Redcliffe Exploration Inc.
TSX VENTURE : RXP.A
TSX VENTURE : RXP.B

Redcliffe Exploration Inc.

May 28, 2009 12:21 ET

Redcliffe Announces Q1 2009 Financial Results

CALGARY, ALBERTA--(Marketwire - May 28, 2009) -

THIS NEWS RELEASE IS NOT FOR DISSEMINATION IN THE UNITED STATES OR TO U.S. PERSONS.

Redcliffe Exploration Inc. ("Redcliffe" or the "Company") (TSX VENTURE:RXP.A) (TSX VENTURE:RXP.B) is pleased to announce that it has filed its unaudited interim consolidated financial statements and related Management's Discussion and Analysis as of and for the three months ended March 31, 2009 with Canadian securities regulatory authorities. These filings are available for review at www.sedar.com.

Q1 2009 Highlights:

- Production increased 42% to a record quarterly average of 1,297 boe/d for Q1 2009, compared to 914 boe/d for Q1 2008.

- Petroleum and natural gas sales stayed flat at $4,715,000 for Q1 2009, compared to $4,717,000 in Q1 2008. As a result of significantly decreased benchmark commodity prices, average prices realized for Q1 2009 decreased 29% to $40.38/boe, compared to $56.72/boe for Q1 2008.

- Operating netback decreased 39% to $19.69/boe for Q1 2009, compared to $32.45/boe for Q1 2008.

- Funds from operations decreased 12% to $1,888,000, compared to $2,156,000 for Q1 2008. On a per boe basis, fund from operations decreased 38% to $16.18/boe for Q1 2009, compared to $25.92/boe for Q1 2008.

- Net loss increased 32% to $1,208,000 for Q1 2009, compared to a net loss of $914,000 for Q1 2008.

- Net capital expenditures totaled $1,956,000 for Q1 2009. Redcliffe drilled 1 (0.20 net) well during the quarter, resulting in 1 (0.20 net) gas well, for an overall success rate of 100%.

- Net debt decreased 10% to $12,148,000 at March 31, 2009, compared to $13,472,000 at December 31, 2008.

- Completed the acquisition of First Western Financial Ventures Inc., resulting in the injection of approximately $1.6 million in working capital, before transaction costs, and the issuance of 3,361,800 Class A shares.



Three Three
months ended months ended
Financial March 31, 2009 March 31, 2008
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($ thousands, except per share and
share amounts)

Petroleum and natural gas sales 4,715 4,717
Funds from operations (1) 1,888 2,156
Per basic and diluted share 0.02 0.03
Cash provided by operating activities 1,259 2,099
Per basic and diluted share 0.01 0.03
Net loss and comprehensive loss 1,268 914
Per basic and diluted share 0.01 0.01
Capital expenditures, net 1,956 4,209
Weighted-average shares (thousands)
Basic 90,982 69,344
Diluted 90,982 69,344



March 31, December 31,
Capital Structure 2009 2008
----------------------------------------------------------------------------
($ thousands, except share amounts)

Working capital deficiency (2) 1,956 4,885
Bank debt 10,192 8,587
Net debt (3) 12,148 13,472
Total assets 62,731 66,683
Shares outstanding (thousands)
Class A 77,508 74,235
Class B 1,494 1,494



Three Three
months ended months ended
Operations March 31, 2009 March 31, 2008
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Daily production
Crude oil and condensate (bbl/d) 223 115
Natural gas liquids (bbl/d) 182 157
Natural gas (mcf/d) 5,352 3,851
Oil equivalent (boe/d @ 6:1) 1,297 914
Per million diluted shares 14.3 13.2
Average prices (4)
Crude oil and condensate ($/bbl) 48.13 96.14
Natural gas liquids ($/bbl) 25.55 55.97
Natural gas ($/mcf) 6.65 8.31
Oil equivalent ($/boe) 40.38 56.72
Netback
Operating netback ($/boe) (5) 19.69 32.45
Realized gain on financial derivatives
($/boe) 1.53 -
General and administrative ($/boe) (4.17) (5.01)
Interest ($/boe) (0.87) (1.52)
Funds from operations ($/boe) 16.18 25.92
Drilling activity
Gross wells 1.00 -
Net wells 0.20 -
Success rate, net wells 100% -

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(1) Funds from operations is calculated as cash provided by operating
activities and adding changes in non-cash working capital and asset
retirement expenditures, if any. 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 GAAP and
therefore may not be comparable with calculations of similar measures
for other companies.
(2) Working capital deficiency includes only accounts receivable, prepaid
expenses and deposits, and accounts payable and accrued liabilities.
(3) Net debt represents the sum of working capital deficiency and bank
debt.
(4) Average prices are before the deduction of transportation costs; oil
equivalent includes sulphur sales.
(5) Operating netback equals petroleum and natural gas sales less
royalties, operating expenses and transportation costs, calculated on a
boe basis. Operating netback does not have a standardized measure
prescribed by GAAP and therefore may not be comparable with the
calculation of similar measures for other companies.


Outlook:

Recent global financial events have had a significant impact on the junior oil and gas sector, resulting in lower commodity prices, tightening of capital markets for both debt and equity, and lower share valuations. Understandably, these events have affected Redcliffe and management has taken measures to assess the impact to the Company and to address the issues that have arisen or may arise in the foreseeable future. As a result of lower commodity prices, and especially natural gas prices, the Company has adjusted its capital expenditure budget for 2009, focusing such expenditures on meeting outstanding flow-through obligations for 2009, optimizing existing production, and drilling lower risk wells. To this end, the Company currently plans to drill up to six additional gross wells on existing lands in the Peace River Arch and Greater Pembina. The Company has also continues to take measures to reduce other costs related to ongoing operations, such as operating expenses and general & administrative expenses.

Although difficult economic times are upon the industry, such times also bring opportunities, and the Company recognizes that it is essential to effect growth to the extent possible in such an environment. To this end, the Company is identifying opportunities to take advantage of recent Alberta drilling incentives and royalty program modifications, and to undertake corporate or property transactions which add scale, future potential and improved balance sheet strength. We expect that commodity prices and the global economy will improve in 2010, which will drive growth in the future, and we are positioning ourselves to take advantage of such. We also recognize that the current environment provides the opportunity to develop our future capital expenditure programs, and to take advantage of business opportunities that can drive future growth. We envision expanding our capital expenditure budget once the commercial environment improves and will, in the interim, work towards enhancing our financial strength. As a company, we continue to focus on per share value drivers, and with our strong management and technical teams, our excellent land base, and our inventory of high-impact drilling opportunities, we remain confident and optimistic about our future.

Reader Advisories

Forward-Looking Statements: This news release contains certain forward-looking statements, including management's assessment of future plans and operations, and capital expenditures and the timing thereof, that involve substantial known and unknown risks and uncertainties, certain of which are beyond the Company's control. Such risks and uncertainties include, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing, processing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, the impact of general economic conditions in Canada, the United States and overseas, industry conditions, changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof, and obtaining required approvals of regulatory authorities. The Company's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits, including the amount of proceeds, that the Company will derive there from. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect the Company's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). All subsequent forward-looking statements, whether written or oral, attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

BOE may be misleading, particularly if used in isolation. A BOE conversion 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.

Neither the TSX Venture Exchange nor its Regulation Services Provider accepts responsibility for the adequacy or accuracy of this news release.

Contact Information

  • Redcliffe Exploration Inc.
    Daryl H. Connolly
    President & CEO
    (403) 539-8440
    (403) 539-8433 (FAX)
    Email: dconnolly@redcliffe.ca
    or
    Redcliffe Exploration Inc.
    George Gramatke
    Vice President, Finance & CFO
    (403) 539-8442
    (403) 539-8433 (FAX)
    Email: ggramatke@redcliffe.ca