Trimox Energy Inc.
TSX VENTURE : TRM.A
TSX VENTURE : TRM.B

Trimox Energy Inc.

November 27, 2006 09:00 ET

Trimox Energy Inc. Announces Third Quarter Results and Normal Course Issuer Bid

CALGARY, ALBERTA--(CCNMatthews - Nov. 27, 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 nine month periods ended September 30, 2006.



Highlights

Three months ended Nine months ended
September 30 September 30
2006 2005 2006 2005
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Financial ($)
Petroleum and natural gas sales 3,521,182 94,625 9,013,635 119,370
Net loss (435,661) (59,455) (755,561) (243,190)
Per share - basic and diluted (0.03) (0.01) (0.04) (0.02)
Funds from (used for)
operations 1,966,343 47,595 4,993,879 (74,090)
Per share - basic 0.12 0.00 0.30 (0.01)
Per share - diluted 0.11 0.00 0.29 (0.01)
Capital expenditures 5,070,041 3,920,497 14,982,273 6,774,027
Working capital (deficiency) (5,816,265) 1,526,531 (5,816,265) 1,526,531

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 1,335,000 900,000 1,335,000 900,000

Operating
Average Daily Production
Crude oil and liquids - bbls 202 1 171 -
Natural gas - mcf 4,446 100 3,599 46
Total - boe 943 18 770 8

Average Sales Prices
Crude oil and liquids - $/bbl 62.73 49.67 59.99 49.67
Natural gas - $/mcf 5.76 10.14 6.33 9.67
Total - $/boe 40.58 60.67 42.90 57.95

Operating Netbacks
BOE - $/boe 22.99 41.97 24.64 40.23

Wells Drilled
Gross 6 7 13 10
Net 4.7 3.9 8.4 5.2
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Third Quarter Highlights

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

- Q3 - 2006 average production was 943 boe/d, an increase of 14% from Q2 - 2006.

- Q3 - 2006 cash flow was $2 million ($0.11per share), an increase of 12% from Q2 - 2006.

- Proved plus probable reserves increased 142% to 1.7 million boe from December 31, 2005 based on a petroleum and natural gas reserve report by McDaniel & Associates Consultants Ltd. dated July 31, 2006. Net present value of future net cash flows associated with such reserves, based on a 10% discount, increased 122% to $35.8 million from $16.1 million on December 31, 2005.

Successful gas wells were drilled in the Company's three core areas -at Retlaw and Vauxhall in southern Alberta, Niton in west-central Alberta and Worsley in the Peace River Arch core area. The Worsley discovery further enhances the Company's prolific Devonian gas project in that area. The Company operated discovery well (0.5 net) is scheduled to commence gas production in mid-February 2007 at a gross restricted rate of approximately 1.5 mmcf/d (750 mcf/d net or 125 boe/d net). Additional follow-up drilling is planned for the first quarter of 2007 and thereafter.

A new oil discovery was made at Enchant in southern Alberta. The well (0.6 net) is currently being equipped for production. Additional development locations have been identified and will be drilled pending an evaluation of the performance of the discovery well over the coming months.

Normal Course Issuer Bid

The TSX Venture Exchange has accepted the Company's Notice of Intention to Make a Normal Course Issuer Bid (the "NCIB"). Under the terms of the NCIB, Trimox is authorized to purchase, for cancellation, up to 745,000 (5%) of its issued and outstanding Class A shares. As at November 23, 2006, Trimox had 14,900,000 Class A Shares issued and outstanding. The NCIB will commence on November 30, 2006 and will end November 29, 2007.

Purchases pursuant to the NCIB will be made from time to time by CIBC Wood Gundy on behalf of the Company through the facilities of the TSX Venture Exchange. Class A Shares purchased will be paid for with cash available from working capital. All Class A Shares purchased pursuant to the NCIB will be cancelled.

Due to the volatility in the financial markets and commodity pricing, Trimox believes that the Class A Shares may from time to time be undervalued in the market and will constitute an appropriate use of funds.

Outlook

Fourth quarter 2006 production and cash flow are expected to be comparable to third quarter results. Production increases will be temporarily restrained as a result of the Company being subjected to an extended shut-in at its west-central Alberta core operating area due to pipeline maintenance on the TransCanada pipeline system. Trimox expects meaningful production increases to be re-established by the first quarter of 2007. Four additional (2.6 net) wells are expected to go on-stream by year-end and the Worsley gas well (0.5 net) discussed above is expected to commence production in February 2007.

Trimox is planning to operate the drilling of four wells in the upcoming winter drilling season. These will target oil at Enchant in southern Alberta and Windfall in west-central Alberta. Gas will be the target of a delineation well planned for Worsley in the Peace River Arch area. Up to four additional earning wells may also be drilled on Company lands by an industry partner under the terms of a farmout agreement.

The unaudited financial statements and related MD&A for the nine months ended September 30, 2006 will be filed on the SEDAR website at www.sedar.com.

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
    Email: steved@trimox.ca
    or
    Trimox Energy Inc.
    Thomas Love
    Chairman & C.F.O.
    (403) 216-1722
    Email: toml@trimox.ca