Pilot Energy Ltd.
TSX VENTURE : PGY

Pilot Energy Ltd.

August 29, 2007 16:30 ET

Pilot Energy Ltd. -Second Quarter 2007 Results

CALGARY, ALBERTA--(Marketwire - Aug. 29, 2007) -

Pilot Energy Ltd. (TSX VENTURE:PGY):



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Highlights Three Months Ended Six Months Ended
June 30 June 30
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2007 2006 % Chg 2007 2006 % Chg
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FINANCIAL
($ thousands, except per share
amounts)

Revenue 3,783 4,683 (19) 7,409 8,474 (13)

Funds from operations(1) 1,509 1,931 (22) 2,621 3,402 (23)
Per share - basic 0.08 0.10 (22) 0.13 0.17 (23)
Per share - diluted 0.08 0.10 (22) 0.13 0.17 (23)

Net income 149 628 (76) 5 820 (99)
Per share - basic 0.01 0.03 (76) 0.00 0.04 (99)
Per share - diluted 0.01 0.03 (76) 0.00 0.04 (99)

Capital expenditures 1,323 3,654 (64) 1,571 5,544 (72)
Debt (including working capital) 10,704 12,064 (11)
Shares outstanding (000's) 22,071 19,736 12
Weighted average shares
outstanding (000's)
basic 19,630 19,690 - 19,683 19,736 -
diluted 19,828 19,939 (1) 19,880 19,986 (1)

OPERATING

Daily production
Oil and NGLs (bbl/d) 663.5 737.7 (10) 676.2 752.4 (10)
Natural gas (mcf/d) 371.1 415.8 (11) 361.6 392.0 (8)
Oil equivalent (boe/d @ 6:1) 725.3 807.0 (10) 736.4 817.7 (10)

Operating netback ($/boe)(2) 32.93 34.38 (4) 29.83 30.86 (3)

Funds from operations ($/boe)(1) 22.86 26.30 (13) 19.66 22.99 (14)
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Notes:
(1) Funds from operations is calculated as cash provided by operating
activities from the statement of cash flows, adding change in non-cash
working capital and asset retirement expenditures. Funds from operations
is used to analyze the Company's operating performance and leverage.
Funds from operations does not have a standardized measure prescribed
by Canadian Generally Accepted Accounting Principles and therefore may
not be comparable with the calculations of similar measures for other
companies.
(2) Netback is equal to total oil and natural gas revenue less royalties and
operating costs calculated on a boe basis. Netback does not have a
standardized measure prescribed by Canadian Generally Accepted
Accounting Principles and therefore may not be comparable with the
calculations of similar measures for other companies.


Quarterly Review

Operations

For the three months ended June 30, 2007, Pilot focused its efforts on initiating its Bakken drilling program. The Company participated in the drilling of one joint venture Bakken well (40 percent working interest), and drilled the first of three 100 percent working interest Bakken wells. The 40 percent Bakken well has been competed and is currently producing approximately 60 bopd (24 bopd net) pre-stimulation. Stimulation of this well, which should increase production, is planned prior to year-end.

The first well of the Company operated three well Bakken drilling program was brought on production in late July. Pilot is pleased with the early results as the well has produced an average of 260 bopd during the first month of production. Typical production performance in the area indicates that these wells stabilize in four to six months at approximately 40 to 60 percent of their first month production rates. Subsequent to the end of the second quarter, Pilot drilled the remaining two 100 percent working interest wells in the planned program. One of the wells has now been completed and is flowing at an average rate of 275 bopd during its first week of production. This well is expected to be equipped with pumping equipment and tied into the 100 percent Pilot owned Huntoon oil battery in the next few weeks. The other well drilled in the program is currently being evaluated and further production updates will be provided upon completion of this well.

Pilot also focused its efforts on lowering overall operating costs. Operating costs for the second quarter of 2007 decreased by $0.6 million or 39 percent compared to the fourth quarter of 2006. The Company expects to continue to reduce operating costs in subsequent quarters through a combination of planned capital projects and by increasing volumes at several of its batteries as a result of its summer drilling program. Forecast increases in oil volumes will result in a significant decrease in both per barrel operating costs and per barrel general and administrative expenses as no major facility capital is required to produce additional volumes and no additional staff is required.

In addition, the Company has entered into arrangements with various purchasers to sell approximately 60 boepd of non-core, high operating cost properties. Closing of these sales will occur in the third quarter of 2007.

Outlook

The Bakken light oil play in the Viewfield area of southeast Saskatchewan continues to be one of the most active plays in western Canada. With the large number of wells drilled in this area in the past two years, drilling, completion and stimulation techniques continue to improve significantly. This past quarter, Pilot has drilled three Bakken wells and participated in a fourth well which have proved up most of the Company's prospective Bakken acreage. Pilot is now in a position to aggressively develop this acreage with the eventual drilling of up to twenty-five additional Bakken wells on Company lands.

Going forward, the Company is in the process of planning a second phase of drilling for the fall/winter of 2007 consisting of three additional 100 percent Bakken wells.

Management will focus its efforts on drilling the Bakken zone for the remainder of this year based on the early success and higher than anticipated production rates from its initial Bakken wells. Drilling programs in southeast Saskatchewan for Frobisher targets and on the Company's Chauvin lands will be deferred until 2008.

Reader Advisory

Barrels of oil equivalent ("boe") amounts mentioned herein have been calculated using a conversion rate of six thousand cubic feet of natural gas to one barrel of oil. This conversion conforms to National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities (NI 51-101). The term "boe" may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Certain statements in this press release are forward-looking statements. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable by Pilot at the time of preparation, may prove to be incorrect. Actual results achieved during the forecast period will vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors, many of which are beyond the control of Pilot. There is no representation by Pilot that actual results achieved during the forecast period will be the same, in whole or in part, as forecast.

This news release shall not constitute an offer to sell or the solicitation of an offer to buy the securities in any jurisdiction. The common shares of Pilot will not be and have not been registered under the United States Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.

Pilot's disclosure documents can be viewed under the Company's SEDAR profile at www.sedar.com or copies can be obtained by e-mailing the Company at info@pilot-energy.com.

Issued and Outstanding Common Shares: 22,137,960

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

Contact Information

  • Pilot Energy Ltd.
    Todd Lemieux
    President
    (403) 514-8115 ext. 226
    or
    Pilot Energy Ltd.
    Douglas Smith
    Chief Financial Officer
    (403) 514-8115 ext. 232