Serrano Energy Ltd.

April 24, 2009 18:35 ET

Serrano Announces Corporate Update

CALGARY, ALBERTA--(Marketwire - April 24, 2009) -


Serrano Energy Ltd. ("Serrano" or the "Corporation") is pleased to provide a summary of its reserves evaluation as of December 31, 2008 as prepared by GLJ Petroleum Consultants Ltd. ("GLJ"), the Company's independent reserves evaluator. The reserves evaluation has been prepared in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101") in Canada.

The Company's annual audit of its financial statements is not yet complete and accordingly all financial amounts referred to in this press release are management's best estimates. Serrano will issue audited financial statements and file its full 51-101F1 Report on Reserves for 2008 by the end of April 2009.

December 31, 2008 Serrano Working Interest Reserves Summary Before Tax
Reserve Category Heavy Oil (Mbbls) Heavy Oil (Mbbls)
(net after royalty)
Proved Producing 1,000 873
Proved Developed - Non Producing 202 184
Proved Undeveloped 223 178
Total Proved 1,425 1,236
Total Probable 997 851
Total Proved & Probable 2,421 2,086

Net Present Value of Reserves

Below is a table showing the Company's net present value of future net revenue attributable to reserves using forecast prices and costs. The prices used were GLJ Forecast Prices as at January 1, 2009. The estimated future net revenues are presented before deducting future income tax effects, and are reduced for estimated future abandonment costs and future capital costs associated with non-producing, undeveloped and probable additional reserves. Estimated values disclosed do not necessarily represent fair market value.

Summary of Future Net Revenue Before Income Taxes - At December 31, 2008
Discounted at: 0% 5% 10% 15% 20%
Total Proved: 36,563 31,879 28,314 25,519 23,271
Total Probable 28,212 22,443 18,474 15,597 13,423
Total Proved & Probable 64,774 54,321 46,788 41,116 36,694

Serrano is pleased to announce that Harry Knutson has joined the board of directors effective March 24, 2009. Mr. Knutson fills the vacancy created by the resignation of Thomas Stan. Mr. Knutson has been the Chairman and Chief Executive Officer of Nova Bancorp Group (Canada) since 1982. He also currently serves as a director of Bonavista Energy Trust, Canadian Sub-Surface Energy Services Corp., Regal Energy Ltd., Canadian Phoenix Resources Corp. and Marble Point Energy Ltd.

As previously announced by Canadian Phoenix Resources Corp. ("CPH"), Serrano's undrawn bank line has been suspended pending further discussions with the financial institution. The banking facility was put in place in January 2009 and was cross-guaranteed with CPH, which owns 56.8% of the Serrano common shares. The banking facility had never been utilized by Serrano or CPH. Both Serrano and CPH have indicated a desire to obtain independent facilities.

The severe drop in oil prices since record highs in July 2008 has reduced Serrano's available cash flow significantly following a busy 2008 drilling season. Consequently, Serrano has recently negotiated and reached agreements with a number of its trade creditors who intend to accept a combination of cash and shares in settlement of their accounts. Serrano today will issue 277,020 common shares at a deemed price of $5.00 per share and pay approximately $1.39 million cash in full settlement of approximately $2.8 million of trade debt. The common shares issued will have a hold period of four months. If Serrano completes a private placement for common shares at a price below $5.00 in the next 90 days the number of shares issued to the trade creditors will be adjusted so as to result in the same price per share.

Serrano Energy Ltd. is an Alberta-based company formed to participate in heavy oil and natural gas exploration, development and acquisitions in Alberta and Saskatchewan. The Corporation's shares are not listed for trading on any stock exchange.

Following the issuance of the common shares today the Corporation has 19,734,409 Common Shares outstanding.

Reader Advisory

This news release contains certain forward-looking statements, including management's assessment of future plans and operations, the ability to secure another credit facility, the acceptance of trade creditors to terms of settlement, and capital expenditures and the timing thereof, that involve substantial known and unknown risks and uncertainties, certain of which are beyond Serrano's control. Such risks and uncertainties include, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing 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. Serrano'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 Serrano will derive therefrom. Readers are cautioned that the foregoing list of factors is not exhaustive. All subsequent forward-looking statements, whether written or oral, attributable to Serrano 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 Serrano 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.

Contact Information

  • Serrano Energy Ltd.
    J.W. Grant Robertson
    Vice-President Business Development
    (403) 231-1230