TRAFINA Energy Ltd.

TRAFINA Energy Ltd.

March 30, 2011 08:30 ET

Trafina Energy Announces Unaudited Operational Q4 2010 Update

CALGARY, ALBERTA--(Marketwire - March 30, 2011) -


Trafina Energy Ltd. (TSX VENTURE:TFA.A) ("Trafina" or "the Company") is pleased to announce an operational update for the three months ended December 31, 2010.


-- Raised gross proceeds of approximately $3.9 million on a non-brokered
private placement basis by issuing 11.2 million Class A common Shares of
Trafina and 6.3 million warrants to purchase Class A common shares.

-- Acquired a 100 percent interest in undeveloped land in northeastern
Alberta from a private oil and gas corporation and acquired additional
sections at a Crown land sale with the potential for Wabiskaw heavy oil

-- Increased oil and liquids production 81 percent over the same period in

-- Tied-in and placed on production a Pembina Cardium oil well. From
January 1, 2011 to March 28, 2011 the well has averaged approximately
168 (42 net) barrels of oil equivalent per day (boepd).

-- Drilled, completed and tied-in an Upper Shaunavon horizontal oil well in
southern Saskatchewan. The well has produced approximately 44 (35 net)
boepd since January 1, 2011.

Selected Financial and Operational Information
For the three months ended December 31
2010 2009 Change

Total gross petroleum and gas revenue ($) 1,285,780 1,225,710 +5
Royalties ($) 158,633 167,164 (5)
Operating, processing, and transportation
expenses ($) 1,111,554 680,376 +63
Funds flow from (used in) operations(1) ($) (455,696) 9,501
per basic and diluted common share ($) (0.02) ---
Weighted average basic shares outstanding 23,388,001 13,514,502 +73
Net capital expenditures ($) 4,445,515 2,484,314 +79
Net debt and working capital deficiency(2)
($) (6,228,982) (3,911,476) +59

Oil and Natural gas liquids (bbls/d) 116 64 +81
Natural gas (Mcf/d) 1,660 1,951 (15)
Total production (boepd) 393 389 +1

(1) Funds flow from (used in) from operations is a Non-GAAP Measure. See
"Non-GAAP Measures" below.
(2) Net debt and working capital deficiency consists of current assets and
current liabilities less commodity contracts.

Despite selling non-core natural gas assets and production in the first quarter of 2010, an increase in oil production helped to keep petroleum and natural gas revenue steady for the three months ended December 31, 2010 compared to the three months ended December 31, 2009.

Operating costs for the three months ended December 31, 2010 were 63 percent higher on a $/boe basis than operating costs over the same period in 2009 as the Company continues to move its production base to a higher oil weighting. The increase is mainly attributable to higher operating costs in southwest Saskatchewan that are associated with emulsion handling, repairs and maintenance of flow-lines and several down-hole tubing replacements.

For the three months ended December 31, 2010 the Company used funds of $455,696 in its operations compared to generating funds of $9,501 in the same period of 2009. The use of funds in the three months ended December 31, 2010 was primarily due to low revenues offset by high operating costs and general and administrative costs.

The Company spent approximately $4.4 million on capital expenditures in the three months ended December 31, 2010, with the majority of the costs going toward acquiring a strategic land position in northeastern Alberta for approximately $2.45 million, completing and tying-in a Pembina Cardium horizontal well for approximately $0.6 million and drilling, completing and equipping an Upper Shaunavon horizontal well in southern Saskatchewan for approximately $1.02 million.

Net debt and working capital deficiency at December 31, 2010 was approximately $6.2 million compared to approximately $3.9 million in the same period in 2009. Increased capital spending and an increase in operating and general and administrative expenses were the main reasons for the increase.

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.

Non-GAAP Measures

The press release uses the term "funds flow from (used in) operations", which is not defined under Canadian Generally Accepted Accounting Principles ("GAAP") and should not be considered an alternative to, or more meaningful than, cash flow from (used in) operating activities as determined in accordance with GAAP 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 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 (used-in) operating activities determined in accordance with GAAP as an indication of Trafina's performance.

The following table reconciles cash flow from (used in) operating activities to funds flow from (used in) operations:

Three Months Ended December 31
2010 2009
Cash flow from (used in) operating activities $ (843,673) $ 443,237
Change in non-cash operating working capital 387,977 (433,736)
Funds flow from (used in) operations $ (455,696) $ 9,501

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.

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)
    Trafina Energy Ltd.
    Robert W. Lamond
    (403) 269-9889
    (403) 269-9890 (FAX)