Turnkey E&P Inc.

Turnkey E&P Inc.

November 10, 2006 16:48 ET

Turnkey E&P Inc. Announces Third Quarter 2006 Results

CALGARY, ALBERTA--(CCNMatthews - Nov. 10, 2006) - Turnkey E&P Inc. ("Turnkey") (TSX:TKY), today announced its financial and operating results for the period ending September 30, 2006.

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

Selected Consolidated Financial Information
Three and Nine Months Ended September 30, 2006

Three Months Nine Months
Ended Ended
September 30, September 30,
2006 2005 2006 2005
$ $ $ $
Financial Results
Revenue 4,842 - 16,344 -
Operating expenses 4,245 - 15,166 -
Financial items (735) - (2,097) -
Net loss (445) (107) (1,675) (207)
Loss per share - basic
and diluted (0.02) (0.09) (0.07) (0.18)

September 30, December 31,
2006 2005
$ $
Financial Position
Cash and cash equivalents 52,780 58,591
Working capital 52,446 59,464
Long-term debt Nil Nil
Shareholders' equity 97,122 98,204

Operating and Financial Highlights

Turnkey reported a net loss of $445 for the third quarter ending September 30, 2006, and $1,675 for the nine months ending on the same date, as compared to a net loss of $107 for same three month period in 2005, and a net loss of $207 for the nine months ending September 30, 2005.

During the three months ended September 30, 2006, there were 275 drilling rig revenue days, representing a utilization rate of 74%. The drilling rigs generated $4,011 of third-party revenue and $831 of revenue accrued from the Rig Personnel Supply agreement. During the nine months ended September 30, 2006, there were 733 revenue days, representing a utilization rate of 67%. The drilling rigs generated $12,326 of third-party revenue and $4,018 of revenue accrued from the Rig Personnel Supply Agreement. During the third quarter, $1,185 of drilling revenue and $996 of operating expenses relating to drilling on the Corporation's own properties were eliminated for accounting purposes.

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. 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 currently has four primary active project areas; Fetter, Tumlinson, Big Wells and Louisiana Exploitation:

Fetter Project, Wyoming

The State 4-36-H well, in which Turnkey is paying 60 percent to casing point and 40 percent thereafter to earn 40 percent working interest in the spacing unit, has reached a total measured depth of 12,498 feet. The well has been cased with 4 1/2-inch casing. Encouraging natural gas and condensate flow rates were encountered while drilling the Frontier interval. Completion and testing operations will be carried out in the coming weeks with a completion rig.

Tumlinson Project, Texas

Turnkey participated in the drilling of the Tumlinson #1 well located in Goliad County, Texas, with a 10 percent working interest in approximately 280 gross acres. The well was drilled by a third party drilling contractor and reached a total depth of 13,202 feet in August, 2006. From electrical logs, the well encountered over one hundred feet of potential net pay from multiple zones in the Wilcox formation. The operator is planning to perform fracture stimulation operations to test the lower Wilcox sands.

Big Wells Project, Texas

One of Turnkey's drilling rigs has recently drilled lateral extensions in a re-entry well in the Big Wells Project area in Zavala and Dimmit Counties, Texas. Turnkey has approximately a 13.2 percent working interest in the 2,530-acre play which directly offsets a commercial well that Turnkey drilled for the same operator. The well will be completed in the near future.

Exploitation Project, Louisiana

Turnkey previously announced its plans to engage in a 6,000-acre Gulf Coast oil play designed to redevelop an abandoned onshore Louisiana field. Turnkey has 100 percent working interest in the play and has been focusing its activity on leasing key acreage for the play. At least 70 percent of the acreage in the play has now been acquired and the first well will be drilled before the end of the year. Turnkey is also engaged in securing additional acreage in and around the project area with farm-ins and options.

The Management Discussion and Analysis and the September 30, 2006 Interim Financial Statement for Turnkey are posted on 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