Shona Energy Company, Inc. Announces 2011 Year End Results

    




 CALGARY, April 27, 2012 /CNW/ - Shona Energy Company, Inc. (SHO-TSX.V)  ("Shona" or the "Company"), today announced its financial results and operational highlights for  the year ended 2011. 

 "Our most significant accomplishment last year was the commercialization  of our Nelson gas asset, which at current delivery rates and prices, is  expected to generate approximately US$25 million in revenues in 2012,"  said James L. Payne, CEO of Shona Energy. "In 2012, we will be focused  on gas marketing activities to obtain maximum value from our producing  Colombian assets, and on business development initiatives to identify  additional regional and international opportunities for growth." 

 Operational Highlights 

 Since January 2011, the Company has: 




        --  Drilled two successful wells in the Nelson field and upgraded
            the production facilities to deliver the increased volumes;
        --  Successfully negotiated gas sales contracts to sell 14 million
            cubic feet per day (Mmcf/d) from the Esperanza Block;
        --  Initiated sales of increased volumes under the new contracts on
            December 1, 2011, and delivered 11.7 Mmcf/d in December;
        --  Raised $44.8 million in equity through brokered private
            placements;
        --  Successfully completed a reverse-takeover transaction with
            Rodeo Capital II Corp resulting in a listing on the TSX Venture
            Exchange under the symbol "SHO" and
        --  Ended the year with 2P Reserves of 95 billion cubic feet (Bcf)
            and possible reserves(1) of 78 Bcf as estimated by independent
            third party, Collarini Associates.




 ((1))  Possible reserves are those additional reserves that are less certain  to be recovered than probable reserves. There is a 10% probability that  the quantities actually recovered will equal or exceed the sum of  proved plus probable reserves. 

  

 Natural Gas Reserves as at January 1, 2012* 





                            Natural Gas Reserves (MMcf)

                                                       

                              Gross                 Net

    Proved                                             

    Developed Producing      40,599              37,189

    Developed Non-Producing     463                 424

    Undeveloped              29,206              26,753

    Total Proved             70,268              64,366

                                                       

    Probable                                           

    Developed Producing      17,256              15,807

    Developed Non-Producing   1,125               1,031

    Undeveloped              15,420              14,125

    Total Probable           33,801              30,963

    Proved Plus Probable    104,069              95,329






  

 *Breakdown on reserves as per Collarini Associates NI 51-101 compliant  reserves report effective January 1, 2012 

 Outlook 

 Shona anticipates the following activities to occur in the remainder of  2012: 




        --  Advancing an ongoing 100 km2 3D seismic survey on the Esperanza
            Block to help determine potential for additional supply
            capacity;
        --  Initiating long-term production testing of the Boa Prospect,
            located in Block 102 in Peru, in May 2012;
        --  Continuing evaluation of options to the sell and market
            additional gas capacity;
        --  Evaluating new ventures in South America and internationally;
        --  Evaluating potential for mergers and acquisitions; and
        --  Possible drilling at the Serrania Block in late 2012.




  





    Selected Financial and                                       
    Operating Information

                                                                 

                                    2011             2010         2009 (2)

    FINANCIAL                                                              

                                                                           

    Natural gas revenues    $    4,009,054   $    1,852,265   $   1,570,320

    Income (loss) from        (29,244,601)      (9,416,285)     (3,514,318)
    operations

                                                                           

    Net income (loss)         (29,860,517)     (10,832,403)     (3,368,819)

      Per share (basic and          (0.15)           (0.07)               -
      diluted)

    Total assets                87,071,316       65,966,624      27,603,545

                                                                           

    Long-Term Debt              16,410,851       15,876,407               -

                                                                           

    Share Capital                                                          

      Common - voting          180,594,389      163,834,448     108,874,042

      Common - non-voting       54,173,451                -               -

      Series A 10%                 175,939          159,971               -
      Convertible Preferred

      Warrants                  40,145,993       40,145,993       8,949,473

                                                                           

    OPERATING                                                              

                                                                           

    Production                                                             

      Natural Gas - Mcf            891,780          503,045         519,686

      Natural Gas - Mcf/d            2,443            1,378           1,424

                                                                           

    Realized prices - $/Mcf $         4.50   $         3.68   $        3.02

                                                                           

    Operating Netback                                                      
    ($/Mcf)

      Natural Gas Revenue             4.50             3.68            3.02

      Royalties                     (0.55)           (0.58)          (0.26)

      Production Expense            (2.14)           (1.74)          (1.04)

      Operating Netback     $         1.81   $         1.36   $        1.72

                                                                           






 ((2))  All 2009 amounts are reported under U.S. GAAP and are not adjusted to  IFRS 

  

 Financial Review 

 The increase in revenues in 2011 compared with 2010 is largely  attributable to higher sales volumes from the Nelson field which  commenced on December 1, 2011, resulting in additional revenue of $1.4  million. Higher gas sales price due to the redetermination of the La  Guajira price to $4.26 per Mcf on February 1, 2011 and $5.81 on August  1, 2011 accounted for $0.7 million of incremental natural gas revenue  for the year ended 2011. 

 The increase in production expense in 2011 compared with 2010 is due to  the upgrade of the Esperanza production facility and the addition of  personnel needed to deliver higher volumes from the Nelson field, which  commenced sales in December 2011. The increased royalty expense in 2011  was due to higher sales revenues. 

 The average depletion, depreciation and amortization (DD&A) expense rate  per Mcf decreased from $1.97 per Mcf in 2010 to $1.84 per Mcf in 2011  due to the commencement of sales from the Nelson field on December 1,  2011, which has larger natural gas reserves and consequently a lower  amortization expense rate per Mcf than the older fields.  Total DD&A  increased $0.7 million in 2011 due to the increased sales which was  partially offset by $0.2 million reduction due to the lower DD&A rate. 

 In 2011, impairment of the investment in the Ramshorn International B  shares was $9.0 million and direct investment in Block 102 was $3.0  million due to the limited results from the tests on the Boa Oeste-1X  well which was drilled in the last half of 2011.  Shona is currently in  the process of conducting a long-term production test on the Boa  prospect in an effort to understand its potential. The test is expected  to commence in May and once the Company has the data from that test,  management expects to be able to make a decision with respect to next  steps with the asset. A decision is expected in the third quarter of  2012.  In 2011, Shona also fully impaired the $6.3 million costs of its  2010 Esperanza Block seismic program due to the small size of prospects  identified. In 2010, the cost incurred to drill the Norman #1 well on  the Esperanza Block in Colombia, which was plugged and abandoned, was  $3.2 million. 

 In 2011, G&A expenses included $2.5 million related to legal, accounting  and consulting fees to complete the RTO and expensing a portion of the  equity issued to the former shareholders of Rodeo Capital II Corp. The  increase in G&A expenses from 2010 to 2011 is also attributed to an  increase in Colombian overhead cost of $0.6 million and higher costs  incurred in the U.S. associated with the ongoing requirements for a  public company. 

 In 2011, there was a $1.2 million expense related to an equity tax in  Colombia.  The tax was based on the equity of Shona's Colombian  subsidiaries as of January 1, 2011, which will be paid over a four year  period in equal payments each year. 

 At December 31, 2011, Shona had unrestricted cash of $21.4 million and  current working capital of $16.9 million. Concurrent with the closing  of the reverse takeover, a private placement raised $30.6 million and  45,961,731 common shares were issued. 

 About Shona 

 Shona is an international oil and natural gas exploration, development  and production company focusing on South America, specifically Colombia  and Peru. The Company's assets currently include interests in the  Company-operated Esperanza block located in Colombia's Lower Magdalena  Basin, the non-operated Serrania, Los Picachos and Macaya Blocks in  Colombia's Caguan Basin, and the non-operated Block 102 in Peru's  Maranon Basin. The common shares of the Company trade on the TSX  Venture Exchange under the stock symbol "SHO". More information on the  Company is available at www.shonaenergy.com. 

 Cautionary Statements 

 Certain information included in this press release constitutes  forward-looking information under applicable securities legislation.   Such forward-looking information is provided for the purpose of  providing information about management's current expectations and plans  relating to the future. Readers are cautioned that reliance on such  information may not be appropriate for other purposes, such as making  investment decisions. Forward-looking information typically contains  statements with words such as "anticipate", "believe", "expect",  "plan", "intend", "estimate", "propose", "project" or similar words  suggesting future outcomes or statements regarding an outlook.  Forward-looking information in this press release may include, but is  not limited to, expectations regarding future oil and gas production  from the Company's properties, the production capacity of the Company's  properties, the anticipated use of seismic data and exploration and  development plans on properties in which the Company holds an  interest.  Forward-looking information is based on a number of factors  and assumptions which have been used to develop such information but  which may prove to be incorrect.  Although Shona believes that the  expectations reflected in such forward-looking information is  reasonable, undue reliance should not be placed on forward-looking  information because Shona can give no assurance that such expectations  will prove to be correct. In addition to other factors and assumptions  which may be identified in this press release, assumptions have been  made regarding and are implicit in, among other things: the ability of  Shona to complete transactions described in this press release, the  timely receipt of any required regulatory approvals, the performance of  existing wells and success obtained in drilling new wells, anticipated  expenses, cash flow and capital expenditures, the application of  regulatory and royalty regimes and prevailing commodity prices and  economic conditions.  Readers are cautioned that the foregoing list is  not exhaustive of all factors and assumptions which have been used.  Shona undertakes no obligation to update forward-looking statements if  circumstances or management's estimates or opinions should change,  unless required by law. Actual results could differ materially from  those currently anticipated due to a number of factors and risks. These  include, but are not limited to, risks associated with the oil and gas  industry in general (e.g., 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 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. 

 All dollar references in this press release are to U.S. Dollars. 

 Neither the TSX Venture Exchange nor its Regulation Services Provider  (as that term is defined in the policies of the TSX Venture Exchange)  accepts responsibility for the adequacy or accuracy of this press  release.   

Shona Energy Company, Inc.


CONTACT:  please contact either of the following individuals:David Gian, Treasurer & Investor RelationsShona Energy Company, Inc.Houston, Texas713-622-8809Shetal Mentlewski, VP Admin & LegalShona Energy Company, Inc.Houston, Texas713-622-8809 


    

Copyright