Traverse Energy Ltd.

Traverse Energy Ltd.

August 16, 2012 16:38 ET

Traverse Energy Announces 2012 Second Quarter Results

CALGARY, ALBERTA--(Marketwire - Aug. 16, 2012) - Traverse Energy Ltd. ("Traverse" or "the Company") (TSX VENTURE:TVL) presents financial and operating results for the six months ended June 30, 2012. 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
(Unaudited) June 30, 2012 June 30, 2011 June 30, 2012 June 30, 2011
Financial ($ thousands, except per share amounts)
Revenue 1,430 903 3,258 1,887
Funds flow from operations 990 458 2,207 862
Per share - basic and diluted 0.02 0.01 0.05 0.03
Cash flow from operations 1,209 176 2,263 944
(including changes in working capital)
Per share - basic and diluted 0.03 0.01 0.05 0.03
Net income (loss) 39 (152 ) 395 (159 )
Per share - basic and diluted 0.00 0.00 0.01 0.00
Capital expenditures, net of dispositions 430 3,415 2,913 4,293
Total assets 18,590 19,294 18,590 19,294
Working capital 1,826 4,314 1,826 4,314
Common shares
Outstanding (millions) 42.2 38.5 42.2 38.5
Weighted average (millions) 42.2 35.0 42.2 33.5
Operations (units as noted)
Average production
Natural gas (mcf/day) 702 399 699 401
Oil and NGL (bbls/day) 184 89 198 104
Working interest production (BOE/day) 169 133 188 147
Royalty income (BOE/day) 132 22 127 24
Total (BOE/day) 301 155 315 171
Average sales price
Natural gas ($/mcf) 2.02 4.06 2.18 4.01
Oil and NGL ($/bbl) 77.92 93.68 82.73 84.73
Operating netback ($/BOE)
Petroleum and natural gas revenue 48.16 69.71 50.33 65.80
Royalties 0.85 4.75 2.43 4.22
Operating and transportation costs 13.16 16.30 14.19 16.13
Working interest operating netback ($/BOE) 34.15 48.66 33.71 45.45
Royalty income netback ($/BOE) 57.62 28.96 66.62 31.48
Total Company operating netback ($/BOE) 44.45 45.89 47.00 43.50

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 income (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.

Operations Review

All of the Company's oil and gas properties are located in Alberta. Traverse is focusing on its' existing medium and light oil properties located in central and southern Alberta. At June 30, 2012 undeveloped land holdings totalled 158,900 gross (156,100 net) acres at an average working interest of 98%.

No wells were drilled by the Company during the second quarter of 2012. In early July, Traverse commenced drilling on its' Turin property (which totals in excess of 9,000 acres) located in southern Alberta. Five gross (4.5 net) wells were drilled to test coincidental seismic and geological targets. This drilling resulted in 1.75 net oil wells, 1 natural gas well (0.75 net), 1 potential natural gas well and 1 well that likely will be abandoned upon conclusion of ongoing testing. The natural gas wells will remain shut-in pending an improved natural gas pricing environment. The first oil well (Traverse 75%) was placed on production August 1, since then the well has produced at an average rate of 85 barrels of oil per day. The second oil well (Traverse 100%) was placed on production August 14 and appears to be capable of producing at a similar rate. Both wells have been tied into Traverse's Turin battery which was expanded in the first quarter of 2012. The battery includes a water disposal and injection facility and a treater capable of handling up to 2,500 barrels of fluid per day. Traverse plans additional seismic surveying and several follow up drilling locations.

In the Brazeau area of west central Alberta, Traverse has a gross overriding royalty interest in 10 sections of land (6,400 acres). By June 30, 2012 a total of 9 horizontal Cardium wells were drilled on these lands by an industry partner. Seven of the wells were on production during the quarter resulting in 113 BOE per day (76% light oil) net to the Company. Subsequent to June 30, 2012 two additional wells were drilled by an industry partner.

Traverse set an initial budget of up to $15 million for 2012 to be funded from working capital, cash flow, new equity issues and debt where appropriate. Exploration plans for the remainder of the year include seismic acquisition; follow up drilling in the Turin area, and 2 to 3 wells in the greater Carbon area where Traverse owns in excess of 40,000 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 the Company's focus in 2012 on its existing medium and light oil properties in central and southern Alberta; planned additional seismic surveying and follow up drilling on the Company's Turin property and exploration plans for the remainder of 2012 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 June 30, 2012 unaudited interim 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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