Regal Energy Ltd.
TSX VENTURE : REG

Regal Energy Ltd.

August 10, 2005 17:37 ET

Regal Energy Announces Second Quarter 2005 Financial and Operating Results

CALGARY, ALBERTA--(CCNMatthews - Aug. 10, 2005) - Regal Energy Corp. (TSX VENTURE:RGN) ("Regal" or the "Company") announces its financial (unaudited) and operating results for the quarter and six months ended June 30, 2005.



Three Months Six Months
ended June 30, ended June 30,
(unaudited) 2005 2004 2005 2004

Financial
Petroleum and natural
gas sales (1) $ 513,040 $ 261,876 $1,023,689 $ 308,076
Cash flow from
operations (2) $(124,946) $ (3,721) $ 62 $ (52,667)
Net Earnings (loss) $(300,948) $ (89,044) $ (399,512) $ (176,562)
Capital
expenditures (3) $ 834,798 $ 241,047 $1,416,453 $2,428,653
Working capital
surplus (deficiency) $ (762,617) $ 531,631
Total assets $5,490,207 $3,335,028
Shareholders' equity $3,459,000 $2,725,119

Shares outstanding as
of August 10, 2005 29,749,841
Shares issuable for
warrants as of
August 10, 2005 1,641,334
Stock options
outstanding as of
August 10, 2005 2,125,000

Operations
Production
Natural gas (Mcf) 21,048 22,061 41,498 22,061
Oil and NGLs (Bbls) 8,603 2,494 18,705 3,553
Total production (Boe)(4) 12,111 6,171 25,621 7,230

Natural gas (Mcf/d) 231 243 229 121
Oil and NGLs (Bbl/d) 95 27 103 20
Total production (Boe/d)(4) 133 68 142 40

Average selling price
Natural gas ($/Mcf) 7.24 6.84 7.02 6.84
Oil and NGLs ($/Bbl) 41.92 44.46 39.15 44.21
Total production
($/Boe) (4) 42.36 42.44 39.96 42.61

Operating Netback
($/Boe) (4) 4.32 23.26 13.93 23.38

Notes:

(1) Net of transportation costs.

(2) Cash flow before net change in non-cash operating working capital
balances does not conform to Generally Accepted Accounting
Principles (GAAP). Refer to the Net Earnings and Cash Flow from
Operations section of the Management's Discussion and Analysis.

(3) Includes amounts allocated to capital as a result of the acquisition
of Thunder Road Resources Ltd. in 2005 as well as amounts allocated
to capital in 2004 as a result of the booking of the Qualifying
Transaction.

(4) Natural gas is converted to oil equivalent at 6 Mcf equals 1 Bbl.
A Boe conversion ratio of 6 Mcf = 1 Bbl is based on an energy
equivalency conversion method and does not represent a value
equivalency at the wellhead; therefore Boe's may be misleading if
used in isolation.


During the second quarter of 2005 Regal's corporate production averaged 133 Boe/d, 96 percent higher than the second quarter of 2004 but 10 percent lower than the first quarter of 2005. Weather related delays caused by unusually wet conditions resulted in reduced production during the quarter. Two of the Company's producing oil wells at Atlee Buffalo required service workovers in early June however significant amounts of rainfall prevented the Company from accessing the wells for a period of one week. This contributed to reduced production for the month. In addition, approximately 2,000 barrels of produced oil remained in inventory at month end until drier field conditions allowed the Company to resume trucking oil to market. Overall, lower than expected sales combined with higher than expected well servicing costs in the month of June contributed to a disappointing quarter for Regal.

Despite the weather related obstacles that were encountered during the month of June the Company is encouraged by its on-going progress. As a result of recent drilling and completion activities Regal's production is estimated to be 210 Boe/d with an additional 25 Boe/d of gas production at Atlee Buffalo, temporarily shut in due to gas plant modifications, that is expected to resume by the end of August.

Regal's drilling activity at Atlee Buffalo was delayed due to wet weather in early June and then heavy rains were encountered again when drilling operations were underway late in the month. However, the Company successfully drilled one heavy oil development well that was completed and recently placed on production. Regal also completed a well under a previously announced farm-in agreement that resulted in the discovery of a new heavy oil pool. This well was placed on production in July. Additional drilling locations are being considered to further evaluate up to four separate heavy oil zones. The Company anticipates that one well will also be drilled for natural gas production on the property.

At Kaybob in west central Alberta, Regal is attempting to finalize a pooling agreement for the drilling and production of a gas well and now expects to drill a 2,000 metre test during the third quarter. The well will target liquids rich natural gas in the Viking and Gething formations. Regal will operate the well at a 50 percent working interest. At Sounding Lake in east central Alberta, Regal is negotiating a pooling of lands to extend the area of its previously announced farmin. A well to test for Mannville oil potential is contemplated to be drilled prior to year-end.

Regal's 2005 revised forecast anticipates capital expenditures will remain at $2.5 million including the $1.4 million spent during the first six months. Due to lower than anticipated production and delays in drilling activity during the first six months of the year, the Company's average production rate for 2005 is now forecasted to be approximately 210 Boe/d. Exit production rates are targeted to be in the range of 375 Boe/d assuming that upcoming drilling activity will be successful and will lead to production increases. Average prices that the Company receives for its production are expected to remain strong and exceed original budget projections by more than 25 percent. The Company's revised forecast now anticipates that cash flow in the range of $1.3 million will be generated over the remaining six months of 2005.

The management and Board of Regal wish to acknowledge the contributions of Mr. Robert G. Dittmer, who resigned as an officer of Regal on July 14, 2005.

We encourage interested parties to access Regal's website (www.regalenergy.ca) for current corporate information, including updates to the Company's corporate presentation.

Regal Energy Corp. is a Canadian energy company engaged in the acquisition, exploration, development and production of crude oil and natural gas with a focus on growth and profitability.

ADVISORY - Certain information regarding Regal set forth in this release, including management's assessment of the Company's future plans and operations, may constitute forward-looking statements under applicable securities law and necessarily involve risks associated with oil and gas exploration, production, marketing, and transportation such as loss of market, volatility of prices, currency fluctuations, imprecision of reserves estimates, environmental risks, competition from other producers and ability to access sufficient capital from internal and external sources. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements.

Issued and Outstanding Common Shares: 29,749,841

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

Contact Information

  • Regal Energy Corp.
    Douglas O. McNichol
    President and Chief Executive Officer
    (403) 509-2581
    Email: dmcnichol@regalenergy.ca
    or
    Regal Energy Corp.
    Wayne R. Wilson
    Vice President Finance and Chief Financial Officer
    (403) 509-2584
    Email: wwilson@regalenergy.ca
    or
    Regal Energy Corp.
    Suite 1520, Life Plaza
    734 - 7th Avenue S.W.
    Calgary, Alberta T2P 3P8