Solara Exploration Ltd.
TSX VENTURE : SAA.A

Solara Exploration Ltd.

August 30, 2011 15:47 ET

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

CALGARY, ALBERTA--(Marketwire - Aug. 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 second quarter and six months ended June 30, 2011. The Financial Statements and Management's Discussion and Analysis for the six months ended June 30, 2011 were filed on August 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 six month period ended June 30, 2011:
  • Oil and gas revenue was $4,664,451, up 102% compared to $2,305,859 for the first six months of 2010;
  • Funds from operations were $1,689,359, up 272% compared to $454,456 in the prior period;
  • Sales production was 431 BOE/D for the period compared to 284 BOE/D for the first six months of 2010;
  • Operating netbacks increased 66% to $35.71 per BOE, up from $21.50 per BOE in the comparable prior period; and
  • Oil sales represented 87% of total oil and gas revenues for the period compared to 72% in the prior period.
The following represents the financial and operating results for the three month period ended June 30, 2011:
  • Oil and gas revenue increased to $2,046,124 for the second quarter which represents a 79% increase compared to $1,145,516 for the three months ended June 30, 2010;
  • Funds from operations increased by 196% to $630,042 for the second quarter compared to $212,569 for the three months ended June 30, 2010;
  • Operating netbacks increased 99% from $20.33 per BOE to $40.49 per BOE as compared to the second quarter of 2010;
  • Second quarter average daily production increased 13% to 331 BOE/D compared to 292 BOE/D for the three months ended June 30, 2010;
  • Royalties on oil and gas operations for the quarter were $8.09 per BOE ($243,453);
  • Operating expenses remained flat on a barrel of oil equivalent basis at $19.39 per BOE ($583,650); and
  • Depletion and depreciation costs were $19.73 per BOE ($594,136).

The Company sold approximately 120 BOE/D of production during the first half of the year for net proceeds of approximately $5.3 million as part of its ongoing rationalization of non-core assets. It is important to note that in the second quarter, the Company experienced a significant number of production downtime days on key wells associated with the Buck Lake (Pembina) and Dewberry projects due to compression issues, prolonged transportation restrictions during spring breakup due to road bans and periodic mechanical breakdown of artificial lift equipment. Most of these problems were resolved by the end of June and production rose to higher levels in July and August.

The sale of non-core assets and production downtime resulted in significantly lower daily production, gross revenues and funds from operations during the period. Solara did not undertake any new drilling activity in the second quarter; however, it did participate in the completion, equipping and tie-in of the 8-17-45-5 W5M Cardium horizontal well in which the Company has a 20.667% working interest. This well came onstream on June 29 at an initial flow rate of approximately 700 BOE/D. Note that this initial rate is not expected to be indicative of sustained production rates for wells of this type in the Pembina area based on actual production histories of similar wells in the area.

The Company also advises that it is currently drilling the first of two Leduc D3 reef wells in the Sylvan Lake area of central Alberta and a Cardium horizontal well on its Buck Lake (Pembina) project located in west central Alberta. Solara will provide additional information on the two wells once they have been drilled and evaluated by late September. In addition to foregoing drilling, Solara also plans to drill and participate in up to two more Cardium horizontal wells and one Leduc D3 well prior to year end. As a result of these activities, the Company will expend most of its capital budget in the last five months of the year and anticipates increasing production and reserve additions based on management's internal risked estimates.

About Solara Exploration

Solara Exploration focuses on the exploration, development and production of oil and gas properties within its core areas in the Buck Lake (Pembina) area and two heavy oil projects in the Dewberry and Borradaile areas of eastern Alberta. Solara is a publicly traded junior oil and gas company listed on the TSXV under the trading symbol SAA.A. More information is available on the Company's website at www.solaraexploration.com.

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.

78,536,402 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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