CALGARY, ALBERTA--(CCNMatthews - July 25, 2006) - Spitfire Energy Ltd. (TSX VENTURE:SEL) is pleased to announce its financial and operating results for the fiscal year ending March 31, 2006.
Spitfire achieved record production, revenue and cash flow in 2006 both in total and on a per share basis. The company focused on internally generated opportunities and strategic acquisitions, enabling Spitfire to add significant value for shareholders. Compared with 2005, average production increased 143% to 129 barrels of oil equivalent per day (boed), revenues increased 215% to $2.3 million and cash flow increased 296% to $1.2 million. Over the same period, Spitfire's share price increased 186% from $0.35 on March 31, 2005 to $1.00 on March 31, 2006.
Operationally, Spitfire had a busy year in 2006, drilling eight (5.8 net) wells with an overall success rate of 88%. The capital program resulted in the discovery of two new pools. Spitfire has an inventory of drilling prospects and 16,192 net acres of undeveloped land in Alberta and Saskatchewan.
Although production in the fourth quarter was adversely affected by operational issues at Fosterton in southwest Saskatchewan, Spitfire's current production has grown to approximately 325 boed, consisting of 69% crude oil. Spitfire has approximately 195 (395 unrisked) boed behind pipe awaiting facility upgrades and pipelines, for a combined production capacity of 520 boed. Since April 2006, Spitfire has drilled three (1.5 net) wells, resulting in three (1.5 net) gas wells. The company has budgeted $7 million in fiscal 2007 for land, seismic and drilling, expecting to drill 12 (7.5 net) wells. Year-end production is expected to be between 750 and 850 boed (1,200 unrisked).
2006 Highlights
- 296% increase in cash flow to $1.2 million.
- 143% increase in average production per barrel of oil equivalent per day (boed) to 129.
- 33% increase in proved plus probable reserves to 1.3 million boe.
- 147% increase in net present value of proved plus probable reserves (discounted 8% before tax).
- 42% decrease in general and administrative expenses per boe to $11.50 per boe.
- 5% decrease in operating costs per boe to $13.04.
- 56% increase in operating netback per boe to $24.31.
- Raised $2 million of equity at a cost of $8,504.
The following table provides a summary of Spitfire's results for the 12-month period ending March 31, 2005 and 2006. Spitfire's audited financial statements, Management's Discussion and Analysis and detailed information regarding Spitfire's reserves for the fiscal year ended March 31, 2006 has been electronically filed and can be accessed for viewing on SEDAR at www.sedar.com and on the Company website, www.spitfireenergy.com.
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Year Ended March 31
2006 2005 % change
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Financial
Petroleum and natural gas sales
Crude oil and NGLs $ 1,506,252 $ 663,464 127%
Natural gas $ 748,933 $ 51,853 1,344%
Net revenue $ 2,255,185 $ 715,317 215%
Cash flow from operations $ 1,183,378 $ 298,426 296%
Per share basic $ 0.05 $ 0.01 400%
Per share diluted $ 0.04 $ 0.01 300%
Net earnings (loss) $ (52,726) $ (277,993) -
Per share basic and diluted $ 0.00 $ (0.01) -
Capital expenditures $ 4,971,974 $ 3,209,748 55%
Working capital (deficit) $ (2,372,816) $ (307,271) -
Total assets $ 9,119,616 $ 4,525,268 101%
Shareholders equity (deficit) $ (908,508) $ (855,782) -
Common shares outstanding 25,804,744 20,511,011 26%
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Operating
Realized prices
Crude oil and NGLs ($/bbl) $ 44.21 $ 36.91 20%
Natural gas ($/mcf) $ 9.10 $ 6.79 34%
Total ($/boe) $ 47.07 $ 37.16 27%
Operating netbacks $ 24.31 $ 15.61 56%
Average production
Crude oil and NGLs (bbls/d) 93 50 86%
Natural gas (mcf/d) 216 18 1,100%
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Total (boed) 129 53 143%
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Spitfire Energy Ltd. is a junior oil and gas company engaged in the exploration, development and production of natural gas and crude oil reserves. Spitfire's common shares trade on the TSX Venture Exchange under the symbol "SEL".
This press release contains forward-looking statements that are based on current expectations. There are a number of risks and uncertainties associated with the oil and gas industry that could cause actual results to differ materially from those anticipated.
A barrel of oil equivalent, derived by converting gas to oil using a ratio of six thousand cubic feet of gas to one barrel of oil, 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.
FOR FURTHER INFORMATION PLEASE CONTACT:
Spitfire Energy Ltd.
Keith N. Chase
President and Chief Executive Officer
(403) 205-3400 x224
Spitfire Energy Ltd.
Danny Zivkusic
Chief Financial Officer
(403) 205-3400 x228
Website: www.spitfireenergy.com
