Solara Exploration Ltd.
TSX VENTURE : SAA.A

Solara Exploration Ltd.

November 30, 2011 13:15 ET

Solara Exploration Announces Financial and Operating Results for Third Quarter 2011 and Provides Corporate Update

CALGARY, ALBERTA--(Marketwire - Nov. 30, 2011) - Solara Exploration Ltd. ("Solara" or the "Company") (TSX VENTURE:SAA.A) announces the release of its unaudited consolidated financial and operating results for the third quarter and nine months ended September 30, 2011. The unaudited Consolidated Financial Statements and Management's Discussion and Analysis for the three and nine months ended September 30, 2011 were filed on November 29, 2001 and are available for viewing on the System for Electronic Disclosure and Analysis ("SEDAR") at www.sedar.com.

The following represents the financial and operating highlights for the nine month period ended September 30, 2011:

  • Oil and gas revenue was $6,199,340 up 89% compared to $3,287,900 for the first nine months of 2010;
  • Funds from operations were $1,682,414 up 466% compared to $297,152 in the prior period in 2010;
  • Sales production averaged 392 BOE/D for the period compared to 280 BOE/D for the first nine months of 2010;
  • Operating netbacks increased 93% to $33.35/BOE up from $17.25/BOE in the comparable prior period;
  • Oil and NGLs sales represented 87% of total oil and gas revenues for the period compared to 77% in the prior period in 2010; and
  • The Company drilled five oil wells during the nine month period.

The following represents the financial and operating results for the three month period ended September 30, 2011:

  • Oil and gas revenue increased to $1,534,888 for the third quarter which represents a 56% increase compared to $982,041 for the three months ended September 30, 2010;
  • Operating netbacks increased 213% from $8.49/BOE to $26.60/BOE as compared to the third quarter of 2010;
  • Third quarter average daily production increased 16% to 314 BOE/D compared to 271 BOE/D for the three months ended September 30, 2010;
  • Operating expenses decreased on a barrel of oil equivalent basis to $20.54 per BOE from $28.57 in the prior period of 2010; and
  • The Company drilled two oil wells during the quarter.

The Company advises that its core horizontal Cardium Project at Buck Lake was suspended for 23 days in September due to a natural gas plant turnaround which caused approximately net 170 BOE/D of oil and gas production to be shutin during the period. This unavoidable suspension of production activities had a material impact on sales revenue and cash flow for the third quarter of 2011. As well, Solara sold approximately 112 BOE/D of production during the first nine months of the year for net proceeds of approximately $5.3 million as part of its ongoing rationalization of non- core assets. The sale of non-core assets and production downtime resulted in a significantly lower daily production, gross revenues and funds from operations during the period. The Company drilled four wells in the third quarter of which two were placed on production in November, one well was cased as a potential oil well and the remaining well in the Borradaile area was abandoned.

The initial Leduc D3 reef well in the Sylvan Lake area of central Alberta was placed on production two weeks ago and the Company's net 30% working interest share of oil, NGL and gas production is approximately 100 BOE/D. The Company also advises that it has currently suspended completion operations on its second of two Leduc D3 reef wells until early next year pending a re-evaluation of the log analysis and economic potential for the well. A recent Cardium horizontal well located at 16-9-45-5 W5M which the Company operated the drilling of in August was placed on production in November with the assistance of artificial lift equipment at an initial rate of approximately 160 BOE/D and continues to improve as frac sand interference diminishes over time. Solara has recently commenced the drilling of another Cardium horizontal well on a new prospect located approximately six kilometers to the north of its main Buck Lake Project.

As a result of its recent drilling and completion operations, the Company estimates that its current daily production is averaging approximately 500 BOE/D, which is subject to variation due to unavoidable interruptions.

In November, the Company completed the private placement of 1,320,000 Class A Shares at $0.30 per share for aggregate proceeds of $396,000 as part of the previously announced private placement of flow-through shares.

About Solara Exploration

Solara Exploration is a publicly traded junior oil and gas company focused on the exploration, development and acquisition of oil and natural gas in Western Canada.

READER ADVISORY

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.

79,200,732 Class A Shares

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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