Spitfire Energy Ltd.
TSX VENTURE : SEL

Spitfire Energy Ltd.

August 24, 2006 13:28 ET

Spitfire Energy Reports Record Production, Revenue, Cash Flow in Q1 2007

CALGARY, ALBERTA--(CCNMatthews - Aug. 24, 2006) - Spitfire Energy Ltd. (TSX VENTURE:SEL) is pleased to announce its financial and operating results for the first quarter ending June 30, 2006.

Spitfire achieved record production, revenue and cash flow in both in total and on a per share basis. The company focused on internally generated opportunities and strategic acquisitions, enabling Spitfire to add significant value for shareholders. Compared with June 30, 2005, average production increased 169 barrels of oil equivalent per day (boed) to 276 boed, revenues increased $872,132 to $1,263,047 and cash flow increased $384,207 to $486,377. Spitfire's share price increased 182% from $0.34 on June 30, 2005 to $ 0.96 on June 30, 2006.

Operationally, Spitfire drilled three (1.5 net) wells with an overall success rate of 100%. Spitfire has an inventory of drilling prospects and 16,192 net acres of undeveloped land in Alberta and Saskatchewan.

Spitfire's current production has grown to approximately 325 boed, consisting of 69% crude oil. Spitfire has approximately 195 (395 unrisked) boed behind pipe awaiting facility upgrades and pipelines, for a combined production capacity of 520 boed. The company has budgeted $7 million in fiscal 2007 for land, seismic and drilling, expecting to drill 12 (7.5 net) wells. Year-end production is expected to be between 750 and 850 boed (1,200 unrisked).

Q1 2007 Highlights

- 375% increase in cash flow to $486,377.

- 158% increase in average production per barrel of oil equivalent per day (boed) to 276.

- 51% decrease in general and administrative expenses to $7.16 per boe.

- Closed strategic acquisition of crude oil reserves and production in S.W. Saskatchewan.

The following table provides a summary of Spitfire's results for the 3-month period ending June 30, 2005 and 2006. Spitfire's audited financial statements, Management's Discussion and Analysis and detailed information regarding Spitfire's reserves for the fiscal year ended March 31, 2006 has been electronically filed and can be accessed for viewing on SEDAR at www.sedar.com and on the Company website, www.spitfireenergy.com.



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Quarter Ended June 30
2006 2005 % increase
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Financial
Petroleum and natural gas sales
Crude oil and NGLs $ 894,943 $ 310,122 189%
Natural gas $ 368,104 $ 80,793 356%
Net revenue $ 1,263,047 $ 390,915 223%
Cash flow from operations $ 486,377 $ 102,170 376%
Per share basic $ 0.02 $ 0.00
Per share diluted $ 0.02 $ 0.00
Net earnings (loss) $ (14,997) $ 2,867
Per share basic and diluted $ 0.00 $ 0.00
Capital expenditures $ 3,838,506 $ 865,495 344%
Working capital (deficit) $ (5,367,095) $ (181,998)
Total assets $ 12,651,679 $ 5,301,595 139%
Common shares outstanding 26,157,744 23,042,744 14%

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Operating
Realized prices
Crude oil and NGLs ($/bbl) $ 59.08 $ 39.50
Natural gas ($/mcf) $ 6.03 $ 7.24
Total ($/boe) $ 50.01 $ 40.26 24%
Netbacks ($/boe) $ 19.97 $ 10.91 83%
Average production
Crude oil and NGLs (bbl/d) 166 87 91%
Natural gas (mcfd) 660 120 450%
------------------------------------------------------------------------
Total (boed) 276 107 158%
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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
    or
    Spitfire Energy Ltd.
    Danny Zivkusic
    Chief Financial Officer
    (403) 205-3400 x228