Primera Energy Resources Ltd.
TSX VENTURE : PTT

December 22, 2008 11:41 ET

Primera Energy Resources Ltd. (TSXV:PTT) Announces Third Quarter 2008 Financial Highlights and Operations Update

PORT OF SPAIN, TRINIDAD & TOBAGO AND CALGARY, ALBERTA--(Marketwire - Dec. 22, 2008) - The board of directors of Primera Energy Resources Ltd. (TSX VENTURE:PTT) ("Primera" or the "Corporation") is pleased to announce its financial results for the nine months ended September 30, 2008.

Financial Highlights

The Corporation has filed its interim unaudited consolidated financial statements for the nine months ended September 30, 2008 and related Management's Discussion and Analysis on SEDAR on, or about, November 28, 2008.

A summary of certain financial information is presented below.



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September 30, September 30, Change
($, except where noted) 2008 2007 (%)
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Oil Revenues 5,688,410 3,041,005 87
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Royalties 2,686,876 1,228,987 119
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Operating expenses 580,455 475,376 22
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Net income (loss) 280,345 (274,285) 202
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Cash flow from operations 1,574,526 329,177 378
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Cash flow from operations as
a percentage of revenues (%) 28 11 155
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Cash flow from operations per BOE 28.86 6.02 379
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Cash flow from operations per share 0.04 0.01 300
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Total BOE's per day 199 200 (0.05)
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Total assets 9,759,557 6,731,622 45
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Weighted-average shares outstanding 36,911,686 28,085,047 31
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Revenues - For the nine months ended September 30, 2008, revenues increased significantly to $5,688,410 over the previous period of $3,041,005 due to increased commodity prices received, representing an increase of 87%. The average oil price received during the current period was $104.27 as compared to the previous period in 2007 of $55.59. Total sales volumes for the nine months ended September 30, 2008 averaged 199 BOPD representing a 0.5% decrease over the previous period.

Royalties - For the nine months ended September 30, 2008, royalties increased significantly to $2,686,876 over the previous period of $1,228,987, due to increased production levels, representing an increase of 119%. However, on a sales basis, royalties did not increase significantly.

Operating Expenses - For the nine months ended September 30, 2008, operating expenses increased to $580,455, up from $475,376, representing an increase of 22%. This increase was incurred particularly during the third quarter. The significant increase during the quarter ended September 30, 2008 is due to work-over's performed on the PS 156 and the PS 164.

Net Income (Loss) - For the nine months ended September 30, 2008, the Company recorded net income of $280,345, up from a net loss of $274,285 in the previous period, assisted by strong commodity prices and stable depletion expenses. This represents an increase of 202%.

Cash Flow From Operations - The Company recorded positive cash flow from operations during the current and previous periods. Cash flow from operations for the nine month period ended September 30, 2008 increased significantly to $1,574,526, up from $329,177 in the previous period, due to increased commodity prices, combined with stable depletion expenses. This represents an increase of 378%.

As a percentage of revenues, cash flow from operations increased significantly during the nine month period ended September 30, 2008 to 28% from 11% in the previous period, representing an increase of 155%.

On a BOE basis, cash flow from operations for the nine month period ended September 30, 2008 increased significantly during the current period to 29%, up from 6% in the previous period, representing an increase of 379%.

Cash flow from operations for the nine month period ended September 30, 2008 equated to $0.04 per share, up from $0.01 per share in the previous period, representing an increase of 300%.

Cash flow from operations for the three month period ended September 30, 2008 equated to $0.011 per share, up from $0.002 per share in the previous period, representing an increase of 450%.

Working Capital - At September 30, 2008 the Company had total current assets of $4,448,303, including cash of $2,634,707, and total current liabilities of $778,684 resulting in a working capital surplus of $3,669,619 (2007 - $2,685,417).

Update on Trading Halt and Potential Transaction

In September, 2008 the Corporation voluntarily requested a halt trading of its common shares on the TSX Venture Exchange Inc. as it was in advanced negotiations with a related party for the acquisition of further production from the related party (the "Proposed Transaction"). Given the tumultuous events over the recent period for both the capital markets and the commodity prices for oil, the Proposed Transaction has undergone numerous amendments since inception and has experienced delays due to these amendments. The Proposed Transaction is a reviewable transaction in accordance with the Policies of the TSX Venture Exchange. As such, the common shares of Corporation will remain halted until certain documentation related to the Proposed Transaction is reviewed by the TSX Venture Exchange. A detailed news release regarding the Proposed Transaction will be issued prior to the reinstatement of trading.

The Proposed Transaction is subject to numerous conditions, including board of director approval, a fairness opinion and TSX Venture Exchange acceptance.

Operations Update

The Corporation is pleased to announce the drilling and completion of well PS 183ST RD on October 14, 2008. This was a sidetrack re-drilled well that was drilled to a total depth of 5,420 feet to recover lost reserves in the Lower and Upper Forest formations after the original well experienced mechanical problems. The PS 183 RD well encountered 254 feet of net oil sand in five (5) pay zones and was completed in 123 feet of the first (1) pay zone (Lower Forest sands). The well came on production October 20, 2008 and has averaged approximately 56.0 bopd over the last 58 days. It is currently pumping 57 bopd and 39 bpd of water (41% water cut average). Water production is not uncommon for this formation and is within analogue water rates.

The Corporation also wishes to announce the drilling and completion of well PS 173 RD, a similar sidetrack re-drill to PS 183ST RD, in the Upper Forest formation. The well was drilled to a total depth of 5,285 feet to investigate prospective Lower Forest sands but these were found wet and it was completed in 60 feet of Upper Forest 'E' sands on October 30th, 2008. The well encountered an additional 56 feet of shallower prospective Upper Forest pay. The well came on production November 6, 2008 and has averaged 58.0 bopd over the last 40 days. The well is currently experiencing greater than anticipated water cuts (water production is not uncommon for this formation) and Management is currently monitoring the produced water rates. If it is deemed uneconomic to continue to produce this zone the Corporation may abandon this Upper Forest "E" zone and move up the well bore to the shallower prospective Upper Forest pay.

PERL's current production rate is approximately 231 bopd. The Corporation has plans, after evaluating the production results from these two recently drilled wells, to be potentially drilling again in WD-4 by first quarter of 2009 subject to rig availability.

READER ADVISORY

Statements in this press release may contain forward-looking information including expectations of future production, operating costs, commodity prices, administrative costs, commodity price risk management activity, acquisitions and dispositions, capital spending, access to credit facilities, income and oil taxes, regulatory changes, and other components of cash flow and earnings. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Corporation. These risks include, but are not limited to, the risks associated with the oil and gas industry, commodity prices and exchange rate changes. Industry related risks could include, but are not limited to, operational risks in exploration, development and production, delays or changes in plans, risks associated to the uncertainty of reserve estimates, health and safety risks and the uncertainty of estimates and projections of production, costs and expenses. The reader is cautioned not to place undue reliance on this forward-looking information.

The reader is further cautioned that the preparation of financial statements in accordance with generally accepted accounting principles requires management to make certain judgements and estimates that affect the reported amounts of assets, liabilities, revenues and expenses. Estimating reserves is also critical to several accounting estimates and requires judgments and decisions based upon available geological, geophysical, engineering and economic data. These estimates may change, having either a negative or positive effect on net earnings as further information becomes available, and as the economic environment changes.

The calculations of barrels of oil equivalent ("boe") are based on a conversion rate of six thousand cubic feet ("mcf") of natural gas to one barrel of crude oil. Boe's may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

This press release contains the term "cash flow from operations" ("cash flow"), which should not be considered an alternative to, or more meaningful than, "cash flow from operating activities" as determined in accordance with Canadian GAAP as an indicator of the Company's financial performance. Primera's determination of cash flow from operations may not be comparable to that reported by other companies. The reconciliation between net earnings and cash flow from operations can be found in the statements of cash flows in the financial statements. The Company evaluates its performance based on net income and cash flow from operations. The Company considers cash flow from operations to be a key measure as it demonstrates the Company's ability to generate the cash necessary to repay debt and to fund future growth through capital investment.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Primera Energy Resources Ltd.
    Patrick Acham
    Chief Executive Officer
    (868) 677-7253
    or
    Primera Energy Resources Ltd.
    Philip E. Collins
    President
    (403) 630-2024