Peregrine Energy Ltd.

Peregrine Energy Ltd.

November 14, 2005 17:34 ET

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

CALGARY, ALBERTA--(CCNMatthews - Nov. 14, 2005) -


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


For the periods Three Months Nine Months
ended September 30 2005 2004 2005 2004

Petroleum and natural
gas revenue $ 7,745,019 $ 3,855,695 $ 20,941,763 $ 5,068,557

Funds from
operations (1) $ 3,108,435 $ 1,490,037 $ 8,439,131 $ 1,677,150
Per share - basic(1) $ 0.10 $ 0.06 $ 0.28 $ 0.11
Per share
- diluted(1) $ 0.10 $ 0.05 $ 0.27 $ 0.10
Net income (loss) $ (64,791)$ 699,981 $ (2,198,144)$ 3,841,908
Per share - basic $ - $ 0.03 $ (0.07)$ 0.24
Per share - diluted $ - $ 0.03 $ (0.07)$ 0.22
Capital expenditures $ 1,626,346 $ 6,992,999 $ 12,226,062 $ 16,424,612
Property acquisitions $ - $ 13,938,219 $ - $ 29,097,718

Weighted average
common shares
outstanding - basic 31,076,143 26,491,778 30,467,428 15,783,155
Weighted average
common shares
- fully diluted 31,827,357 27,298,624 31,184,679 17,132,207
Average Daily
Crude oil & NGLS
(bbls/day) 740 714 809 299
Natural gas (mcf/day) 4,167 1,143 4,121 678
Barrels of oil
equivalent (boe/day)
(6:1) 1,434 904 1,496 412
Average Selling Price
Crude oil & NGLs
($/bbl) $ 64.59 $ 48.23 $ 55.64 $ 47.75

(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 sup plemental
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 nine months 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 nine months of 2005 was $8,439,131 ($0.28/basic share) and includes a one time management restructuring expense of $640,000 ($0.02 per basic share). The Company incurred a net loss in the amount of $2,198,144 mainly as a result of incurring a non-cash financial instrument loss of $2,256,267 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.

Under the guidance of the new Management team, in place since July 2005,
Peregrine has been active evaluating and executing on the properties within the company. Peregrine remains committed to both exploration and development opportunities that will add production and reserves, as well as developing the existing asset base. To date the highlights include:

- Closing of 3D Seismic Option and Farmout Agreement in the Tofield area of central Alberta with a senior producer covering 25 sections of land with multi-zone potential

- Drilling and casing three exploration wells in Buick Creek (1), Parkbeg (2) and one development well at Ingoldsby

- Completion of two exploration wells in Jackpine (1) and Buick Creek (1)

- New pipeline projects initiated in three core areas

- Initiation of Non-Core Divestment program with cash offers received on 28 properties and 30 BOE/day at very competitive multiples with planned year end closings

Peregrine is excited to note the following updates on the exploration and ongoing development activities despite the ongoing challenges in securing field services and rig contracts.


Exploration play evaluation is moving forward as previously announced while adding one new area to the portfolio. Due to the competitive nature of our industry and ongoing business negotiations, specific well results will be released only where prudent. The following is an update on the Exploration activities:

- Gunnell, NE BC; Peregrine owns 3D seismic over 230 sections of land and the deep rights in three contiguous sections of land. Based on the 3D seismic, a 2,400 meter test is identified targeting the Keg River formation on these lands. Our plans remain to farm-out 50% of the working interest in this well. There are six more potential drilling locations at Gunnell on lands contributed by its joint venture partner and we continue to evaluate exploration and business opportunities on all the land under the joint venture AMI (Area of Mutual Interest).

- Jackpine, NE BC; the Company has a 50% working interest in an exploration well that was completed in two zones and remains standing awaiting a follow-up location prior to commitment to a pipeline route and tie-in. The operator indicates that a follow-up exploration well is planned for Q4. Peregrine has an average working interest of 42% in 11 sections of land with multi-zone gas potential.

- Buick Creek, NE BC; Peregrine has earned a 70% working interest on 4 sections of land, providing high working interest in 6 sections. The original exploration well was completed in two zones resulting in commercial gas rates. The uphole formations have not been completed and will remain behind pipe while options to twin the well are evaluated. A follow up exploration well has been drilled and cased with multi-zone gas potential and will be completed prior to year end. The re-completion of an offsetting third-party well has been suspended subject to further land negotiations. The Company is reviewing follow up development drilling locations and tie-in options for the area.

- At Swan Hills, Alberta; Peregrine has 35 sections of land with a 100% WI. Peregrine is proceeding with licensing the first exploration well and has identified two additional locations to be added to the program. Licensing and building of all three locations will proceed with the program to start once a rig comes available. Peregrine plans to drill up to three wells this winter drilling season with an on production date depending on results and pipeline crew availability, which could be delayed until after break up.

- Parkbeg, Saskatchewan; the Company has 58 sections at 100% working interest. The two exploration wells were moved up in priority and drilled and cased in October. Completion of the wells will start immediately to evaluate the deeper oil and shallow gas potential, with results anticipated by mid December.

- Tofield, Alberta; Peregrine holds 14.75 sections of land in this area 100%. Peregrine is preparing to shoot 3-D seismic over 25 sections of land including 12.75 sections of our land. This seismic, is the first stage of commitment in a recently executed seismic review and farm-in agreement with a senior producer in the area.


Development work commenced in Q3 with the scheduling of up to eight new wells in three different areas.

- Ingoldsby, Saskatchewan; at the time of this message the second well in Ingoldsby is drilling ahead with the first well drilled and cased and waiting on completion.

- Noel, BC; new well licensing is proceeding with the potential to drill up to four wells this winter depending on rig availability.

- Central and Southern Alberta; three new wells in Grand Forks and one in Tofield are scheduled to commence drilling in Q4 2005 or early 2006 as part of the infill drilling program in these areas.


The 2005 budget is estimated at $18 MM of net capital, with the majority of the capital invested in exploration projects in order to set up the 2006 development program and ensure that the flow through commitment is met. The 2005 production exit rate is estimated at 1550 - 1600 boepd (prior to any divestitures) which is behind the forecasted exit rate of 1800 boepd. Although the exit rate has been reduced, we forecast to have 200 boepd behind pipe at year end awaiting tie-in in early 2006.

To assist in managing debt and improving operational efficiencies, the Company plans to rationalize or divest of non-core assets. Management has identified up to 100 boepd of non-core assets for disposition and is evaluating an additional 150 boepd for future rationalization. Offers have been received on several non-core properties at attractive multiples including 28 properties producing 30 boepd.

The new Management Team has come up to speed quickly and is executing on the business strategy of: rationalization of non-core properties, assessing the current exploration projects, adding future exploration plays and moving ahead with our development projects. We will continue to be diligent in the execution and prioritization of our projects while maintaining focus on reserve additions, production growth and economic metrics.

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) 206-0027
    (403) 206-0029 (FAX)
    Peregrine Energy Ltd.
    Willie Dawidowski
    VP Finance & CFO
    (403) 206-0027
    (403) 206-0029 (FAX)
    Peregrine Energy Ltd.
    Bill Gallacher
    (403) 237-9949
    (403) 237-0903 (FAX)