Turnkey E&P Inc.
NEX BOARD : TKY.H

Turnkey E&P Inc.

April 16, 2009 19:45 ET

Turnkey E&P Inc. Announces Fourth Quarter and Year End 2008 Results

HOUSTON, TEXAS--(Marketwire - April 16, 2009) - Turnkey E&P Inc. ("Turnkey") (NEX:TKY.H), today announced its financial and operating results for the three and twelve months ended December 31, 2008 and 2007.

The figures presented below are expressed in thousands of U.S. dollars, except where otherwise stated.



Below are the Corporation's summarized financial statements:

Summary Consolidated Balance Sheet
(stated in thousands of U.S. dollars)


December 31, December 31,
2008 2007
$ $
----------------------------
----------------------------

Assets

Current assets
Cash and cash equivalents 4,021 19,959
Restricted cash 1,000 -
Term deposits 1,000 1,000
Accounts receivable 938 3,580
Prepaid expenses 430 1,351
----------------------------

7,389 25,890

Property and equipment 13,376 65,940

Preferred supplier agreement and other 67 3,039
----------------------------

20,832 94,869
----------------------------
----------------------------

Liabilities and shareholders' equity

Current liabilities
Accounts payable and accrued liabilities 10,108 5,689
Current debt 10,310 -
----------------------------

20,418 5,689

Asset retirement obligations 243 187
----------------------------

20,661 5,876
----------------------------

Commitments and Contingencies

Shareholders' equity

Share capital 97,950 97,950

Contributed surplus 3,606 2,699

Deficit (101,385) (11,656)
----------------------------

171 88,993
----------------------------

20,832 94,869
----------------------------
----------------------------

Summary Consolidated Statement of Comprehensive Loss and Deficit
(stated in thousands of U.S. dollars, except share data)

December 31, December 31,
2008 2007
$ $
----------------------------
----------------------------

Revenue 27,182 17,744
----------------------------

Expenses
Operating 29,941 14,689
General and administration 3,634 3,985
Depreciation, depletion and amortization 5,188 3,465
Stock-based compensation 907 959
Write down of capital assets 74,699 -
Write down of preferred supplier agreement 2,069 -
Interest expense 610 -
Other income (124) (2,148)
----------------------------

116,924 20,950
----------------------------

Loss before income taxes (89,742) (3,206)
----------------------------

Income tax expense (recovery)
Current (13) 128
Future - 2,466
----------------------------

(13) 2,594
----------------------------

Net loss and comprehensive loss for the year (89,729) (5,800)

Deficit - Beginning of year (11,656) (5,856)
----------------------------

Deficit - End of year (101,385) (11,656)
----------------------------

Net loss per share
Basic and diluted (3.71) (0.24)
----------------------------

Weighted average number of common shares
Basic 24,187,910 24,149,298
Diluted 24,187,910 24,299,536


Summary Consolidated Statement of Cash Flows
(stated in thousands of U.S. dollars)


December 31, December 31,
2008 2007
$ $
----------------------------
----------------------------

Cash provided by (used in)

Operating activities
Net loss for the year (89,729) (5,800)
Items not involving cash
Depreciation, depletion and amortization 5,188 3,465
Stock-based compensation 907 959
Future income tax reduction - 2,582
Accretion expense 18 7
Foreign exchange losses (gains) 194 (354)
Write down of preferred supplier agreement 2,069 -
Write down of capital assets 74,699 -
----------------------------
(6,654) 859
Changes in non-cash working capital
Accounts receivable 2,642 158
Prepaid expenses 921 (1,007)
Accounts payable and accrued liabilities 7,078 (1,717)
Income and other taxes payable - (29)
----------------------------
Net cash provided by (used in) Operating
Activities 3,987 (1,736)
----------------------------

Financing activities
Issue of common shares - 211
Issue of long-term debt 11,370 -
Repayment of long-term debt (1,060) -
Increase in restricted cash (1,000) -
----------------------------

Net cash provided by (used in) Financing
Activities 9,310 211
----------------------------
Investing activities
Purchase of property and equipment (26,409) (27,721)
Other 27 36
Changes in accounts payable (2,659) 2,296
----------------------------

Net cash provided by (used in) Investing
Activities (29,041) (25,389)
----------------------------

Effect of foreign exchange (gains) losses on
cash (194) 354

Decrease in cash and cash equivalents (15,938) (26,560)

Cash and cash equivalents
- Beginning of year 19,959 46,519
----------------------------

Cash and cash equivalents
- End of year 4,021 19,959
----------------------------


The Corporation's Financial Statements and Management Discussion and Analysis are posted on www.sedar.com.

The Corporation's consolidated financial statements for the year ended December 31, 2008 have been prepared on a going concern basis which contemplates the realization of assets and settlement of liabilities in the normal course of operations. On November 17, 2008, The Corporation's U.S. subsidiary through which the majority of the Corporation's activities are conducted filed for protection under Chapter 11 of the United States Bankruptcy Code. At December 31, 2008, the Corporation reported a working capital deficiency of $13,029 and a net loss and comprehensive loss for the year then ended of $89,729. The Corporation is engaged in a program to dispose of certain of its operating assets in order to discharge its liabilities. The Corporation's focus is to obtain an international drilling contract utilizing its specialized drilling equipment and technical knowledge to maximize the value of the assets and maintain an ongoing operation. Notwithstanding this, the assets have been written down to their estimated realizable value. Due to uncertain global and industry economic conditions, the assets may not be realized at their carrying values on these financial statements. The Corporation may not be able to continue in business operations or emerge from Chapter 11.



A summary of the Corporation's reserves as at December 31, 2008 prepared by
Prator Bett, L.L.C. follows:

----------------------------------------------------------------------------
Remaining Reserves - Forecast Case
-----------------------------------------------------------
Light and Heavy Natural Natural Gas
Medium Oil Oil Gas Liquids
-----------------------------------------------------------
Company Company Company Company
Gross Net Gross Net Gross Net Gross Net
-----------------------------------------------------------
Reserves Category Mbbl Mbbl Mbbl Mbbl MMcf MMcf Mbbl Mbbl
----------------------------------------------------------------------------
Proved
Developed
Producing 150 114 0 0 192 148 7 5
Developed
Non-Producing 226 174 0 0 709 535 20 15
Undeveloped 518 396 0 0 5,237 3,839 18 14
Total Proved 894 684 0 0 6,138 4,522 44 34
----------------------------------------------------------------------------
Probable 269 208 0 0 2,341 1,713 0 0
Total Proved
Plus Probable 1,163 892 0 0 8,479 6,235 44 34
----------------------------------------------------------------------------
Possible 363 283 0 0 1,339 976 0 0
Total Proved
Plus Probable
Plus Possible 1,526 1,175 0 0 9,818 7,211 44 34
----------------------------------------------------------------------------


FORECAST PRICE CASE BEFORE INCOME TAXES
-----------------------------------------------------------------
Proved
Plus
Proved Proved Proved Probable
($ in U.S. Developed Developed Proved Total Plus Plus
Dollars) Producing Nonproducing Undeveloped Proved Probable Possible
----------------------------------------------------------------------------
Future Net
Oil, Mbbl 115 174 396 684 893 1,176
Future Net
Gas, MMcf 148.4 534.7 3,839.2 4,522.3 6,235.1 7,210.7

Revenue
after
Royalty, M$ 8,268 18,170 53,648 80,086 106,874 134,659
Operating
Expenses,
M$ 3,009 4,386 12,021 19,416 24,342 28,884
Production
Taxes, M$ 968 1,820 5,477 8,265 11,005 14,125
Capital
Costs, M$ 80 543 22,509 23,132 25,248 26,362

Future Net
Revenue, M$ 4,210 11,421 13,642 29,273 46,280 65,288
Present
Worth at
5%, M$ 3,754 7,454 7,727 18,935 31,297 44,694
Present
Worth at
10%, M$ 3,391 5,247 3,833 12,471 22,181 32,805
Present
Worth at
15%, M$ 3,097 3,920 1,149 8,167 16,173 24,997
Present
Worth at
20%, M$ 2,855 3,069 (767) 5,157 11,975 19,509

Estimated
Revenues by
Year - M$
2009 1,076 252 (10,841) (9,514) (8,114) (6,735)
2010 1,074 454 436 1,963 3,864 6,105
2011 730 710 5,120 6,560 8,641 10,355
Thereafter 1,330 10,006 18,927 30,263 41,888 55,564
Total 4,210 11,421 13,642 29,273 46,280 65,288

Average
Production
Rate for
2009
Oil,
bbl/day 91 13 52 156 197 254
Gas,
MMcf/day 0.13 0.11 0.00 0.25 0.73 0.97

(1) Totals may not add due to computer rounding.


This release and Turnkey's website referenced in this release contain forward-looking statements including expectations of future production and components of cash flow and earnings. Investors are cautioned that assumptions used in the preparation of such information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of Turnkey. These risks include, but are not limited to; the risks associated with the oil and gas industry, commodity prices and exchange rate changes. Industry related risks could include, but are not limited to; operational risks in exploration, development and production, delays or changes in plans, risks associated to the uncertainty of reserve estimates, health and safety risks including, without limitation, blowouts and spills, and the uncertainty of estimates and projections of production, costs and expenses. The risks outlined above should not be construed as exhaustive. Investors are cautioned not to place undue reliance on any forward-looking information. Turnkey undertakes no obligation to update or revise any forward-looking statements.

Contact Information

  • Turnkey E&P Inc.
    R. M. (Bob) Tessari
    President and Chief Executive Officer
    (281) 248-8822