Spitfire Energy Ltd.

Spitfire Energy Ltd.

September 05, 2007 13:20 ET

Spitfire Energy Announces First Quarter Results and Operational Update

CALGARY, ALBERTA--(Marketwire - Sept. 5, 2007) - Spitfire Energy Ltd. (TSX VENTURE:SEL) is pleased to announce its financial and operating results for the first quarter of fiscal 2008 ending June 30, 2007.

Spitfire increased its production and revenue base in the quarter, maintaining a 67% weighting to crude oil. In the first quarter of fiscal 2008, compared with the same period of fiscal 2007, average production increased 17% to 322 barrels of oil equivalent per day (boed) and revenue increased 8% to $1.4 million.

Subsequent to the first quarter, Spitfire took steps to strengthen its balance sheet by reducing its debt to one-month cash flow by closing three financings for a total of $7,289,200, paying only 3% in financing costs. Because of the recent volatility in interest rates and lower than expected natural gas sales prices, the company sought to remove the reliance on debt financing and to focus on financing capital expenditures through cash flow.

Michael Culbert, President and CEO of Progress Energy Trust, joined the Spitfire board in July. Mikel Faulkner, President & CEO of HKN, Inc. and Anna Williams, HKN, Inc.'s VP Finance & CFO, joined the board in August as part of the plan to empower Spitfire with the tools and experience necessary to execute it's growth plan.

First Quarter Fiscal 2008 Highlights

- Spitfire continued to grow, increasing production to 322 boed and revenue to $1.4 million.

- Spitfire focused on field and battery optimization investing $0.3 million in recompletions and equipping upgrades, resulting in increased total fluid production on a daily basis.

- Drilled one (0.5 net) well in Southern Alberta that was cased and completed. The well tested at a marginal rate, making tie-in subeconomic at this time.

- Directed capital resources to its undeveloped land base, investing $0.1 million in land and seismic.

- The Company evaluated a portfolio of assets for potential acquisition, targeting assets that offer a predictable production base with a mixture of exploration and development upside.

- Spitfire strengthened its management team with the hiring of a key employee, bringing more than 25 years of asset evaluation and reservoir exploitation experience in the Western Canadian Sedimentary Basin.

The following table provides a summary of Spitfire's results for the three-month period ending June 30, 2007 and 2006. Spitfire's unaudited financial statements and Management's Discussion and Analysis can be accessed for viewing on SEDAR at www.sedar.com and on the Company website at www.spitfireenergy.com.

Quarter Ended June 30
2007 2006
Petroleum and natural gas sales
Crude oil and NGLs $ 982,101 $ 894,943
Natural gas $ 381,250 $ 368,104
Net revenue $ 1,363,351 $ 1,263,047
Cash flow from operations $ 448,059 $ 486,377
Per share basic $ 0.01 $ 0.02
Per share diluted $ 0.01 $ 0.02
Net earnings (loss) $ (24,272) $ (14,997)
Per share basic and diluted $ 0.00 $ 0.00
Capital expenditures $ 581,584 $ 3,838,506
Working capital (deficit) $ (7,300,203) $ (5,367,095)
Total assets $ 18,582,018 $ 12,651,679
Common shares outstanding 29,461,244 26,157,744


Realized prices
Crude oil and NGLs ($/bbl) $ 49.51 $ 59.08
Natural gas ($/mcf) $ 6.75 $ 6.03
Total ($/boe) $ 46.53 $ 50.01
Netbacks ($/boe) $ 15.30 $ 19.97
Average production
Crude oil and NGLs (bbl/d) 218 166
Natural gas (mcfd) 621 660
Total (boed) 322 276

Spitfire Energy Ltd. is a junior oil and gas company engaged in the exploration, development and production of natural gas and crude oil reserves. Spitfire's common shares trade on the TSX Venture Exchange under the symbol "SEL".

This press release contains forward-looking statements that are based on current expectations. There are a number of risks and uncertainties associated with the oil and gas industry that could cause actual results to differ materially from those anticipated.

A barrel of oil equivalent, derived by converting gas to oil using a ratio of six thousand cubic feet of gas to one barrel of oil, may be misleading, particularly if used in isolation. A boe conversion is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

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

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