Pilot Energy Ltd. -Second Quarter 2007 Results

Pilot Energy Ltd. (TSX VENTURE:PGY):



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Highlights                         Three Months Ended      Six Months Ended
                                        June 30               June 30
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                                   2007   2006  % Chg    2007   2006  % Chg
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FINANCIAL
($ thousands, except per share
 amounts)

Revenue                           3,783  4,683    (19)  7,409  8,474    (13)

Funds from operations(1)          1,509  1,931    (22)  2,621  3,402    (23)
 Per share - basic                 0.08   0.10    (22)   0.13   0.17    (23)
 Per share - diluted               0.08   0.10    (22)   0.13   0.17    (23)

Net income                          149    628    (76)      5    820    (99)
 Per share - basic                 0.01   0.03    (76)   0.00   0.04    (99)
 Per share - diluted               0.01   0.03    (76)   0.00   0.04    (99)

Capital expenditures              1,323  3,654    (64)  1,571  5,544    (72)
Debt (including working capital)                       10,704 12,064    (11)
Shares outstanding (000's)                             22,071 19,736     12
Weighted average shares
 outstanding (000's)
  basic                          19,630 19,690      -  19,683 19,736      -
  diluted                        19,828 19,939     (1) 19,880 19,986     (1)

OPERATING

Daily production
 Oil and NGLs (bbl/d)             663.5  737.7    (10)  676.2  752.4    (10)
 Natural gas (mcf/d)              371.1  415.8    (11)  361.6  392.0     (8)
 Oil equivalent (boe/d @ 6:1)     725.3  807.0    (10)  736.4  817.7    (10)

Operating netback ($/boe)(2)      32.93  34.38     (4)  29.83  30.86     (3)

Funds from operations ($/boe)(1)  22.86  26.30    (13)  19.66  22.99    (14)
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Notes:
(1) Funds from operations is calculated as cash provided by operating
    activities from the statement of cash flows, adding change in non-cash
    working capital and asset retirement expenditures. Funds from operations
    is used to analyze the Company's operating performance and leverage.
    Funds from operations does not have a standardized measure prescribed
    by Canadian Generally Accepted Accounting Principles and therefore may
    not be comparable with the calculations of similar measures for other
    companies.
(2) Netback is equal to total oil and natural gas revenue less royalties and
    operating costs calculated on a boe basis. Netback does not have a
    standardized measure prescribed by Canadian Generally Accepted
    Accounting Principles and therefore may not be comparable with the
    calculations of similar measures for other companies.



Quarterly Review

Operations

For the three months ended June 30, 2007, Pilot focused its efforts on
initiating its Bakken drilling program. The Company participated in the drilling
of one joint venture Bakken well (40 percent working interest), and drilled the
first of three 100 percent working interest Bakken wells. The 40 percent Bakken
well has been competed and is currently producing approximately 60 bopd (24 bopd
net) pre-stimulation. Stimulation of this well, which should increase
production, is planned prior to year-end.


The first well of the Company operated three well Bakken drilling program was
brought on production in late July. Pilot is pleased with the early results as
the well has produced an average of 260 bopd during the first month of
production. Typical production performance in the area indicates that these
wells stabilize in four to six months at approximately 40 to 60 percent of their
first month production rates. Subsequent to the end of the second quarter, Pilot
drilled the remaining two 100 percent working interest wells in the planned
program. One of the wells has now been completed and is flowing at an average
rate of 275 bopd during its first week of production. This well is expected to
be equipped with pumping equipment and tied into the 100 percent Pilot owned
Huntoon oil battery in the next few weeks. The other well drilled in the program
is currently being evaluated and further production updates will be provided
upon completion of this well. 


Pilot also focused its efforts on lowering overall operating costs. Operating
costs for the second quarter of 2007 decreased by $0.6 million or 39 percent
compared to the fourth quarter of 2006. The Company expects to continue to
reduce operating costs in subsequent quarters through a combination of planned
capital projects and by increasing volumes at several of its batteries as a
result of its summer drilling program. Forecast increases in oil volumes will
result in a significant decrease in both per barrel operating costs and per
barrel general and administrative expenses as no major facility capital is
required to produce additional volumes and no additional staff is required.


In addition, the Company has entered into arrangements with various purchasers
to sell approximately 60 boepd of non-core, high operating cost properties.
Closing of these sales will occur in the third quarter of 2007.


Outlook

The Bakken light oil play in the Viewfield area of southeast Saskatchewan
continues to be one of the most active plays in western Canada. With the large
number of wells drilled in this area in the past two years, drilling, completion
and stimulation techniques continue to improve significantly. This past quarter,
Pilot has drilled three Bakken wells and participated in a fourth well which
have proved up most of the Company's prospective Bakken acreage. Pilot is now in
a position to aggressively develop this acreage with the eventual drilling of up
to twenty-five additional Bakken wells on Company lands.


Going forward, the Company is in the process of planning a second phase of
drilling for the fall/winter of 2007 consisting of three additional 100 percent
Bakken wells. 


Management will focus its efforts on drilling the Bakken zone for the remainder
of this year based on the early success and higher than anticipated production
rates from its initial Bakken wells. Drilling programs in southeast Saskatchewan
for Frobisher targets and on the Company's Chauvin lands will be deferred until
2008.


Reader Advisory

Barrels of oil equivalent ("boe") amounts mentioned herein have been calculated
using a conversion rate of six thousand cubic feet of natural gas to one barrel
of oil. This conversion conforms to National Instrument 51-101 - Standards of
Disclosure for Oil and Gas Activities (NI 51-101). The term "boe" may be
misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf
is based on an energy equivalency conversion method primarily applicable at the
burner tip and does not represent a value equivalency at the wellhead.


Certain statements in this press release are forward-looking statements. The
reader is cautioned that assumptions used in the preparation of such
information, although considered reasonable by Pilot at the time of preparation,
may prove to be incorrect. Actual results achieved during the forecast period
will vary from the information provided herein as a result of numerous known and
unknown risks and uncertainties and other factors, many of which are beyond the
control of Pilot. There is no representation by Pilot that actual results
achieved during the forecast period will be the same, in whole or in part, as
forecast.


This news release shall not constitute an offer to sell or the solicitation of
an offer to buy the securities in any jurisdiction. The common shares of Pilot
will not be and have not been registered under the United States Securities Act
of 1933 and may not be offered or sold in the United States absent registration
or an applicable exemption from the registration requirements.


Pilot's disclosure documents can be viewed under the Company's SEDAR profile at
www.sedar.com or copies can be obtained by e-mailing the Company at
[e-mail].


Issued and Outstanding Common Shares: 22,137,960