Traverse Energy Ltd.

April 26, 2011 18:04 ET

Traverse Energy Announces 2010 Year End Financial Results

CALGARY, ALBERTA--(Marketwire - April 26, 2011) - Traverse Energy Ltd. ("Traverse" or "the Company") (TSX VENTURE:TVL) presents financial and operating results for the year ended December 31, 2010. Unless otherwise stated, the volume conversion of natural gas to barrel of oil equivalent (BOE) is presented on the basis of 6 thousand cubic feet of natural gas being equal to 1 barrel of oil.

                        Three Months Ended
HIGHLIGHTS          December 31 (unaudited)          Year Ended December 31
                            2010      2009       2010      2009        2008
Financial ($ thousands, 
 except per share 
Petroleum & natural 
 gas revenue             $ 1,136    $  156    $ 2,118    $  547     $ 1,372
Funds flow from 
 operations                  636       (29)       795       128         847
 Per share 
  - basic and diluted       0.02      0.00       0.03      0.01        0.07
Cash flow from operations    244        17        487      (250)        974
 Per share 
  - basic and diluted       0.01      0.00       0.02     (0.01)       0.08
Net income (loss)         (1,191)     (177)    (2,106)     (722)        408
 Per share 
  - basic and diluted      (0.04)    (0.01)     (0.08)    (0.04)       0.03
Capital expenditures       3,569     1,290      7,970     1,790         457
Total assets              14,177    10,241     14,177    10,241       6,193
Working capital            2,358     4,546      2,358     4,546       2,501
Common shares
 Outstanding (millions)     31.9      24.9       31.9      24.9        12.9
 Weighted average 
  (millions)                30.1      24.1       27.4      18.2        12.9
 (Units as noted)
Production (BOE/d)           214        48        121        48          65
 Natural gas (Mcf per day)   423       233        370       237         346
 Oil and NGL (bbls per day)  143         9         59         9           7
Average sale price
 Natural gas ($/Mcf)        3.73      4.29       3.91      4.11        9.04
 Oil and NGL ($/bbl)       75.10     73.85      73.46     60.44       89.93
Netback per BOE ($/BOE)
 Petroleum & natural gas 
  revenue                  57.73     35.84      47.98     31.26       57.83
 Royalties                  2.71      0.15       2.18      0.19        0.35
 Operating                 12.59      6.69      12.72      6.64        6.31
 Transportation             1.76      1.22       1.63      0.69        1.04
 Operating netback         40.67     27.78      31.45     23.74       50.13

Non-GAAP measures

Management uses funds flow from operations and operating netback to analyze operating performance. These measures are commonly utilized in the oil and gas industry and are considered informative for management and stakeholders. The reconciliation between cash flow from operations and funds flow from operations can be found in the statement of cash flows in the financial statements with funds flow from operations calculated before non-cash working capital and asset retirement expenditures. Management believes that in addition to net loss, funds flow from operations is a useful supplemental measure as it provides an indication of Traverse's operating performance. Operating netback reflects petroleum and natural gas revenues less royalties, operating and transportation costs and is calculated on a per unit basis. Investors should be cautioned, however, that these measures may not be comparable to measures reported by other companies nor should they be construed as an alternative to cash flow from operations or other measures of financial performance calculated in accordance with GAAP.

Financial and Operating Review

The change in management and business direction of Traverse that occurred in June 2009 has significantly impacted the financial and operating results for 2010. Prior year revenue consisted mainly of natural gas royalty income and minor working interest production. As a result comparison of certain items between 2010 and prior years may not be meaningful.

In 2010 Traverse participated in the drilling of 10 gross (9.25 net) wells all within the province of Alberta. This drilling resulted in 4.25 net oil wells, 1 net natural gas well, 2 net suspended potential natural gas wells and 2 net abandonments. Production in the Turin area increased with the addition of 3 oil wells (2.25 net), the installation of a natural gas sweetening unit and the expansion of the oil battery. Oil production further increased with the success in the fall of a single oil well at Long Coulee (100% working interest). Gas production increased early in the year with the addition of a 100% interest well in the Warwick area. Additional drilling operations in the Warwick area resulted in two potential natural gas wells (100% working interest); however, additional completion activities in the wells have been delayed due to depressed natural gas prices. One horizontal well and one re-entry in the Manyberries area have been abandoned. Late in the year, a successful oil well was drilled in the Carbon area.

Drilling activities carried out during the fourth quarter included three 100% working interest wells resulting in 1 oil well at Long Coulee, 1 oil well at Carbon and 1 dry and abandoned well at Manyberries. Field activities also included the construction of oil and natural gas production facilities at Long Coulee. The Long Coulee well was drilled in October and placed on production in early November. The addition of new oil production with associated natural gas from Long Coulee is reflected in the daily production average of 214 BOE per day in the fourth quarter versus 103 BOE per day in the third quarter. Undeveloped lands holdings at December 31, 2010 totaled 155,500 gross, 147,400 net acres at an average working interest of 94%.

Traverse plans an active 2011. The Company will focus on its' existing light oil properties in central and southern Alberta. During the first quarter the oil well at Carbon was flow tested. The well requires a pipeline tie-in to nearby gas facilities in order to conserve natural gas. The tie-in is anticipated to be completed after spring break-up. 3D Seismic shooting activities are planned at Turin and Long Coulee. Drilling is planned at Carbon, Turin, Long Coulee, and Alliance. All of these areas are targeting light to medium gravity oil with associated natural gas. Further drilling is also planned in other areas depending on the availability of working capital. The Company has set an initial budget of $8-9 million to be funded from working capital, cash flow and the issue of additional equity.

Forward-looking information

This press release contains forward-looking information. Forward-looking information is based upon the opinions, expectations and estimates of management as at the date the information is provided and, in some cases, information received from or disseminated by third parties. In particular, the Company's statements with respect to the tie-in at Carbon, seismic field activities at Turin and Long Coulee, and planned drilling for the remainder of 2011 contain forward-looking information. This forward-looking information is subject to a variety of substantial known and unknown risks and uncertainties and other factors that could cause actual events or outcomes to differ materially from those anticipated or implied by such forward-looking information. The Company's Annual Information Form filed with securities regulatory authorities (accessible through the SEDAR website describes the risks, material assumptions and other factors that could influence actual results and which are incorporated herein by reference.

The forward-looking information contained in this press release is made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Further details on the Company including the 2010 year end audited financial statements, the related management's discussion and analysis and Annual Information Form are available on the Company's website and SEDAR.

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

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