Peregrine Energy Ltd.
TSX : PEG

Peregrine Energy Ltd.

August 15, 2005 11:26 ET

Peregrine Energy Ltd. Announces Second Quarter 2005 Results and Outlines Strategic Direction for the Remainder of the Year

CALGARY, ALBERTA--(CCNMatthews - Aug. 15, 2005) - Peregrine Energy Ltd.
("Peregrine" or the "Company", TSX - PEG) announces its second quarter 2005
results as follows:

/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR DISSEMINATION IN THE
UNITED STATES./



HIGHLIGHTS

For the periods Three Months Six Months
ended June 30 2005 2004 2005 2004
-------------------------------------------------------------------------

Financial
Petroleum and
natural gas
revenue $ 6,272,429 $ 774,967 $ 13,196,741 $ 1,212,863
Funds from
operations(1) $ 1,902,637 $ 7,545 $ 5,330,695 $ 187,111
Per share -
basic(1) $ 0.06 $ - $ 0.18 $ 0.02
Per share -
diluted(1) $ 0.06 $ - $ 0.17 $ 0.01
Net income (loss) $ (1,236,195) $ 986,744 $ (2,133,354) $ 3,141,927
Per share -
basic $ (0.04) $ 0.08 $ (0.07) $ 0.29
Per share -
diluted $ (0.04) $ 0.06 $ (0.07) $ 0.21
Capital
expenditures $ 4,943,780 $ 18,525,436 $ 10,599,716 $ 24,591,111
Weighted average
common shares
outstanding -
basic 30,174,379 12,008,289 30,158,025 10,899,127
Common shares
outstanding at end
of period 30,667,313 15,776,386 30,918,020 14,664,267
-------------------------------------------------------------------------
Operating
-------------------------------------------------------------------------
Average Daily
Production
Crude oil & NGLS
(bbls/day) 768 116 845 99
Natural gas
(mcf/day) 3,891 585 4,098 443
Barrels of oil
equivalent
(boe/day) (6:1) 1,416 214 1,528 173
Average Selling
Price
Crude oil & NGLs
($/bbl) $ 53.65 $ 37.29 $ 51.66 $ 36.37
Natural Gas
($/mcf) $ 7.13 $ 5.50 $ 7.14 $ 5.82
Barrels of oil
equivalent
($/boe@6:1) $ 48.66 $ 35.34 $ 47.73 $ 35.75
Average field
netback
($/boe@6:1) $ 26.15 $ 15.41 $ 27.53 $ 16.55
-------------------------------------------------------------------------
(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 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 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.


For the first half of 2005 the Company realized significant increases in
revenue and funds flow from operations as compared to the comparable period in
2004. Funds flow from operation for the first half of 2005 was $5,330,695
($0.18/share) and include a one time management restructuring expense of
$490,000 ($0.02 per share). The Company incurred a net loss in the amount of
$2,133,354 mainly as a result of incurring a non-cash financial instrument
loss of $2,171,515 and a one time management restructuring expense. In
addition, as announced in the first quarter, the Company has initiated a
strategic shift that has moved up its exploration thrust which will continue
through 2005.

The end of the second quarter saw changes in the management team at
Peregrine. To complete the change, on July 18th, 2005, the following people
joined the Company; Gary Gardiner President and CEO, Art Flaws VP Engineering
and George Hardisty VP of Land and Business Development. Ed Marcinew VP
Exploration and Willie Dawidowski VP Finance & CFO remained with Peregrine and
complete the new management team. Grant MacKenzie of Burnet, Duckworth &
Palmer LLP was appointed Corporate Secretary.

The current producing properties give the company a solid production base
and a large inventory of development opportunities. At the time of this
message most of the properties have been reviewed and ranked to determine core
versus non-core properties and priority of future capital spending. The
development projects that the Company had previously reported on and allocated
capital to in the first half of this year, are still in inventory and are
being reviewed by management. These projects will be developed based on an
economic ranking with the work starting in early Q4 2005 and continuing into
2006. The change in Management slowed the activity in Q2, but the new team is
coming up to speed quickly and will continue to rationalize those properties
that don't fit as long term core properties.

This team is committed to both exploration and development programs that
will add production and reserves as well as develop the existing asset base.
Peregrine's remaining 2005 capital budget is currently under review by
management, that being said we are currently active on three exploration
projects in Buick Creek, Jackpine and Swan Hills.

Completion of the two exploration wells in Jackpine and Buick Creek are
ongoing with final results expected in September. Programming of another
exploration well in Buick Creek is underway with an estimated spud date early
in the 4th quarter.

The programming of a well to be drilled on the Swan Hills prospect has
been initiated. The other exploration prospects in Gunnell and Parkbeg have
well locations identified and drilling programs in place for review by
management. Timing of these prospects will depend on capital priorities and
rig availability with at least one prospect drilled prior to year end.

As mentioned at the end of Q1, 2005 capital was reallocated from
development to exploration projects. In the first half of 2005, Peregrine has
invested $4.3 million of exploration capital on five key exploration projects,
specifically; Gunnell, Jackpine, Buick Creek (N.E. British Columbia), Swan
Hills (Central Alberta) and Parkbeg (Saskatchewan). In total, $0.7 million was
spent on seismic, $ 1.2 million for land acquisitions at four of the project
areas and $2.4 million for first phase drilling at Jackpine Creek and Buick
Creek. Approximately $5.0 million, primarily for exploratory drilling and
completions, will be spent between July 1st and year end.

Details of Exploration activities:

- At Jackpine, the Company has a 50% working interest in a 2,800 meter
test which was cased as a potential multi-zone gas well prior to
spring break-up. The completion of this well is just underway with a
perf, frac and test of the first zone. Final results of the multi-zone
completion is expected by the end of September. Peregrine has an
average 42% interest in 11 sections of land with multi-zone gas
potential and is planning an additional exploration well in Q4.

- At Buick Creek, the multi-zone completion is being programmed on the
original 1,700 meter exploration well. This well earned Peregrine a
70% working interest on four sections of land. Another exploration
well (WI 70%) is currently being programmed with an anticipated spud
date early in Q4. The deep-zone re-completion of a nearby third-party
well to earn 50% interest in an adjacent three sections is on going.
Results of the completions are expected by late September. The team is
reviewing tie-in options, which are dependant on the completion
results. The result for the Company is an average working interest of
60% in nine sections of land.

- At Swan Hills, Peregrine has 35 sections of land with a 100% WI.
Recent 2D seismic interpretation and drilling results by third-parties
offsetting the Company's lands is being reviewed and to date supports
the multi-zone potential believed to be present. Peregrine plans to
drill at least one well in the fourth quarter of 2005, with drilling
to continue into Q1 of 2006. Positive results would see production
early in 2006.

- Peregrine owns 100% working interest in three contiguous sections of
land at its Gunnell project in N.E. British Columbia. Based on 3D
seismic, a 2,400 meter test is programmed targeting the Keg River
formation on these lands. Peregrine plans to farm out a portion of the
well retaining at least a 50% working interest. There are six more
potential drilling locations at Gunnell on lands contributed by its
joint venture partner. A detailed review is underway by management
with a well planned for late Q4 2005 or early Q1 2006. Additional
opportunities should present themselves with further evaluation of the
seismic coverage and successful drilling results.

- At Parkbeg, Saskatchewan, the Company added 33 sections bringing the
total to 58 sections of medium to deep multi-zone potential for oil
and gas, as well as possible shallow gas resource plays in the Second
White Specks and Viking zones. This project is also being reviewed
internally with plans to drill up to two exploratory wells in Q4 2005
or Q1 2006.

As a result of the ongoing exploration focus, production for Q2 was
1,416 boepd compared to 1,640 boepd in Q1. Production decreases for Q2 are a
result of restricted gas flows at the Noel Plant net to Peregrine of
approximately 80 boepd along with new well flush production declines and
normal property declines. The production at Noel came back on in late July and
the plant owner continues to work towards facility capacity to permanently
solve the problem. Based on Peregrine's reallocation of the 2005 capital
program to exploration and limited focus on development projects, the Company
is forecasting an average production rate of 1,500 boepd and an exit rate of
1,800 boepd for 2005.

Management believes that success is based on several factors including
proper risk assessment, defined focus areas (core vs. non-core), efficient
exploitation of reserves and low cost operating metrics. We continue to review
the development projects and will be opportunistic in cleaning up the non-core
assets while growing production in development areas such as: Noel, Tofield,
Grand Forks, Jenner and Ingoldsby/Clairlaw.

The continued focus on exploration is necessary to grow the company and
develop future high impact growth areas. Exploration success and the
appropriate follow-up development programs will increase our production base,
allowing Peregrine to take advantage of future opportunities.

Please note Peregrine has re-filed its December 31, 2004 financial
statements due to a revision in the accounting treatment of seismic sales.
Please refer to the financial statements filed on SEDAR

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

For additional information on the Company, please go to the Company's
profile on SEDAR at www.sedar.com or the Company's website at www.peregrine-
energy.com.

FORWARD LOOKING STATEMENTS

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, (*) 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.

Contact Information

  • Peregrine Energy Ltd.
    Gary Gardiner
    President, CEO & Director
    (403) 206-0027
    (403) 206-0029 (FAX)
    or
    Peregrine Energy Ltd.
    Willie Dawidowski
    VP Finance & CFO
    (403) 206-0027
    (403) 206-0029 (FAX)
    or
    Peregrine Energy Ltd.
    Bill Gallacher
    Director
    (403) 237-9949
    (403) 237-0903 (FAX)
    Website: www.peregrine-energy.com