Veteran Resources Inc.
TSX : VTI

Veteran Resources Inc.

May 24, 2005 13:12 ET

Veteran Resources Inc. Announces $11 Million Increase to Credit Facilities

CALGARY, ALBERTA--(CCNMatthews - May 24, 2005) - Veteran (TSX:VTI) ("Veteran" or the "Company") is pleased to announce that the National Bank of Canada has completed its annual review of the Company's reserves. As a reflection of the Company's reserve additions from a highly successful winter drilling program, the bank increased Veteran's credit facilities from $16 million to $27 million.

Veteran recently completed an active winter drilling program which resulted in expenditures of $10.0 million in the first quarter from a total 2005 capital budget of $16.0 million. As discussed in a May 13, 2005 press release, these expenditures contributed to an 86 percent increase in Veteran's reserves over totals at December 31, 2004, adding 2,169,000 barrels of oil equivalent. The success of the winter drilling program led to an acceleration of capital expenditures, resulting in the expenditure of 63 percent of the 2005 annual capital budget in the first quarter. Total debt, including working capital deficiency, at March 31, 2005 was $16.3 million.

The Company's estimated cash flow for the last three quarters of 2005 of approximately $11 million, augmented by the $1.3 million proceeds from the sale of Barons, Alberta assets on April 29, 2005 is double Veteran's remaining capital commitments from its 2005 budget. Excess cash flow and proceeds from non-core property sales will continue to reduce the Company's bank debt throughout 2005. It is expected that 2005 year-end total debt will be under $10 million, providing the Company the flexibility to expand the capital program to fund activities under the recently announced Peace River Arch exploration joint venture.

Caution to Reader

This report contains forward-looking statements and the reader is cautioned not to place undue reliance on these statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur. Although Veteran believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. These statements are based on current expectations that involve a number of risks and uncertainties including but not limited to: the risks associated with the oil and gas industry (e.g., operational risks in development, exploration, and production; the uncertainty of reserve estimations; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety, and environmental risks), commodity price and exchange rate fluctuations 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 Veteran's operations or financial results are included in Veteran's reports on file with regulatory authorities. The Company cautions that events or circumstances could cause actual results to differ materially from those projected. Particular risks related to the forward-looking statements addressed above are:

- Actual drilling results achieved in 2005 may differ from the levels of risk assigned by the Company, or the Company's drilling program could change if results are not as estimated, which will affect estimates of production volumes and cash flows.

- Actual prices received by the Company for its commodity sales may differ from the pricing estimates used in projections, based upon forecasts utilized by the Company's independent reservoir engineers Sproule Associates Limited, which will affect estimates of cash flows.

- The average estimated 2005 foreign exchange rate, based upon a forecast utilized by the Company's independent reservoir engineers Sproule Associates Limited, may differ from actual exchange rates for the year, which will affect estimates of cash flows.

- Actual interest rates may differ from estimates used by the Company which will affect estimates of cash flows.

- The cost of materials and services required to complete the 2005 drilling program may differ from cost estimates used by the Company. If this difference is significant, there may be an impact on the number of wells drilled in 2005 by the Company.

- The cost of materials and services required to operate producing wells may differ from cost estimates used by the Company which will affect estimates of cash flows.

Conversion

Boe's are derived by converting natural gas to oil in the ratio of 6 mcf to 1 bbl. Boe's may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf to 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent an equivalency at the wellhead.

Contact Information

  • Veteran Resources Inc.
    Philip J. Loudon
    President and Chief Executive Officer
    (403) 699-8629
    or
    Veteran Resources Inc.
    J. Peter Henry
    Vice President and Chief Financial Officer
    (403) 699-8632
    Website: http://www.veteranresources.net