TRAFINA Energy Ltd.
TSX VENTURE : TFA.A

TRAFINA Energy Ltd.

August 25, 2009 09:00 ET

Trafina Energy Ltd. Announces Q2 2009 Financial and Operating Results

CALGARY, ALBERTA--(Marketwire - Aug. 25, 2009) -

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

Trafina Energy Ltd. ("Trafina" or the "Company") (TSX VENTURE:TFA.A) is pleased to announce its financial and operating results for the three and six months ended June 30, 2009. Trafina's second quarter 2009 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.

Highlights:

- Increased production 54 percent to 403 barrels of oil equivalent (boe) per day in the second quarter of 2009 compared with 261 boe/day in the same period of 2008. Over the first half of 2009, Trafina increased its production 63 percent to 414 boe/day from 254 boe/day in 2008.

- Placed five (1.5 net) wells on production in the second quarter of 2009, bringing the total wells that commenced production in the first half of 2009 to 13 (4.2 net).

- Maintained funds flow from operations for the second quarter of 2009 at $60,826 compared to $80,645 in the same period of 2008. The Company increased its funds flow from operations for the first half of 2009 by 100 percent to $136,091, compared to $68,176 in 2008. The increase in funds flow from operations over the same period in 2008 is attributable to lower general and administrative costs and no provision for bad debt, offset by lower revenue.

- Achieved oil and gas revenue of $913,483 for the second quarter of 2009 compared to $1.5 million in the same period of 2008. Despite Trafina's increased production, revenue from petroleum and natural gas production decreased compared with 2008 as a result of lower commodity prices.

- Focused its capital expenditures in Wetaskiwin, Alberta, equipping six (2.4 net) wells in the second quarter of 2009 that were drilled in 2008. The wells have already been logged and completion work is expected to be finished by the end of August 2009.

- Subsequent to the end of the quarter, on July 29, 2009, Trafina signed a settlement agreement with a third party operator relating to the overpayment of production revenue. The settlement agreement reduces the amount owed by Trafina to the operator. At December 31, 2008, the Company had included an estimate of the obligation in its financial statements. As a result of the settlement, the Company reduced its obligation recorded at March 31, 2009 by approximately $533,000 and recorded liability settlement revenue.

- On August 19, 2009, Trafina announced that it had agreed to purchase a 50 percent interest in certain producing assets in Alberta and Saskatchewan from an arm's length third party for $10 plus a sliding scale royalty and the assumption of related operating, abandonment and reclamation liabilities. The present value of assuming the reclamation liabilities are estimated to be $750,000. Closing of the transaction is expected to occur on or about September 17, 2009 and is expected to add approximately 42 boe/day to the Company's production, increasing total production to approximately 450 boe/day along with undetermined upside.



Summary of Operations

----------------------------------------------------------------------------
For the three months
ended June 30
2009 2008 % Change
----------------------------------------------------------------------------
Production:
Natural gas 2.1 mmcf/day 1.3 mmcf/day +62
Oil and Natural gas liquids 47 bbls/day 45 bbls/day +4
Total production 403 boe/day 261 boe/day +54

Total gross oil and gas
revenue ($) 913,483 1,505,335 -39
Liability settlement
revenue ($) 533,716 - -
Royalties ($) 75,296 210,479 -64
Operating, processing, and
transportation expenses ($) 573,527 438,903 +31
Funds flow from operations(1)
($) 60,826 80,645 -25
per basic common share ($) 0.01 0.01
per diluted common share ($) 0.01 0.01
Weighted average basic shares
outstanding 11,302,675 5,759,848 -
Weighted average diluted shares 11,461,703 5,759,848 -
Loss before income taxes ($) (458,834) (483,464) +5
Net loss ($) (341,010) (417,464) +18
per basic and diluted common
share ($) (0.03) (0.07)
Net capital expenditures ($) 333,882 (18,093) -
Total assets ($) 15,937,964 15,976,595 -
Net debt and working capital
deficiency(2) ($) (2,896,332) (2,972,298) -

(1) Funds flow from operations is a Non-GAAP Measure. See "Non-GAAP
Measures" in this MD&A.
(2) Net debt and working capital deficiency consists of accounts payable
and accrued liabilities, current portion of liability settlement and
bank debt less current assets.



----------------------------------------------------------------------------
For the six months
ended June 30
2009 2008 % Change
----------------------------------------------------------------------------
Production:
Natural gas 2.2 mmcf/day 1.2 mmcf/day +83
Oil and natural gas liquids 47 bbls/day 53 bbls/day -11
Total production 414 boe/day 254 boe/day +63

Total gross oil and gas
revenue ($) 2,093,731 2,616,271 -20
Liability settlement revenue 533,716 - -
Royalties ($) 241,752 358,627 -33
Operating, processing, and
transportation expenses ($) 1,102,755 811,854 +36
Funds flow from operations(1)
($) 136,091 68,176 +100
per basic common share ($) 0.01 0.01
per diluted common share ($) 0.01 0.01
Weighted average basic shares
outstanding 11,284,240 5,767,348 -
Weighted average diluted shares 11,397,438 5,767,348 -
Loss before income taxes ($) (1,337,651) (962,502) +39
Net loss ($) (1,024,792) (754,502) -
per basic and diluted common
share ($) (0.09) (0.13)
Net capital expenditures ($) 561,171 1,809,766 -69
Total assets ($) 15,937,964 15,976,595 -
Net debt and working capital
deficiency(2) ($) (2,896,332) (2,972,298) -

(1) Funds flow from operations is a Non-GAAP Measure. See "Non-GAAP
Measures" below.
(2) Net debt and working capital deficiency consists of accounts payable
and accrued liabilities, current portion of liability settlement and
bank debt less current assets.


Outlook

For the second half of 2009, Trafina will focus on managing its debt while pursuing opportunities to grow through exploration and development drilling, property acquisitions and corporate transactions. If necessary, funding options include equity financings or an increased credit facility.

Trafina is a junior oil and gas company based in Calgary, Alberta. It is primarily a natural gas producer, with its main area of interest in Wetaskiwin with non-core interests in Jenner, Carson Creek/ Judy Creek and Bindloss, all of which are in Alberta. Trafina's shares trade on the TSX Venture Exchange under the stock symbol TFA.A.

BOEs Cautionary Statement: In this press release Trafina references boes. Boes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf: 1 bbl is based on energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the well head.

Non-GAAP Measures: This press release uses the term "funds flow from operations," which is not defined under Canadian GAAP ("GAAP") and should not be considered an alternative to, or more meaningful than, cash flow from operating activities as determined in accordance with Canadian GAAP as an indicator of the Company's performance. Trafina's determination of funds flow from 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 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 GAAP as an indication of Trafina's performance. See Trafina's Management's Discussion and Analysis for the three and six months ended June 30, 2009 for a reconciliation of cash flow from operating activities to funds flow from operations.

Forward-Looking Statements: This press release contains forward-looking statements, including statements relating to management's approach to operations (including drilling programs), expectations relating to the Company's funding requirements and availability of potential property and corporate acquisitions. Readers are cautioned that assumptions used in the preparation of such statements may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of Trafina. These risks include, but are not limited to: the risks associated with the oil and natural gas industry, commodity prices, and exchange rate changes. Industry related risks include, but are not limited to: operational risks in exploration, development and production of oil and natural gas and production risks associated with sour hydrocarbons, dependence on third-party owned and operated production facilities, availability of skilled personnel and services, failure to obtain industry partners, regulatory and other third-party consents and approvals, delays or changes in plans, risks associated with the uncertainty of reserve estimates, health and safety risks and the uncertainty of estimates and projections of reserves, production, costs and expenses. The risks outlined above should not be construed as exhaustive. Readers are cautioned not to place undue reliance on these forward-looking statements. Except as required by applicable securities laws, Trafina undertakes no obligation to update or revise any forward-looking statements.

The TSX Venture Exchange does not accept 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
    or
    Trafina Energy Ltd.
    Robert W. Lamond
    Chairman
    (403) 269-9889
    (403) 269-9890 (FAX)