Trimox Energy Inc.

Trimox Energy Inc.

August 24, 2006 21:12 ET

Trimox Energy Inc. Announces Second Quarter Results

CALGARY, ALBERTA--(CCNMatthews - Aug. 24, 2006) - Trimox Energy Inc. ("Trimox" or the "Company") (TSX VENTURE:TRM.A)(TSX VENTURE:TRM.B) is pleased to report its financial and operating results for the three and six month periods ended June 30, 2006.

Three months ended Six months ended
June 30 June 30
2006 2005 2006 2005
Financial ($)
Petroleum and natural
gas sales 3,301,646 24,745 5,492,453 24,745
Net income (loss) 75,836 (107,481) (319,900) (183,735)
Per share -- basic and
diluted 0.00 (0.01) (0.02) (0.02)
Funds from (used for)
operations 1,755,072 (67,281) 3,027,536 (121,685)
Per share -- basic and
diluted 0.10 (0.01) 0.18 (0.01)
Capital expenditures 3,822,581 1,854,670 9,912,232 2,853,530
Working capital
(deficiency) (2,685,163) 5,399,433 (2,685,163) 5,399,433

Equity outstanding
Class A shares 14,900,000 10,000,000 14,900,000 10,000,000
Class B shares 450,000 450,000 450,000 450,000
Stock options on Class
A shares 1,335,000 815,000 1,335,000 815,000

Average Daily Production
Natural gas - mcf 3,829 33 3,168 16
Crude oil & NGL - bbls 189 - 155 -
Total - boe 827 5 683 3

Average Sales Prices
Natural gas - $/mcf 6.24 8.32 6.74 8.32
Crude oil & NGL - $/bbl 65.47 - 58.15 -
Total - $/boe 43.86 49.91 44.45 49.91

Operating Netbacks
BOE - $/boe 24.78 35.09 25.75 35.09

Wells Drilled
Gross 5 3 7 3
Net 3.1 1.3 3.7 1.3

Second Quarter Highlights

- Drilled five (3.1 net) wells resulting in three (1.4 net) gas wells and two (1.7 net) oil wells.

- Second quarter average production of 827 boe/d was a 54% increase over the first quarter average production of 537 boe/d.

- Second quarter cash flow of $1.76 million ($0.10 per share) was a 38% increase over first quarter cash flow of $1.27 million ($0.07 per share).

- Hedged 2,000 GJ/d for the month of July 2006 at a price of Cdn$5.40 per GJ and entered into a costless collar arrangement with AECO pricing for 2,000 GJ/d for the period August 1, 2006 -- October 31, 2006 with a floor of Cdn$5.00 and a ceiling of Cdn$6.90 per GJ.

- Increased the credit facility with a Canadian chartered bank to $4 million and subsequent to June 30, 2006 increased the Company's credit facility by a further $1 million.

Third Quarter Activities to Date

- Drilled six (4.7 net) wells resulting in five (4.1 net) gas wells and one (0.6 net) oil well.

- Continued production and cash flow growth - third quarter average production and cash flow are budgeted to rise to approximately 950 boe/d and $1.9 million, respectively, with further increases in production and cash flow projected in the fourth quarter.

- Based on a preliminary petroleum and natural gas reserve report prepared by McDaniel and Associates Consultants Ltd. dated August 1, 2006, the Company's proved plus probable reserves increased 142% to 1.7 million boe from December 31, 2005. The net present value of future net cash flows associated with such reserves, based on a 10% discount, increased 122% to $35.8 million from December 31, 2005.

- Increased the 2006 capital budget by $3 million to $16.5 million.

Trimox continues to achieve significant quarter over quarter growth. Management is confident that this growth will be maintained into the future as further success is realized in each of the Company's three core areas of operation.

The unaudited financial statements and related MD&A for the six months ended June 30, 2006 will be filed on the SEDAR website at

This news release refers to "cash flow from (used for) operations", "cash flow from (used for) operations per share" and "operating netback", which are not recognized measures under Canadian generally accepted accounting principles ("GAAP"). Management believes that in addition to net income (loss), cash flow (out flow) and operating netback are useful supplemental measures as they demonstrate the Company's ability to generate the cash necessary to fund future growth through capital investment. The reconciliation between net income (loss) and cash flow (loss) can be found on the statements of cash flows in the interim financial statements and the audited financial statements. Trimox defines operating netback as revenue less royalties, operating and transportation expenses. Investors are cautioned, however, that these measures should not be construed as an alternative to net income (loss) determined in accordance with GAAP as an indication of the Company's performance. Trimox's method of calculating these measures may differ from the method used by other companies and accordingly, may not be comparable to measures used by other companies.

This news release contains forward-looking statements which are subject to known and unknown risks, uncertainties and other factors that could influence actual results or events and cause actual results or events to differ materially from those stated, anticipated or implied. Such forward-looking statements necessarily involve risks associated with oil and gas exploration, property development, production, marketing, and transportation, such as dry holes and non-commercial wells, facility and pipeline damage, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers and the ability to access sufficient capital from internal and external sources. Readers are cautioned not to place undue reliance on forward-looking statements, as no assurances can be given as to future results, levels of activity or achievements.

Natural gas volumes have been converted to barrels of oil equivalent ("boe") using six thousand cubic feet ("mcf") equal to one barrel ("bbl"). This conversion ratio is based on an energy equivalent conversion applicable at the burner tip and does not represent a value equivalency at the wellhead.

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

Contact Information

  • Trimox Energy Inc.
    Steve Dabner
    President & C.E.O.
    (403) 216-1721
    Trimox Energy Inc.
    Thomas Love
    Chairman & C.F.O.
    (403) 216-1722