Solara Exploration Ltd.

Solara Exploration Ltd.

May 04, 2007 14:18 ET

Solara Announces 2006 Financial and Operating Results and Reserve Additions

CALGARY, ALBERTA--(CCNMatthews - May 4, 2007) - Solara Exploration Ltd. (TSX VENTURE:SAA.A)(TSX VENTURE:SAA.B) ("Solara" or the "Company") is pleased to announce its consolidated financial and operating results for the twelve (12) month fiscal year ended December 31, 2006.


- Completed the acquisition of two private oil and gas companies

- Exited 2006 with approximately 300 boe/d of daily oil and gas production

- Raised $5.3 million in various financings during the year

- Generated gross oil and gas revenue of $2.15 million and cash flow of $176,000

- Operated the drilling of 14 wells on core projects, and participated in an additional 34 wells

- Added in 931,300 boe in proven and probable reserves based on an independent reserve evaluation.

The drilling activity and acquisitions undertaken in 2006 have positioned Solara for significant growth in 2007. Total capital expenditures for the 2006 fiscal period were $19.7 million comprised mainly of exploration activities and the acquisition of two oil and gas companies. Most of the investment occurred later in the year and accordingly, had a lesser impact on the financial and operating results for 2006. The Company's production and reserves increased significantly during the year. Upon completion of various tie-in activities for the oil and gas wells drilled in late 2006 and completed in the first quarter of 2007, Solara's net daily field production is expected to increase to 700 boe/d in the second quarter based on management's estimates.

As at December 31, 2006, Solara reported a working capital deficiency of $3,557,522. During the period, the Company had oil and gas production revenue of $2,149,560, cash flow of $176,000 and a loss, after income taxes, of $589,092. The Company had no bank debt at year end 2006. Solara raised $4.09 million pursuant to a private placement of Class A Shares in March, 2007. Solara has filed its audited financial statements and management discussion and analysis for the 2006 fiscal year with the Canadian securities regulatory authorities on SEDAR and may be accessed electronically at

The Company also announces its reserves for the fiscal year ended December 31, 2006 ("Fiscal Year End"). In accordance with National Instrument 51-101-Standards for Disclosure for Oil and Gas Activities ("NI 51-101"), GLJ Petroleum Consultants ("GLJ") has independently prepared Solara GLJ Report ("GLJ Report") which evaluated all of the Company's oil, natural gas and liquids reserves at Fiscal Year End. The GLJ price forecast of January 1, 2007 was used to determine estimates of future net revenues. Based on the GLJ Report, Solara has 1,058,100 boe proven plus probable reserves for Total Company Interest Reserves. The before tax net present value discounted at 8% of Total Company Interest Reserves is $19,429,000, not including value of reserves associated with wells drilled but not completed at Fiscal Year End. Solara exceeded its reserve ceiling test and accordingly, did not have a write down at Fiscal Year End. GLJ prepared a second report at March 31, 2007, updating the Company's proved and probable reserves ("GLJ March Report") reporting 1,166,000 boe, net of estimated produced reserves in the first quarter 2007. The before tax net present value discounted at 8% of Total Company Reserves pursuant to the GLJ March Report is $22,063,000 utilizing the GLJ price forecast at April 1, 2007. The Company had proven and probable reserve additions of 283,900 boe in the first quarter 2007 based on GLJ March Report. Total Company Interest Reserves are the total of the Company's working and royalty interest share after deduction of applicable royalties. The Form 51-101-F1 summary of the GLJ Report and associated Company information is available for public viewing on SEDAR at

Solara Exploration Ltd. is an emerging junior oil and gas company focused on the exploration, development and acquisition of oil and natural gas in western Canada.


This news release may contain 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 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 therefrom. Readers are cautioned that the foregoing list of factors is not exhaustive. 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.

BOEs 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.

24,880,181 Class A Shares

1,044,000 Class B Shares

The TSXV has neither approved nor disapproved the contents of this news release. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Solara Exploration Ltd.
    Donald R. Holding
    President and Chief Executive Officer
    (403) 537-0458
    (403) 537-0462 (FAX)
    Solara Exploration Ltd.
    1800, 444 - 5th Avenue S.W.
    Calgary, Alberta T2P 2T8