves are 3.3 MM boe Proven and 5.4 MM boe Proven plus Probable. This year end total is a result of 554 M boe of production, new discoveries of 440 M boe and negative reserve revisions of approximately 1.0 MM boe. Net of the property divestments, as of March 1, 2006, Peregrine's go forward reserve base is 2.6 MM boe Proven and 4.3 MM boe Proven + Probable. Given the above property sales the net downward revision on the go forward properties is 600 M boe.

2005 exploration activities in Buick Creek and Jackpine of northeast British Columbia included the drilling and completion of three wells. After the completion of the first exploration well in Buick Creek, a follow-up well was drilled and completed in Q4 2005, resulting in approximately 300 boe/d behind pipe in the area. Peregrine also participated in the drilling and completion of a 50% WI well in Jackpine, with approximately 50 boe/d net behind pipe.

Development opportunities in 2005 included the drilling of four operated horizontal wells in southeast Saskatchewan. Two of the wells were drilled in Ingoldsby, Saskatchewan in October of 2005. After completion, the initial production increase for the area was approximately 200 bbls/d on an average WI of 80%.

Peregrine drilled, completed and tested two exploration wells in Parkbeg, Saskatchewan in Q4 with mixed results. On completion the wells tested gas, but due to the high gas water ratio, have been deemed commercially uneconomic. These well results and follow-up locations are currently under review.

Late in 2005, Peregrine shot 25 square miles of 3D seismic in the Tofield area as part of a seismic option review with a senior oil and gas producer. That seismic has been processed and is now being assessed for future drilling opportunities in Q2/Q3 2006.

Growing Value

Going forward, Peregrine is strategically positioned to exploit existing plays and compete in the industry as a value-add company. Peregrine's prospect inventory has over $40 MM in exploration and development capital opportunities with the capability to add over 2,000 boe/d of initial production. We have a good undeveloped land base and will continue to explore future land deals that fuel the Company's growth.

As of March 1, 2006, the following metrics are used to calculate the
Company's Net Asset Value:

- Reserve Value $ 62 MM
- Land $ 12.4 MM
(65,000 acres @ $175/acre + 35,000 acres @ $30/acre)
- Seismic $10 MM
(Includes seismic value for Gunnell, Buick Ck,
Clear Hills, Swan Hills & Tofield)
- Debt ($13 MM)
- Tax Pools $6.5 MM
(Total pools $43 MM @ $0.15/dollar, Loss Carry
Forward & CEE account for $13.5 MM)
- Resulting NAV $2.47/share basic

Current 2006 plans forecast the drilling of up to 15 wells, including both exploration and development. Our strategy will concentrate on shallow to medium depth stacked pay potential gas plays and light oil development.

Peregrine's primary growth will come from the exploration and development of assets in Buick Creek and Noel in northeast British Columbia and Grand Forks, Swan Hills and Tofield in Alberta. Success in these areas as well as the addition of other exploration projects to our portfolio will drive the Company's growth strategy. The ongoing rationalization of non-core assets will also continue, allowing Peregrine to focus on targeted core areas.

In northeast British Columbia, the pipeline has been routed and compression ordered for the tie-in of the two standing wells (300 boe/d) in Buick Creek. The plan is to pipeline the winter access areas prior to spring break-up and finish the pipeline and tie-ins for production commencement in Q3, 2006. Licensing is underway for two follow-up locations in Buick Creek for drilling in Q2-Q3. Plans for Jackpine are being finalized by the operator and include the potential drilling of a follow-up well in 2006.

In Noel, up to 10 low to medium risk drilling locations have been identified, with four drilling locations currently surveyed. The target reservoirs are typically long life deep basin gas zones with initial production rates ranging from 0.5 - 3.0 mmcf/d. Space in the gathering system has been confirmed and the current plan is to start drilling in Q3 of 2006.

In Alberta, the first well at Swan Hills was drilled in early Q1, 2006, with two follow-up wells waiting on well licenses. The follow-up wells will be drilled next winter. As well, three oil wells have been licensed in the Grand Forks area with plans for drilling in Q2. The 3-D seismic in Tofield is processed and being evaluated to pick up to three drilling locations for drilling in Q2/Q3.

Peregrine Energy will continue to work to ensure sustainability of existing share values by implementing target metrics for growth, such as an F&D of $15-20/boe, production efficiencies of less than $25,000/boe and operating costs of approximately $10.00/boe. In 2006, funds from operations are estimated at $14-15 MM ($0.47/share basic). As of March 1, 2006, the production rate is 1,150 - 1,200 boe/d. Targeted average production rates are 1,600 - 1,700 boe/d with an exit rate of 2,100 - 2,200 boe/d, on 2006 capital expenditures of $21 - 23 MM prior to proceeds from dispositions.

Throughout 2006, Peregrine will remain focused on effectively developing a strong asset base in five to six core areas, while creating solid value and return. We will continually operate within our fiscal means and evaluate any opportunity to increase ownership in our targeted areas. With prudent financial management practices and the continual refinement of our operations, we believe that Peregrine will realize several opportunities for production and, ultimately, corporate growth.

Peregrine Energy Ltd. has filed its Annual Information Form which contains the annual National Instrument 51-101 F1, F2 and F3 information. Also filed are the 2005 year end financial statements and MD&A. These reports can be accessed electronically from the SEDAR system at

For additional information on the Company, please go to the Company's profile on SEDAR at or the Company's website at


Except for historical financial information contained herein, the matters discussed in this document may be considered forward-looking statements. Such statements include declarations regarding management's intent, belief or current expectations. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties; actual results could differ materially from those indicated by such forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: (i) that the information is of a preliminary nature and may be subject to further adjustment, (ii) the possible unavailability of financing, (iii) risks related to the exploration and development of oil and gas properties, (iv) the impact of price fluctuations and the demand and pricing for oil and natural gas, (v) the seasonal nature of the business, (vi) start-up risks, (vii) general operating risks, (viii) dependence on third parties, (ix) changes in government regulation, (x) the effects of competition, (xi) dependence on senior management, (xii), impact of the Canadian economic conditions, (xiv) fluctuations in currency exchange rates and interest rates.

The Toronto Stock Exchange has neither approved nor disapproved of the contents of this release.

Contact Information

  • Peregrine Energy Ltd.
    Gary Gardiner
    President, CEO & Director
    (403) 451-3490
    (403) 451-3501 (FAX)
    Peregrine Energy Ltd.
    Willie Dawidowski
    VP Finance & CFO
    (403) 451-3500
    (403) 451-3501 (FAX)
    Peregrine Energy Ltd.
    Bill Gallacher
    (403) 237-9949
    (403) 237-0903 (FAX)