Spitfire Energy Ltd.

Spitfire Energy Ltd.

November 29, 2007 13:55 ET

Spitfire Energy Announces Second Quarter Results and Operational Update

CALGARY, ALBERTA--(Marketwire - Nov. 29, 2007) - Spitfire Energy Ltd. (TSX VENTURE:SEL) is pleased to announce its financial and operating results for the second quarter of fiscal 2008 ending September 30, 2007.

Spitfire increased its production and revenue base in the quarter and six months ending September 30, 2007. In the second quarter of fiscal 2008, compared with the same period of fiscal 2007, average production increased 35% to 335 barrels of oil equivalent per day (boed) from 248. Revenue increased 31% to $1.5 million. More than 73% of Spitfire's production is crude oil, allowing the company to insulate itself from some of the challenges facing natural gas-weighted juniors.

Spitfire closed three equity financings in the second quarter of fiscal 2008 for gross proceeds of $7.28 million. The proceeds were used to reduce bank debt from $7.38 million at June 30, 2007 to $105,000 at September 30, 2007.

It is the intention of Spitfire to acquire common shares pursuant to an approved normal course issuer bid to provide capital appreciation and market stability for the shareholders. The approval was obtained on October 24, 2007 to acquire up to 2,147,162 common shares pursuant to the policies of the TSX Venture Exchange. To date, Spitfire has not attempted to acquire common shares because of its Blackout Policy restricting insider trading until the release of these second quarter results.

In the second quarter the company evaluated a portfolio of assets for acquisition. Spitfire continues to look for assets that offer a predictable production base with a mixture of exploration and development upside. While Spitfire's Saskatchewan production base continues to provide steady cash flow, some of the Alberta prospects have not resulted in the expected level of success. As a result, Spitfire has taken steps to change direction with its exploration drilling. As Spitfire works to identify potential acquisitions, the company is prepared to add additional engineering, land and exploration talent required to facilitate growth.

Second Quarter Fiscal 2008 Highlights

- Spitfire closed three equity financings for gross proceeds of $7,280,000.

- The proceeds from the financings were used to repay debt, reducing the bank debt from $7,380,000 at June 30, 2007 to $105,000 at September 30, 2007.

- The Company increased production to 335 boed, 73% of which was crude oil.

- 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 dedicated resources to regulatory planning required for field and battery optimization. The Company was successful in obtaining the required approvals and has commenced the capital program.

The following table provides a summary of Spitfire's results for the three-month period ending September 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 September 30
2007 2006
Petroleum and natural gas sales
Crude oil and NGLs $ 1,214,011 $ 832,358
Natural gas $ 255,802 $ 288,189
Net revenue $ 1,469,813 $ 1,120,547
Cash flow from operations $ 462,160 $ 350,632
Per share basic $ 0.01 $ 0.01
Per share diluted $ 0.01 $ 0.01
Net earnings (loss) $ (26,156) $ 45,758
Per share basic and diluted $ 0.00 $ 0.00
Capital expenditures $ 928,731 $ 2,135,446
Working capital (deficit) $ (721,682) $ (7,148,399)
Total assets $ 19,133,833 $ 15,525,528
Common shares outstanding 42,943,244 26,167,744


Realized prices
Crude oil and NGLs ($/bbl) $ 54.30 $ 57.26
Natural gas ($/mcf) $ 5.06 $ 5.81
Total ($/boe) $ 48.21 $ 49.11
Corporate Netbacks ($/boe) $ 15.16 $ 15.38
Average production
Crude oil and NGLs (bbl/d) 243 158
Natural gas (mcfd) 549 539
Total (boed) 335 248

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.

Contact Information

  • Spitfire Energy Ltd.
    Keith N. Chase
    President and Chief Executive Officer
    (403) 205-3400 x224
    Spitfire Energy Ltd.
    Danny Zivkusic
    Chief Financial Officer
    (403) 205-3400 x228
    Website: www.spitfireenergy.com