TRAFINA Energy Ltd.
TSX VENTURE : TFA.A

TRAFINA Energy Ltd.

August 29, 2007 17:51 ET

TRAFINA Energy Ltd. Announces Second Quarter 2007 Financial and Operational Results

CALGARY, ALBERTA--(Marketwire - Aug. 29, 2007) - TRAFINA Energy Ltd. (TSX VENTURE:TFA.A) announces financial and operating highlights for the three and six months ended June 30, 2007:

- TRAFINA drilled one gas well in the second quarter which is expected to be producing by the end of third quarter of 2007.

- Cash flow from operations(1) for the six months totaled $468,062, or $0.08 per share, which represents a 64% decrease from the comparative prior period.

- Net loss for the six months totaled $445,083 compared to a net income of $3,007,832 in 2006 due to the $3.68 million gain on sale of assets in 2006.

- Capital expenditures for the six months totaled $2,035,775, a decrease of 72% compared to 2006.

- TRAFINA had no outstanding debt and had a working capital deficiency of $828,019 at June 30, 2007.

- Sales volume decreased 19% to 267 BOE/d compared to the first half of 2006. 85.9% of TRAFINA's total sales volume was represented by natural gas.

OUTLOOK

TRAFINA's plans for the remainder of 2007 are to increase production from existing drilled wells, to further reduce well operating expenses and to reduce general and administrative expenses. This is expected to lead to increased profits, cash flow, and rate of return to our shareholders.

TRAFINA continues to target a production rate of approximately 500 BOE/d by the end of 2007. Current production levels are at approximately 315 BOE/d.

Drilling plans during the second half of 2007 will involve participating in 5.0 gross (2.2 net) CBM gas wells, which are expected to be on production prior to year end.

Initiatives to reduce operating expenses and to reduce general and administrative expenses by 10% are underway. TRAFINA has reduced senior staff salaries effective the end of August 2007 and other staff reductions and changes are being made. A new Chief Financial Officer (CFO) will be hired as Mr. David C. Yu resigned as Vice President, Finance effective August 31, 2007, but will continue to act as the CFO on a part time consulting basis until a replacement has been appointed.

TRAFINA intends to take advantage of new opportunities and will consider any acquisition, disposition or other corporate transaction that is presented to it.



FINANCIAL Three months ended June 30 Six months ended June 30
HIGHLIGHTS
% %
2007 2006 Change 2007 2006 Change
----------------------------------------------------------
Total gross
revenue ($) 1,164,516 1,732,284 -33 2,297,562 3,543,045 -35

Oil and gas
revenue, net
of royalties ($) 970,777 1,483,455 -35 1,943,631 2,983,291 -35

Income (loss)
before income
taxes ($) (277,802) 3,772,876 -107 (652,083) 3,851,626 -117
Net Income
(loss) ($) (219,302) 2,957,082 -107 (445,083) 3,007,832 -115
Per common
share - basic (0.04) 0.51 -108 (0.08) 0.52 -115
Per common
share - diluted (0.04) 0.50 -108 (0.08) 0.51 -116
Cash flow from
operations ($)(1) 288,472 487,281 -41 468,062 1,246,374 -62
Per common
share - basic 0.05 0.09 -44 0.08 0.22 -64
Per common
share - diluted 0.05 0.08 -38 0.08 0.21 -62
Average shares
outstanding -
basic 5,782,472 5,751,250 +1 5,764,550 5,751,250 0

Average shares
outstanding -
diluted 5,804,110 5,963,164 -3 5,786,188 5,953,758 -3

Capital expend-
itures ($) 1,271,399 3,105,058 -59 2,035,775 7,262,762 -72

Working capital
(deficiency) ($) (828,019) 948,403 -187 (828,019) 948,403 -187
----------------------------------------------------------
(1) Cash flow from operations is a Non-GAAP Measure, See "Non-GAAP
Measures" in the Management's Discussion and Analysis of TRAFINA for
the three and six months ended June 30, 2007.


OPERATING Three months ended June 30 Six months ended June 30
HIGHLIGHTS
% %
2007 2006 Change 2007 2006 Change
--------------------------------------------------------
DAILY SALES
Natural gas
(Mcf/d) 1,383.1 1,712.7 -19 1,378.0 1,722.3 -20
Heavy and light
oil (Bbl/d) 30.5 30.1 +1 34.4 40.6 -15
NGL (Bbl/d) 3.3 4.5 -27 3.3 4.2 -21
Total BOE/d 264 320 -17 267 332 -19

AVERAGE PRICE
Natural gas ($/Mcf) 8.00 9.35 -14 7.87 9.51 -17
Heavy and light
oil ($/Bbl) 31.53 77.98 -60 36.86 61.32 -40
NGL ($/Bbl) 50.11 61.13 -18 51.11 57.63 -11
Total $/BOE 46.14 58.23 -21 45.93 57.61 -20
--------------------------------------------------------


Note: The use of the term 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 at the burner tip and does not represent a value equivalency at the wellhead.

Forward Looking Statements:

This press release contains forward-looking statements, including statements relating to management's approach to operations, expectations relating to the number of wells, amount and timing of capital projects, interest rates, prices of oil and natural gas, production, cash flows and debt levels. The forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of TRAFINA to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable by TRAFINA at the time of preparation, may prove to be incorrect. TRAFINA undertakes no obligation to update or revise any forward-looking statements expect as required by applicable securities laws.

Additional Information:

A copy of TRAFINA's Financial Statements and Management's Discussion and Analysis for the three and six months ended June 30, 2007 has been filed on SEDAR and can be viewed at www.sedar.com or on request by e-mail to TRAFINA at info@trafinaenergy.ca.

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

Contact Information

  • TRAFINA Energy Ltd.
    Roland T. Valentine
    Chairman & CEO
    (403) 263-0800
    (403) 263-0811 (FAX)
    Website: www.trafinaenergy.ca