Valiant Energy Inc.
TSX : VLE

Valiant Energy Inc.

August 10, 2006 20:10 ET

Valiant Energy Reports Q2 Results and Provides an Operations Update

CALGARY, ALBERTA--(CCNMatthews - Aug. 10, 2006) - Valiant Energy Inc ("Valiant" or the "Company") (TSX:VLE) releases its June 30, 2006 second quarter results. The unaudited financial statements, notes and MD&A are filed on SEDAR and are available on Valiant's website on the 'Investor Information - Financial Statements' page.



Highlights
2006 2005
-----------------------------------
Q2 Q1 Q4 Q3
------------------------------------------------------------------------
Production
Natural gas (mcf/d) 3,126 3,192 2,815 1,549
Oil and natural gas liquids (bbls/d) 601 683 749 410
Barrels of oil equivalent (boe/d) 1,122 1,215 1,219 668

Financial ($000s except as
indicated)
Petroleum and natural gas revenue 4,775 4,960 6,263 3,293
Revenue net of royalties 3,928 3,786 4,372 2,681

Cash flow from operations 1,875 1,677 2,693 1,655
Per share basic ($) 0.11 0.10 0.16 0.11
Per share diluted ($) 0.11 0.10 0.16 0.10

Net earnings (loss) (430) (1,051) (202) (62)

Total assets 67,091 64,301 61,296 50,309
Capital expenditures 3,550 7,354 10,658 10,533
Net debt and working capital
(deficiency) (14,996) (13,294) (7,619) (5,228)
Total liabilities (24,770) (21,719) (15,813) (10,919)

Shares outstanding (000s) 17,277 17,277 17,277 16,186

Per unit information
Natural gas revenue ($/mcf) 6.34 7.06 12.33 8.95
Oil and natural gas liquids revenue
($/bbl) 54.32 47.71 44.53 54.18
Oil equivalent revenue ($/boe) 46.77 45.38 55.87 53.98

Operating netback ($/boe) 25.97 24.60 29.31 33.79

Net wells drilled
Natural gas 1.07 0.25 1.07 1.23
Oil 0.61 1.33 2.68 3.12
Dry 0.20 0.82 2.00 0.25
-----------------------------------
Total 1.88 2.50 5.75 4.60

Net success rate (%) 89% 64% 65% 95%

Undeveloped land holdings (net
acres) 93,500 92,000 90,000 88,000
Average Working Interest 60% 59% 57% 57%
------------------------------------------------------------------------


- Cash flow for the quarter was $1.875 million ($0.11 per share)
compared to $1.677 million ($0.10 per share) in Q1 2006. The increase
was attributed primarily to higher realized prices for crude oil.

- On July 21, 2006 Valiant and Peerless Energy Inc. announced that their
respective Boards of Directors had unanimously approved an arrangement
agreement wherein Valiant shareholders will exchange all of their
issued and outstanding common shares for Peerless Class A shares on
the basis of 1.06 Peerless Class A share for each Valiant share. The
plan requires shareholder, court and regulatory approval and if
approved should occur on or about September 14, 2006. An information
circular with respect to this transaction is expected to be mailed to
shareholders by approximately August 15, 2006.

- Valiant drilled 5.0 (1.88 net) wells in the quarter resulting in 1.0
(0.61 net) oil well, 3.0 (1.07 net) gas wells and 1.0 (0.2 net) dry
hole.

- Valiant drilled an exploratory well in the Grand Prairie area during
the first quarter. The well was completed and placed on production
during the second quarter and is currently producing approximately
100 boe/d (60 boe/d net) of light oil.

Q2 Results

Production
Q2 2006 Q1 2006 Q4 2005 Q3 2005
------------------------------------------------------------------------
Natural gas (mmcf/d) 3,126 3,192 2,815 1,549
Oil and liquids (bbls/d) 601 683 749 410
Boe/d 1,122 1,215 1,219 668


- Production decreased by approximately 50 boe/d due to a plant
turnaround in the Progress area of Alberta.

- Since the end of the quarter production has increased to over 1,200
boe/d.

Cash Flow
Q2 2006 Q1 2006 Q4 2005 Q3 2005
------------------------------------------------------------------------
Cash flow from operations ($000's) 1,875 1,677 2,693 1,655
Per basic share ($) 0.11 0.10 0.16 0.11
Net loss ($000's) (430) (1,051) (202) (62)
Per basic share ($) (0.02) (0.06) (0.01) 0.00


- Revenue for the quarter was $4.78 million compared to $4.96 million in
Q1 2006. The decrease was due to a combination of factors including
slightly lower production and lower gas prices partially offset by
higher crude oil prices.

Capital Expenditures
Q2 2006 Q1 2006 Q4 2005 Q3 2005
------------------------------------------------------------------------
Capital expenditures ($000's) 3,550 7,354 10,658 10,533
Net wells drilled
Completions 1.68 1.46 3.75 4.35
Dry 0.20 0.82 2.00 0.25
Net success rate 89% 64% 65% 95%


- During Q2 2006 the Company drilled and completed wells at Zaller,
Saskatchewan and Mikwan, Alberta.


Liquidity

The net debt and working capital at June 30, 2006 was $15.0 million. The Company has a borrowing base line of credit of $16.0 million.

Outlook

Valiant has an inventory of more than 90 potential locations with an associated expenditure of over $60 million. Management and the Board of Valiant believe that the arrangement with Peerless will provide for a much stronger company with improved access to capital and thus better able to maximize and realize the value of its assets.

Valiant is a Calgary, Alberta based oil and gas exploration and production company. Valiant's shares trade on the Toronto Stock Exchange under the trading symbol "VLE".

FORWARD LOOKING STATEMENTS

This press release may contain forward-looking statements including expectations of future production, cash flow and earnings. These statements are based on current expectations that involve a number of risks and uncertainties, which could cause actual results to differ from those anticipated. These risks include, but are not limited to: the risks associated with the oil and gas industry (eg. Operational risks in development, exploration and production: delays or changes in plans with respect to exploration or development projects or capital expenditures: the uncertainty of reserve estimates; the uncertainty of estimates an projections relating tot production, costs and expenses and health, safety and environmental risks), commodity price and exchange rate fluctuation and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Additional information on these and other factors that could affect the Company's operations or financial results are included in Valiant's reports on file with Canadian regulatory authorities.

A barrel of oil equivalent (boe) is derived by converting gas to oil in the ratio of six thousand cubic feet of gas to one barrel of oil and may be misleading, particularly if used in isolation. A boe conversion is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Contact Information

  • Valiant Energy Inc.
    Douglas N. Baker
    Chief Financial Officer
    (403) 237-5163
    Email: dbaker@valiantenergy.ca
    or
    Valiant Energy Inc.
    Tom MacKay
    Chairman and Chief Executive Officer
    (403) 237-5163
    Email: tmackay@valiantenergy.ca
    or
    Valiant Energy Inc.
    2400, 500 - 4th Avenue S.W.
    Calgary, Alberta T2P 2V6
    (403) 237-5163
    (403) 237-5256 (FAX)
    Website: www.valiantenergy.ca