TMX group

Mar. 29, 2011 (Canada NewsWire Group) --

CALGARY, March 29 /CNW/ - Sea Dragon Energy Inc. ("Sea Dragon" or the "Company") (TSXV: SDX) is pleased to announce its 2010 annual and fourth quarter financial and operating results.   All dollar values are expressed in United States dollars unless otherwise stated.

Highlights:

• Increased Proved plus Probable reserves by 382 percent to 8.2 million boe from 1.7 million boe in 2009;
• Increased net asset value by 280 percent to $91.3 million from $24.0 million in 2009;
• Replaced 2010 production 10 times with Proved reserves and 19 times with Proved and Probable reserves;
• Achieved an average production of 1,001 bopd as compared to 67 bopd in 2009;
• Increased 2010 operating netback to $9.1 million from $0.1 million;
• Attained a Top quartile finding and development costs ("F&D") of $3.79 bbl per boe on a Proved plus Probable basis with a netback recycle ratio of 6.6;
• Attained an attractive finding, development and acquisition ("FD&A") costs of $10.11 per boe on a Proved plus Probable basis with a netback recycle ratio of 2.5;
• Exited the year with cash and cash equivalents of $14.8 million and working capital of $15.7 million and no debt;
• Closed the acquisition of a fifty percent (50%) working interest in the Kom Ombo Concession for approximately $44.5 million in late April 2010;
• Closed year-end with sufficient funds to cover the 2011 Capital Program of $12.4 million.

FINANCIAL & OPERATING HIGHLIGHTS

The following table provides a summary of Sea Dragon's financial and operating results for the three and twelve month periods ended December 31, 2010 and 2009. Consolidated financial statements with Management's Discussion and Analysis ("MD&A") are now available on the Company's website at www.seadragonenergy.com and on SEDAR at www.sedar.com.

CEO's Message:

Sea Dragon started 2010 with a focused strategy of populating the Company with the right management, additional producing assets and exploration prospects to enhance shareholder value. The transformational strategy has begun to show results:

• Significant increase in production with a 2010 average rate of 1,001 bopd compared to 67 bopd in 2009;
• Impressive drilling results in both of the Company's concessions with an 88% success rate;
• Increased Proved plus Probable reserves by 382 percent to 8.2 million boe from 1.7 million boe in the prior year;
• Top quartile finding and development costs of only $3.79 per barrel of Proved and Probable reserves;
• Achieved FD&A costs of $10.11 per boe with a recycle ratio of 2.5;
• Increased net asset value by 280 percent to US$91.3 million from US$24.0 million in 2009.

In late 2009, Sea Dragon Energy reshaped its strategy to focus on building a solid reserve and production base in Egypt. The strategy culminated with the successful acquisition of a 10 percent (10%) working interest in the onshore Gulf of Suez North West Gemsa Concession ("NW Gemsa"), and a 50 percent (50%) working interest in the large Kom Ombo Concession in South Egypt. In addition to the property acquisition, the Company recruited the key executives from Centurion Energy (Centurion sold to Dana Gas in 2006 for $1.2 billion) including Tony Anton as President and COO (former COO of Centurion) and Mike Zayat (former VP Exploration of Centurion) with the intention of replicating the success of Centurion and ultimately increasing shareholder value.

Sea Dragon is determined to build a portfolio of opportunities to sustain growth and create shareholder value. The Company has developed an aggressive approach to expand its activities, and pursue and capture opportunities within Egypt as well as outside of Egypt.   In 2010, the Company has laid the foundation for an exciting 2011 and intends on growing the Company into a preeminent intermediate oil and gas company with operations in several countries.  In 2011, the Company believes shareholders will begin to see an increase in production, cash flow and shareholder value as the Company begins to exploit the large reserve and resource base it captured in just over a year since the transformation strategy began.

Year in Review:

North West Gemsa:

In the NW Gemsa the two main light oil Kareem Formations (Shagar and Rahmi) were delineated and appraised, heavier oil from the shallower reservoir was put on long term test, and a potentially new gas and condensate reservoir was discovered in the deeper Lower Rudeis Formation.  The Al Amir SE field was extended to the south with a discovery of light oil in the Kareem Formation in the Al Ola X-1 well. The presence of hydrocarbons in the Lower Rudeis Formation in both Al Amir SE #6 and Al Ola X-1 bodes well for discovering additional reserves in the deeper prolific Nubia Formation.  During 2011, the Al Amir SE field will undergo pressure maintenance through water injection, preservation of associated gas and stripping of hydrocarbon liquids.  The Company's $5.0 million capital expenditure program includes, but is not limited to, expanding the production facilities, building a 20 km six inch gas line, the drilling of up to four water injection wells and up to two development wells and the building of gas compression facilities.

Kom Ombo:

In Kom Ombo, development of the established reservoirs continued in the Al Baraka field, additional   shallow and deeper oil pay zones were discovered and placed on production. As a result of the 2010 drilling campaign and interpretation of the newly acquired seismic, several new prospects and leads were mapped and added to the Company's prospect inventory.  During 2011, Company's $7.4 million capital expenditure program includes, but is not limited to, the drilling of five additional development wells, several work overs and fracs, and up to two exploration wells outside of the development lease.

Reserves:

Reserve estimates have been calculated in compliance with the National Instrument 51-101 Standards of Disclosure ("NI 51-101").  Under NI 51-101, Proved reserves are those that can be estimated with a high degree of certainty to be recoverable.  It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves. In accordance with NI 51-101, Proved Undeveloped reserves have been recognized in cases where plans are in place to bring the reserves on production within a short, well defined time frame.  Proved Undeveloped reserves often involve infill drilling into existing pools. Probable reserves are those additional reserves that are less certain to be recovered than proved reserves.  It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of estimated proved plus probable. Possible reserves are those additional reserves that are less certain to be recovered than probable reserves.  It is unlikely that the actual remaining quantities recovered will exceed the sum of the estimated proved plus probable plus possible reserves.

Of the net present value of the Company's reserves, 100 percent were evaluated by independent third party engineers, Gaffney, Cline & Associates Ltd ("GCA") and Ryder Scott Company Canada ("Ryder Scott") in their reports dated March 11, 2011 and February 25, 2011, respectively.

The disclosures required in accordance with National Instrument 51‐101 of the Canadian Securities Administrators will be available in the Company's Annual Information Form to be filed on the SEDAR website at www.sedar.com within the next 48 hours.

The Company also announces that David Wilson has tendered his resignation as a director for personal reasons. The Company wishes to thank David for his contribution to Sea Dragon over the past several years and wishes him the best in his future endeavors.

Certain statements contained in this press release constitute "forward-looking statements" as such term is used in applicable Canadian and US securities laws. These statements relate to analyses and other information that are based upon forecasts of future results, estimates of amounts not yet determinable and assumptions of management. In particular, statements concerning the 2011 drilling and capital expenditure programs of the NW Gemsa and Kom Ombo Concessions and the results referenced or implied herein should be viewed as forward-looking statements.

Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or are not statements of historical fact and should be viewed as "forward-looking statements".  All reserves information contained herein as well as the net present value of such reserves should be considered as forward looking statements. Such forward looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  Such risks and other factors include, among others, costs and timing of exploration and production development, availability of capital to fund exploration and development and political, social and other risks inherent in carrying on business in Egypt.  There can be no assurance that such statements will prove to be accurate as actual results and future events could vary or differ materially from those anticipated in such statements.  Accordingly, readers should not place undue reliance on forward-looking statements contained in this news release.

Forward-looking statements are made based on management's beliefs, estimates and opinions on the date the statements are made and the Corporation undertakes no obligation to update forward-looking statements and if these beliefs, estimates and opinions or other circumstances should change, except as required by applicable law. Although Sea Dragon has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Investors are cautioned that such forward-looking statements involve risks and uncertainties.  Actual results may differ materially from those currently anticipated.  See Sea Dragon's Annual Information Form for the year ended December 31, 2010 for a description of the risks and uncertainties associated with the Company's business, including its exploration activities. The forward-looking statements contained herein are expressly qualified by this cautionary statement.

A "boe" conversion ratio of 6 Mcf of natural gas = 1 barrel of oil has been used and is based on the standard energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

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