Trafina Energy Ltd.
TSX VENTURE : TFA.A

Trafina Energy Ltd.

June 28, 2011 08:30 ET

Trafina Announces Q1 2011 Financial and Operating Results; Company Remains on Track in Pursuit of Significant Heavy Oil Potential at McMullen

CALGARY, ALBERTA--(Marketwire - June 28, 2011) -

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE U.S.

Trafina Energy Ltd. (TSX VENTURE:TFA.A) ("Trafina" or the "Company") is pleased to announce its financial and operating results for the three months ended March 31, 2011. Trafina's first quarter 2011 financial statements and management's discussion and analysis have been filed on SEDAR at www.sedar.com and are available on the Company's website at www.trafinaenergy.com.

Q1 2011 HIGHLIGHTS

  • Commenced construction in January 2011 of an all-access road to Trafina's heavy oil project at McMullen in northeastern Alberta
  • Road and lease construction at McMullen were completed in June 2011, on time and under budget, allowing the Company to finalize plans to drill four vertical evaluation wells
  • Acquired an additional 18 sections of land in McMullen at a Crown land sale on March 18, 2011, increasing total McMullen lands to 33 sections
  • Drilled one (0.50 net) test well at Twin Lakes with the potential to earn a 25 percent working interest in 13 adjacent sections
  • Maintained production above 400 barrels of oil equivalent per day (boepd) while continuing to increase the oil weighting. Production for the first quarter of 2011 averaged 412 boepd compared with 424 boepd over the same period of 2010
  • Oil weighting increased 57 percent from 97 boepd to 152 boepd, representing 37 percent of overall production
  • Completed a public offering subsequent to the end of the first quarter of 2011, raising gross proceeds of $9.0 million
  • Renewed the credit facility agreement with a Canadian chartered bank in June 2011, providing Trafina with up to $5.8 million of borrowing capacity

SUMMARY OF FINANCIAL AND OPERATING RESULTS

For the three months ended March 31,
20112010% Change
Total gross oil and gas revenue ($)1,537,1101,494,636+3
Royalties ($)140,177205,263-32
Operating, processing, and transportation expenses ($)1,063,1451,144,843-7
Funds flow used-in operations(1) ($)(217,074)(343,013)+37
per basic and diluted common share ($)(0.01)(0.02)--
Weighted average basic shares outstanding29,941,26218,294,595+64
Loss before income taxes ($)(1,066,238)(1,569,619)+32
Net loss ($)(936,238)(1,314,104)+29
per basic and diluted common share ($)(0.03)(0.07)
Net capital expenditures (dispositions) ($)2,001,759(144,011)--
Total assets ($)18,985,90117,446,435+9
Net debt and working capital deficiency ($)(8,427,247)(4,158,567)-103
(excluding commodity contract liability)

Production:
Natural gas (Mcf/d)1,5641,961-20
Oil and Natural gas liquids (bbls/d)1529757
Total production (boepd)412424-3

OUTLOOK

Trafina continues to execute its strategy of increasing its oil weighting. The Company expects to drill four vertical heavy oil wells at McMullen in July 2011 that may generate production by August 2011. Depending on success, additional drilling would follow. In addition to McMullen, the Company is continuing to develop its oil prospects at Divide in southwest Saskatchewan and Pembina in Alberta. These oil prospects are all supported by stable natural gas production at Wetaskiwin, Alberta.

Trafina's management believes the Company's significant heavy oil prospects may offer the potential for exponential growth in reserves, production and cash flow.

About Trafina

Trafina is a junior oil and gas company based in Calgary, Alberta. The Company's main areas of interest are in the McMullen and Pembina areas of Alberta and in the Rangeview and Divide areas of southwest Saskatchewan with other operated production in Wetaskiwin, Retlaw and Ronalane in Alberta. Trafina also has non-operated production in Viking/Kinsella, Alberta and minor interests in Carson Creek/Judy Creek, Alberta. Trafina's shares trade on the TSX Venture Exchange under the stock symbol TFA.A.

Basis of Presentation and Cautionary Statement:Information in this press release expressed in boes is derived by converting natural gas to oil in the ratio of six thousand cubic feet (mcf) of natural gas to one barrel (bbl) of oil. Boes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Non-IFRS Measures:This news release uses the term "funds flow from (used in) operations," which is not defined under IFRS and should not be considered an alternative to, or more meaningful than, cash flow from (used in) operating activities as determined in accordance with IFRS as an indicator of the Company's performance. Trafina's determination of funds flow from (used in) operations may not be comparable to that reported by other companies. The Company also presents funds flow from (used in) operations per share whereby per share amounts are calculated using weighted average shares outstanding consistent with the calculation of earnings per share. Management believes that in addition to cash flow from operating activities, funds flow from (used in) operations is a useful supplemental measure as it demonstrates Trafina's ability to generate cash necessary to repay debt or fund future growth through capital investment before changes in non-cash working capital balances. Investors are cautioned, however, that the measure should not be construed as an alternative to cash flow from operating activities determined in accordance with IFRS as an indication of Trafina's performance. See Trafina's MD&A for a reconciliation of cash flow from (used in) operating activities to funds flow from (used in) operations.

Forward Looking Statements: This news release contains forward looking statements and forward looking information based on management's current expectations regarding the use of proceeds from the sale of units. Operational forward looking information is based on management's expectations regarding future growth, results of operations, production, future commodity prices and foreign exchange rates, future capital and other expenditures (including the amount, nature and sources of funding thereof), plans for and results of drilling activity, environmental matters, business prospects and opportunities and future economic conditions. Readers are cautioned that assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be incorrect. Forward looking statements involves significant known and unknown risks and uncertainties. Reference is made to Trafina's revised annual information form for the year ended December 31, 2010 dated April 8, 2011 and management's discussion and analysis for the year ended December 31, 2010 for a description of some of the risks that could affect the Company's future results and could cause results to differ materially from those expressed in the Company's forward looking statements. The forward looking statements contained in this news release are made as at the date hereof and, except as required by applicable securities laws, Trafina does not undertake any obligation to update publicly or otherwise any such statements.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Trafina Energy Ltd.
    Kelly J. Ogle
    President and Chief Executive Officer
    (403) 263-0800
    (403) 263-0811 (FAX)
    info@trafinaenergy.com

    Trafina Energy Ltd.
    Robert W. Lamond
    Chairman
    (403) 269-9889
    (403) 269-9890 (FAX)
    www.trafinaenergy.com