Stonefire Energy Corp.

Stonefire Energy Corp.

March 21, 2007 16:00 ET

Stonefire Energy Corp. Announces Year End 2006 Financial Results

CALGARY, ALBERTA--(CCNMatthews - March 21, 2007) - Stonefire Energy Corp. (the "Corporation" or "Stonefire") (TSX VENTURE:SFE.A)(TSX VENTURE:SFE.B) is pleased to announce its financial and operating results for the year ended December 31, 2006. Selected operational and financial results are outlined below and should be read in conjunction with Stonefire's audited financial statements and related MD&A. For a complete copy of Stonefire's 2006 financial statements and related MD&A, please refer to

Financial and Operating Highlights

Three months ended Year ended
December 31, 2006 December 31, 2006
($ except share amounts) (unaudited) (audited)
Petroleum and natural gas revenues $ 296,681 $ 586,427
Cash flow from (used in) operations(1) 38,175 (161,619)
Per share, basic and diluted(1) 0.00 (0.01)
Capital expenditures $ 2,933,151 13,748,274
Working capital (deficit) 1,694,131
Shareholders' equity $ 15,709,444
Shares outstanding
Class A 11,850,000
Class B 1,012,000
Options 1,061,000
Weighted average shares outstanding
Class A 11,096,739 9,197,397
Class B 1,012,000 806,827
Conversion of Class B shares(2) 4,641,631 3,700,589
Weighted average shares outstanding
- basic 16,750,370 13,704,813
Class A share trading
High $ 4.00
Low 1.60
Close $ 1.79
Natural gas liquids (bbls/d) 14 7
Natural gas (mcf/d) 336 186
Total (boe/d @ 6:1) 70 38
Reference prices
WTI (US$ per bbl) $ 60.21 $ 66.21
AECO (Cdn$ per GJ) 6.55 6.19
Average selling price
Natural gas liquids (per bbl) 50.42 57.57
Natural gas (per mcf) 7.49 6.57
Operations netback (per boe @ 6:1) 22.99 20.29
Cash flow netback (per boe @ 6:1) $ 5.93 $ (11.65)

(1) Management uses cash flow from operations (before changes in non-cash
working capital) to analyze operating performance and leverage. Cash
flow from operations as presented does not have any standardized
meaning prescribed by Canadian GAAP and therefore it may not be
comparable with the calculation of similar measures for other entities.
(2) For the year ended December 31, 2006, the Class B shares are converted
at the year-end Class A share price of $1.79 and added to the Class A
shares to calculate basic shares outstanding.

2006 Corporate Highlights

- Stonefire's initial public offering closed on March 15, 2006 with gross proceeds of $11.0 million.

- Commenced trading on the TSX Venture Exchange on March 22, 2006 under the symbols SFE.A and SFE.B.

- Drilled 9 gross, (5.0 net) exploration wells all in the Edson exploration area resulting in 5 gross (3.0 net) productive wells that are all new pool discoveries.

- First production came on stream in June, 2006, Stonefire's first new pool discovery.

- Closed a $5,040,000 flow through financing November 2, 2006.

- Exited 2006 with approximately 110 boepd net production with a further 300 boepd tested and awaiting tie-in.

- From zero land at the start of 2006, Stonefire's gross land position stands at 16,160 acres (net 9,040 acres) at year end 2006, all in the Edson exploration area.

- Established an inventory of 12+ gross exploration wells with a growing number of development well locations. Working interests range from 50 - 100%.

- Discovered 881,000 boe of proved plus probable reserves in 2006 with very respectable all in finding and development costs of $17.09 per boe on a proved plus probable basis. Excluding Future Development Capital and undeveloped land spending, proved plus probable reserves were added at a cost of $12.81 per boe.

President's Message

It is a great pleasure to report on Stonefire's beginnings as a public company and to welcome our shareholders. In Stonefire's first nine months of operations in 2006, we've seen incredible change in the energy industry. The year started with sector hyperactivity and a tight market for well services driven by record commodity prices. In 2007, the reverse is occurring, with commodity prices and field activity down substantially from early 2006. Despite these volatile and challenging industry conditions, Stonefire has had a good start and continues to execute its growth strategy. In the short time since our start-up Stonefire's experienced management team has worked hard to execute our business plan and deliver significant results, including drilling success, pool discoveries and growing production. Our inventory of land and 12 plus exploration well locations will continue to propel Stonefire's growth in 2007 and beyond.

In 2006 our exploration strategy of targeting long reserve life multi zone natural gas and light oil prospects in the Edson exploration area generated significant results. Proved plus probable reserve additions were 881,000 boe for 2006 resulting in very respectable all in finding and development costs of $17.09 per boe on a proved plus probable basis. Stonefire exited 2006 with approximately 110 boepd of net production and with significant production (300 boepd) awaiting tie-in, all generated through exploration drilling.

Because of the current volatile and uncertain industry conditions, Stonefire's management team has strived to keep the Corporation debt free. Stonefire exited 2006 with positive working capital of $1.7 million, no debt and an undrawn line of credit currently at $3.0 million. Our strong financial situation leaves the Corporation well positioned to react to and capture business and exploration opportunities as they arise. Subsequent to year end Stonefire entered into a letter agreement for a bought deal financing of $7.0 million to help fund the 2007 exploration program.

In 2007 Stonefire will continue to focus in the Edson exploration area with forecast spending of $14 to $16 million resulting in the drilling of 7-10 gross (5.5 net) exploration wells and forecast average production of 330 boepd and a forecast 2007 exit rate of 600 - 700 boepd.

Stonefire's management expects that the current slowdown in industry activity will benefit growth orientated junior exploration and production companies such as Stonefire due to greater availability of equipment and services, at reduced capital costs, as well as greater access to farm-in deals and potential property acquisitions. Regardless of ongoing changes in industry conditions I am confident that Stonefire has the right management team and board of directors in place. They have the experience and track record to execute Stonefire's growth strategies and to deliver long-term growth in net asset value per share to its shareholders.

In closing, I would like to thank our investors for their support, the management team at Stonefire for their dedication and hard work, our board of directors for their guidance and our lead financial advisor, Tristone Capital for its sound financial advice.

As referred to above, for a complete copy of Stonefire's 2006 financial statements and related MD&A, please refer to Stonefire has also filed its Form 51-101F1 Statement of Reserves Data as at December 31, 2006 with securities regulators and it is available for viewing at as well.

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)