Sharon Energy Ltd.

Sharon Energy Ltd.

November 19, 2007 13:27 ET

Sharon Energy Ltd. Announces Q2 2008 Results

CALGARY, ALBERTA--(Marketwire - Nov. 19, 2007) -

Sharon Energy Ltd. (TSX VENTURE:SHY)

Sharon's financial and operating results for the first six months of the 2008 fiscal year ended September 30, 2007, were lower than the same reporting period of the prior year, due to reduced production volumes offset partially by higher gas prices.

Sharon, as operator, is pleased to report that it has contracted a rig and plans to begin drilling the Wharco-Schilling well during the next couple of weeks. Also, in January 2008 Sharon plans to begin drilling the N.W. Speaks well. Both of these wells had been delayed due to extremely wet conditions caused by record levels of rainfall in the south-west Texas area.

As a result of greater availability of rigs in the United States, Sharon believes it is able to operate the bulk of its future exploration projects. As operator, Sharon can control the timing and costs involved. A good example of this is the recently completed Black Owl project which was drilled, completed and placed on production in 67 days.


Sharon reported revenue for the six month period ended September 30, 2007, of $1.4 million compared with $1.7 million in the prior year period and cash flow for the six month period was $520,000 compared with $1.2 million for the same period in 2006. Sharon reported a loss for the six month period ended September 30, 2007, of $485,000 or $(0.01) per share versus earnings of $11,000 or nil per share for the same period in 2006.

Capital spending for the six month period ended September 30, 2007, totaled $3.0 million compared with $2.3 million for the same period in 2006. Capital spending was financed from cash flow, capital dispositions and a $9 million equity financing completed in June 2007.

Sharon exited the second quarter with working capital of $2.5 million versus net debt of $2.6 million at the beginning of the fiscal year.


Production for the three month period ended September 30, 2007, declined to average 202 BOEd compared with 312 BOEd for the prior year. For the six month period production declined to 232 BOEd compared to 334 BOEd for the prior year period. The Hancock #2 well located on the Allen Ranch property in Texas was shut-in during the first and second quarters causing most of the production decline.

United States

In the first six months of the 2008 fiscal year Sharon's focus has been on developing the Cheney and Black Owl prospects. Black Owl came on line in November 2007, while at Cheney the well is anticipated to be fully tested in early 2008.

Cheney, Colorado County, Texas - Working Interest 14%

On July 10, 2007, drilling reached a total depth of 18,400 feet after which the well was cased. Based on the Company's log analysis, the well has encountered 40 feet of gross pay and 30 feet of potential net gas pay, in the Wilcox #18 zone, which was the primary target horizon in the well.

Completion operations, which had been hampered by weather and a change of the operator of the well, are now expected to be carried out in early 2008 with a fracture stimulation and production test of the zone.

Black Owl, Wharton County, Texas - Working Interest 24.4%

In the second quarter, Sharon as operator, drilled the Black Owl #1 well to a depth of 8,775 feet. The well encountered 18 feet of pay in the Yegua zone and was completed and flow tested at a rate of 1,300 Mcfd at 5,600 psi.

The well has been connected to a sales pipeline and production started in November 2007.

West Wharco-Schilling, Wharton County Texas - Working Interest 28.44% (at casing point)

Sharon Energy Ltd. will be the operator for the Duson #1 well. This prospect has seven potential objectives of which three have been proven productive by offset operators. Sharon's Duson #1 well, which is planned to be spud in November 2007, has a proposed depth of 11,450 feet.

N.W. Speaks, Lavaca County, Texas - Working Interest 35.8%

Sharon will be the operator of the N.W. Speaks Robertson #1 well, located in Lavaca County, Texas. Sharon plans to spud this well in early 2008.


During the first six months of the 2008 fiscal year Sharon participated in drilling and/or re-entering two wells (0.40 net) resulting in one oil well (0.25 net) and one dry hole (0.15 net). In the second half of fiscal year, Sharon plans to participate in the drilling of several wells including a Sawtooth oil test in the Hays area.

Business Outlook

Sharon anticipates that North America natural gas prices will continue to recover which should result in an improvement in the Company's financials. The weakening US dollar during the first half of the fiscal year had a negative $297,000 affect on Sharon's consolidated earnings which are denominated in U.S. currency resulting from the settling of Canadian denominated debt. However, if currency valuations maintain their current levels Sharon anticipates that this trend will reverse in the second half of the fiscal year as Canadian net assets and revenues are consolidated into Sharon's statements at increasingly favourable exchange rates.

Highlights for the second half of fiscal year 2008 will include production additions in both Canada and the U.S. and the drilling of several exploration oil and gas wells in Canada and three gas wells in the U.S.

Six Months Ended
(Thousands, except per share amounts) September 30,
(U.S. Dollars, unaudited) 2007 2006
Total revenue $ 1,369 $ 1,720
Cash flow from operations $ 520 $ 1,154
per share, basic and diluted $ 0.01 $ 0.02
Earnings (loss) for the period $ (485) $ 11
per share, basic and diluted $ (0.01) $ -
Property, plant and equipment
Capital additions $ 3,030 $ 2,308
Dispositions $ (119) $ (23)
Working capital/(net debt) $ 2,541 $ (2,806)
Total assets $ 18,277 $ 13,216
Total shares outstanding, at period end 75,419 51,419

Gas (MMcfd) 1.3 1.8
Oil (Bopd) 23 34
BOEd (6Mcf = 1Bbl) 232 334
Product Prices
Gas ($/Mcf) $ 6.66 $ 6.01
Oil ($/Bbl) $ 62.05 $ 63.31

BOE Presentation - the term barrels of oil equivalent (BOE) may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All BOE conversions in this report are derived by converting gas to oil in the ratio of six Mcf of gas to one Bbl of oil.

Financial Reporting - all numbers are reported in U.S. dollars.

Sharon is an oil and gas exploration and production company based in Calgary, Alberta. Sharon's current focus is on shallow gas developments in southern Alberta, natural gas exploration in central and southern Alberta and deep gas exploration in Texas.

ADVISORY: Certain information regarding the Company in this News Release including management's assessment of future plans and operations, the use of proceeds from the offering and the anticipated closing date of the offering, may constitute forward-looking statements under applicable securities laws and necessarily involve risks including, 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, capital expenditure costs, including drilling, completion and facilities costs, unexpected decline rates in wells, wells not performing as expected, incorrect assessment of the value of acquisitions, failure to realize the anticipated benefits of acquisitions, delays resulting from or inability to obtain required regulatory approvals 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. Readers are cautioned that the foregoing list of factors is not exhausted. Additional information on these and other factors that could effect 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 ( and at the Company's website ( 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.

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

Contact Information

  • Sharon Energy Ltd.
    H.C. (Kip) Ferguson, III
    (713) 789-5395
    (713) 789-8454 (FAX)
    Sharon Energy Ltd.
    Robert W. Lamond
    (403) 269-9889
    (403) 269-9890 (FAX)