Turnkey E&P Inc.

Turnkey E&P Inc.

August 09, 2006 11:38 ET

Turnkey E&P Inc Announces Second Quarter 2006 Results

CALGARY, ALBERTA--(CCNMatthews - Aug. 9, 2006) - Turnkey E&P Inc ("Turnkey") (TSX:TKY), today announced its financial and operating results for the period ending June 30, 2006.

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

Selected Consolidated Financial Information
Three and six months ended June 30, 2006

Three months ended Six months ended
June 30, June 30,
-------------------- --------------------
2006 2005 2006 2005
$ $ $ $
-------- -------- -------- --------
Financial Results
Revenue 5,745 - 11,502 -
Operating expenses 5,618 - 10,921 -
Financial items 784 - 1,362 -
Net loss (662) (99) (1,230) (99)
Loss per share - basic and diluted (0.03) (0.00) (0.05) (0.00)

June 30, December 31,
2006 2005
$ $
------------- -------------
Financial Position
Cash and cash equivalents 54,979 58,591
Working capital 58,766 59,464
Long-term debt Nil Nil
Shareholders' equity 97,366 98,204

Operating and Financial Highlights

Turnkey reported a net loss of $662 for the second quarter ending June 30, 2006, and $1,230 for the six months ending on the same date, as compared to a net loss of $99 for same three month period in 2005, and a net loss of $99 for the six months ending June 30, 2005.

During the three months ending June 30, 2006, Turnkey's four casing drilling rigs accounted for 227 drilling rig revenue days, representing a utilization rate of 62%. The drilling rigs generated $4,364 of revenue and $1,381 of revenue accrued from the Rig Personnel Supply Agreement. For the six months ended June 30, 2006, the rigs operated for 459 revenue days, representing a utilization rate of 63%, generating $8,315 of revenue while $3,187 of revenue accrued from the Rig Personnel Supply Agreement.

Turnkey's business plan is to use its available funds to pursue a drilling program using Tesco's casing drilling technology to exploit oil and natural gas reserves. The continuing strong demand for hydrocarbons and the past successful applications of the technology make management enthusiastic about Turnkey's business plan. Although it is anticipated that reported results from contract drilling operations will continue to be marginal due to the fact that the Corporation only owns four drilling rigs, management is looking to exploitation activities to provide future earnings and growth.

Turnkey has three active project areas.

The first is the Fetter project in Wyoming where Turnkey will drill two earning wells, with the option for a third, to earn an option to purchase a 15% interest in 51,000 acres. The first well was spudded on July 6, 2006 and the second well is expected to be spudded in September of 2006.

The second project is a 6,000-acre Gulf Coast oil play designed to develop underexploited reservoirs within the confines of a previously abandoned oil field. In addition, there is further potential to be realized from secondary and tertiary recovery application of the previously abandoned field pay as well as deeper, untested prospective sands. Casing Drilling is expected to add value by effectively addressing documented partial depletion in one of the sands that produced for more than 25 years. The field also has a history of completion and production problems indicative of poor cementing. Casing Drilling would provide for significantly better borehole conditions resulting in improved cementing and more effective completions.

The third area is in Goliad County, Texas where Turnkey is participating at the 10% level in a Wilcox trend well. The operator is considering using casing drilling on the next well to improve the drilling process and reduce costs. Two or three additional wells are expected to be drilled.

The Management Discussion and Analysis and the June 30, 2006 Interim Financial Statement for Turnkey are posted www.sedar.com.

Turnkey is an independent oil and gas company that is focusing its oil and natural gas acquisition, exploitation, development and production activities in the continental United States using Casing Drilling® technologies. Additional information about Turnkey can be found at its website: www.turnkeyep.com.

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
    Dale W. Bossert
    President and Chief Executive Officer
    (403) 828-5720
    Turnkey E&P Inc
    Martin Hall
    Vice-President, Finance and Chief Financial Officer
    (403) 616-3910