Stonefire Energy Corp.

Stonefire Energy Corp.

November 21, 2007 16:53 ET

Stonefire Energy Corp. Announces 2007 Third Quarter Financial Results

CALGARY, ALBERTA--(Marketwire - Nov. 21, 2007) -


Stonefire Energy Corp. (the "Corporation" or "Stonefire") (TSX VENTURE:SFE.A) (TSX VENTURE:SFE.B) is pleased to announce that it has filed on SEDAR its unaudited financial statements and related management's discussion and analysis ("MD&A") for the three month and nine month periods ended September 30, 2007. Selected operational and financial results are outlined below and should be read in conjunction with Stonefire's unaudited financial statements and related MD&A which can be found at

Financial and Operating Highlights

Three months ended Nine months ended
Sep 30, Sep 30, Sep 30, Sep 30,
(unaudited) 2007 2006 2007 2006
($ except share
Petroleum and
natural gas revenues $ 412,738 $ 269,610 $ 1,160,002 $ 289,746
Funds flow from
(used in) operations (1) (24,135) 15,739 (41,642) (199,794)
Per share, basic and
diluted (1) (0.00) 0.00 (0.00) (0.02)
Net loss (245,681) (226,800) (742,568) (487,192)
Per share, basic and
diluted (0.01) (0.02) (0.03) (0.04)
Capital expenditures 5,578,624 4,690,005 13,881,262 10,815,123
Working capital
deficit (end of period) (5,828,846) (58,096)
Shareholders' equity
(end of period) $ 16,989,269 $10,620,899
Shares outstanding
(end of period)
Class A 15,265,000 9,750,000
Class B 1,012,000 1,012,000
Options 1,421,000 871,000
Weighted average
shares outstanding
Class A 15,265,000 9,750,000 14,164,194 8,557,326
Class B 1,012,000 1,012,000 1,012,000 737,685
Conversion of Class
B shares (2) 9,108,000 4,048,000 9,108,000 2,950,740
----------- ----------- ------------ -----------
Weighted average
shares outstanding
- basic 25,385,000 14,810,000 24,284,194 12,245,751
Class A share trading
High $ 2.29 $ 4.00
Low 0.95 2.00
Close $ 1.00 $ 2.00
Natural gas liquids
(bbls/d) 26 11 21 4
Natural gas (mcf/d) 516 374 433 135
Total (boe/d at 6:1) 112 74 94 27
Reference prices
WTI (US$ per bbl) $ 75.38 $ 70.48 $ 66.23 $ 68.22
AECO (Cdn per GJ) 4.91 5.35 6.21 6.07
Average selling price
Natural gas liquids
(per bbl) 64.58 66.99 58.23 65.55
Natural gas (per mcf) 5.49 5.81 6.92 5.81
Operating netback
(per boe at 6:1) 18.52 18.13 21.48 17.94
Funds flow netback
(per boe at 6:1) $ (2.34) $ 2.31 $ (1.62)$ (27.11)

(1) Management uses funds flow from operations (before changes in non-cash
working capital) to analyze operating performance and leverage. Funds
flow from operations as presented does not have any standardized meaning
prescribed by Canadian generally accepted accounting principles (GAAP)
and, therefore, may not be comparable with the calculation of similar
measures by other entities.

(2) For the period ended September 30, 2007, the Class B shares are
converted at the period-end Class A share price of $1.00 and added to
the Class A shares to calculate basic shares outstanding.

2007 Third Quarter Corporate Highlights

- Record average production for the quarter of 112 boe per day with the average for September at 231 boe per day, a new monthly high.

- The Corporation's first 100 percent working interest gas plant was constructed and brought into service in the Edson field in late September. The plant is designed for 5.65 mmscf per day plus 300 bbls per day of NGL or a combined capacity of 1,242 boe per day.

- Drilled and cased a 50 percent working interest successful exploration well in the McLeod field. The well was drilled to a total depth of 1,968 meters and encountered two new natural gas zones. The well is awaiting tie-in and is expected to be on-production in the first quarter of 2008.

- The Corporation's land base increased by 2,560 gross acres or 11.9 percent in the third quarter to a total of 24,160 gross acres with an average working interest of 68 percent.

- Spent $5.6 million of capital in the quarter with the majority spent on the Edson 10-28 gas plant ($3.2 million), land sales ($1.5 million), and drilling and completions ($0.7 million).

- Due to drilling success and increased production the Corporation's bank credit lines were increased from $6.0 million to $9.0 million.

President's Message

The third quarter of 2007 saw the Corporation pass several important milestones. Most notably, Stonefire completed construction and started up its 100 percent working interest Edson gas plant, located at 10-28-53-16W5M. The natural gas processing facility is a strategic asset that will allow Stonefire to develop its high-working-interest land base in the Edson field. As a result of the start-up of the Edson plant, the quarter saw a record average production rate of 112 boe per day as well as a record monthly production rate of 231 boe per day in September. Corporate production has continued to grow since then and at this time is in the range of 300 boe per day with in excess of 300 boe per day of tested production awaiting tie-in in the McLeod and Edson fields. The Corporation is on track to meet or exceed the 2007 exit rate target of 600-700 boe per day.

During the third quarter Stonefire continued to achieve exploration success with the drilling and casing of a 1,968-metre-deep exploration well in the McLeod field. The well encountered two natural gas zones and is currently awaiting tie-in. The well is expected to commence production in the first quarter of 2008 at a net 75 boe per day. This well proves up an additional two to three drilling locations on Stonefire lands, which the Corporation hopes to drill starting in the first quarter of 2008. These wells will be Stonefire operated with a 50 percent working interest.

The Corporation's land base continues to expand with 4.0 gross (3.5 net) sections of land added in the quarter. Stonefire's gross land base at the end of the third quarter was 37.75 sections with an average working interest of 68 percent. Approximately 95 percent of this land base is operated by Stonefire and with the majority prospective for multi-zone Deep Basin-type natural gas prospects. The Corporation's drilling inventory now stands at approximately 40 gross (30 net) operated high-impact exploration and development wells, including potential down spacing locations.

Total capital spent in the quarter was $5.6 million, with the majority or $3.2 million spent on the Edson gas plant, $1.5 million spent on land and $0.7 million spent on drilling and completions. Due to drilling success and increased production the Corporation's bank credit lines were expanded in the quarter from $6.0 million to $9.0 million. Net debt at the end of the quarter was $5.8 million. Although cash flow remained slightly negative for the quarter, we foresee substantial production growth over the next several months and excellent prospects of generating positive cash flow in the fourth quarter and beyond.

Stonefire will remain focused on growing production with the tie-in of the new McLeod discovery well and the tie-in of two new 100 percent working interest wells that have been drilled in the fourth quarter at Edson. Along with increasing production at Edson the Corporation expects to see declining per-unit operating costs and increasing netbacks. The Corporation is making plans for a significant 2D and 3D seismic program in the Edson field late in the fourth quarter of 2007. The results of this seismic program will be used to help plan the winter drilling program which is expected to include up to two net exploration wells and one net development well in the Edson and McLeod fields.

Stonefire Energy Corp. is an Alberta-based company formed to participate in oil and gas exploration, development and acquisitions focusing in the West Central region of Alberta. The Company's shares trade on the TSX Venture exchange under the symbols SFE.A and SFE.B. The Company currently has 18,265,000 Class A shares and 1,012,000 Class B shares outstanding.

As referred to above, to view a full copy of the Corporation's unaudited interim financial results for the three-month and nine-month periods ended September 30, 2007, including the Corporation's unaudited financial statements and accompanying MD&A, please refer to the SEDAR website at

Reader Advisory

This news release contains 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 Stonefire'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. Stonefire'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 Stonefire 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 Stonefire 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 Stonefire 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."

Petroleum and natural gas volumes are converted to an equivalent measurement basis referred to as a "barrel of oil equivalent" (boe) on the basis of 6 thousand cubic feet of natural gas equalling 1 barrel of oil. This is based on an energy equivalency conversion method applicable at the burner tip and does not necessarily represent a value equivalency at the wellhead. Readers are cautioned that boe figures may be misleading, particularly if used in isolation.

To request a free copy of Stonefire's financial report or if you would like to be put on Stonefire's mailing list please contact Ronald Williams, Vice President, Finance and CFO at

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

Contact Information

  • Stonefire Energy Corp.
    Mr. Richard Dahl
    President and CEO
    (403) 262-9885
    (403) 262-9887 (FAX)
    Stonefire Energy Corp.
    Mr. Ronald Williams
    Vice President, Finance and CFO
    (403) 262-9885
    (403) 262-9887 (FAX)