Traverse Energy Ltd.

August 23, 2011 16:43 ET

Traverse Energy Announces 2011 Second Quarter Results

CALGARY, ALBERTA--(Marketwire - Aug. 23, 2011) - Traverse Energy Ltd. ("Traverse" or "the Company") (TSX VENTURE:TVL) presents financial and operating results for the six months ended June 30, 2011. 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. This conversion ratio is based upon an energy equivalent conversion method primarily applicable at the burner tip and does not represent value equivalence at the wellhead. BOE figures may be misleading, particularly if used in isolation.

HIGHLIGHTS Three months ended Six months ended
June 30 , June 30 , June 30 , June 30 ,
(unaudited) 2011 2010 2011 2010
Financial ($ thousands, except per share amounts)
Petroleum and natural gas revenue 903 345 1,887 636
Funds flow from operations * 458 41 862 73
Per share - basic and diluted 0.01 0.00 0.03 0.00
Cash flow from operations 176 315 944 258
(including changes in working capital)
Per share - basic and diluted 0.01 0.01 0.03 0.01
Net loss (152 ) (232 ) (159 ) (348 )
Per share - basic and diluted 0.00 0.00 0.00 (0.00 )
Capital expenditures, net of dispositions 3,415 739 4,293 3,087
Total assets 19,294 11,794 19,294 11,794
Working capital 4,314 4,274 4,314 4,274
Common shares
Outstanding (millions) 38.5 29.4 38.5 29.4
Weighted average (millions) 35.0 25.1 33.5 25.0
Operations (units as noted)
Average production
Natural gas (mcf/day) 399 403 401 317
Oil and NGL (bbls/day) 89 33 104 30
Total (BOE/day) 155 100 171 83
Average sales price
Natural gas ($/mcf) 4.06 3.80 4.01 4.27
Oil and NGL ($/bbl) 93.68 69.88 84.73 72.59
Netback per BOE ($/BOE)
Petroleum and natural gas revenue 63.98 38.08 61.00 42.52
Royalties 4.08 1.51 3.63 1.40
Operating 11.74 12.98 11.99 12.71
Transportation 2.27 1.29 1.88 1.27
Operating netback 45.89 22.30 43.50 27.14
* Management uses funds flow from operations (before changes in non-cash working capital and decommissioning expenditures) to analyze operating performance. Funds flow from operations does not have any standardized meaning prescribed by IFRS and therefore may not be comparable with the calculation of similar measures for other entities.

Operations review

All of the Company's oil and gas properties are located in Alberta. Traverse's activities during 2011 will include the drilling of 7 to 10 wells and shooting 2 and 3D seismic programs within an initial budget of $8-9 million. The Company is focusing on its' existing medium and light oil properties located in central and southern Alberta. At June 30, 2011 undeveloped land holdings totalled 147,700 gross (137,300 net) acres at an average working interest of 93%.

During the second quarter Traverse completed the drilling of 2 gross (1.93 net) wells. At Turin 1 net oil well was drilled and cased for potential oil production from several zones. This well was placed on production during July, as a flowing oil well and is currently producing at a rate of 35 BOE per day (70% oil). Flow rates are currently restricted due to constraints at the Company's Turin battery. Production from the well includes oil, minor associated sour natural gas and water. An expansion of the Turin facilities is required to increase natural gas sweetening capabilities, provide for water separation and disposal, and increase the oil battery capacity. This work commenced in August. Traverse has increased its' land holdings to 7,600 gross (7,200 net) acres in this area. Several follow-up wells are scheduled for drilling, commencing in the third quarter. Seismic surveys are planned before year end to more fully explore and develop this property.

In the Alliance area, Traverse drilled one horizontal well (0.93 net) targeting Viking oil. A 1075 meter horizontal leg was drilled and completed in June. Due to mechanical difficulties, only a portion of the proposed completion intervals were fracture treated. The well has been tied-in and placed on production in early August with current rates of 50 BOE per day (90% oil). An application for down spacing has been submitted to allow for an additional well to be drilled.

At Carbon Traverse recently placed a 100% working interest vertical oil well on production. This well confirms recoverable light oil from the Pekisko formation and provides correlation with our 3D seismic coverage. The well is currently recovering completion fluid along with new oil and natural gas from the Pekisko formation. The well is expected to produce as a lower rate oil and natural gas well. The Company recently surveyed a horizontal well location scheduled for drilling in the later part of 2011. This well has a projected 1000 meter horizontal section in the Pekisko formation. Traverse's land holdings in the area total 9,500 acres at a 100% working interest.

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 planned drilling and seismic activities for the remainder of 2011, scheduled follow-up drilling in the Turin area, expected production from a well in the Carbon area and intentions for drilling a horizontal well in the Carbon area 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 2011 second quarter unaudited 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) accepts responsibility for the adequacy or accuracy of the content of this release.

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