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Share Name | Share Symbol | Market | Type |
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Stonefire Energy Corp | TSXV:SFE.B | TSX Venture | Ordinary Share |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 0.00 | - |
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES. Stonefire Energy Corp. (the "Corporation" or "Stonefire") (TSX VENTURE:SFE.A) (TSX VENTUERE:SFE.B) is pleased to announce that it has filed on SEDAR its unaudited financial statements and related management's discussion and analysis ("MD&A") for the three month and nine month periods ended September 30, 2008. Selected operational and financial results are outlined below and should be read in conjunction with Stonefire's unaudited financial statements and related MD&A which can be found at www.sedar.com. Financial and Operating Highlights ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Three months ended Nine months ended Sep 30, 2008 Sep 30, 2007 Sep 30, 2008 Sep 30, 2007 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ($ except share (unaudited) (unaudited) (unaudited) (unaudited) amounts) FINANCIAL Petroleum and natural gas revenue $ 5,385,975 $ 412,738 $ 12,796,008 $ 1,160,002 Funds flow from (used in) operations (1) 2,795,950 (24,135) 5,945,661 (41,642) Per share, basic (1) 0.12 0.00 0.25 0.00 Net income (loss) 781,426 (245,681) 1,343,673 (742,568) Per share, basic 0.03 (0.01) 0.06 (0.03) Capital expenditures $ 8,688,403 $ 5,578,624 16,364,955 13,881,262 Working capital deficit (end of period) $ (18,111,215) $ (5,828,846) Shares outstanding (end of period) Class A, including shares under share purchase loans 18,265,000 15,265,000 Class B 1,012,000 1,012,000 Options 1,775,000 1,421,000 Weighted average shares outstanding Class A 18,202,500 15,265,000 18,202,500 14,164,194 Class B 1,012,000 1,012,000 1,012,000 1,012,000 Conversion of Class B shares (2) 4,458,270 9,108,000 4,458,270 9,108,000 Weighted average basic shares outstanding 23,672,770 25,385,000 23,672,770 24,284,194 ------------ ------------ ------------ ------------ Class A share trading High $ 2.75 $ 2.29 Low 0.65 0.95 Close $ 1.85 $ 1.00 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- OPERATIONS Production Crude oil (bbls/d) 81 - 27 - Natural gas liquids (bbls/d) 137 26 121 21 Natural gas (mcf/d) 4,318 516 3,369 433 Total (boe/d at 6:1) 938 112 710 94 Reference prices WTI (US$ per bbl) $ 117.98 $ 75.38 $ 113.29 $ 66.23 AECO (Cdn$ per GJ) 7.34 4.91 8.17 6.21 Average selling price Crude oil (per bbl) 111.14 - 111.14 - Natural gas liquids (per bbl) 95.89 64.58 92.90 58.23 Natural gas (per mcf) 8.42 5.49 9.63 6.92 Operating netback (per boe at 6:1) 37.54 18.52 37.62 21.48 Funds flow netback (per boe at 6:1) $ 32.40 $ (2.34) $ 30.56 $ (1.62) (1) Management uses funds flow from operations (before changes in non-cash working capital) to analyze operating performance and leverage. Funds flow from operations as presented does not have any standardized meaning prescribed by Canadian generally accepted accounting principles (GAAP) and, therefore, may not be comparable with the calculation of similar measures by other entities. (2) For the period ended September 30, 2008, the Class B shares are converted at the period-end Class A share price of $1.85 (2007 - $1.00) and added to the Class A shares to calculate basic shares outstanding. 2008 Third Quarter Corporate Highlights - Average production of 938 boe per day, an increase of 738 percent over Q3 2007 production of 112 boe per day and a record high quarterly rate. - Continued exploration success in the quarter with the drilling of three (3.0 net), exploration wells in the Edson exploration area. - Record high funds flow of $2.8 million with an operating netback of $37.54 per boe in the quarter. - Strengthened financial capacity, with lines of credit increased from $17.0 million to $30.0 million late in the quarter. - Drilled the Corporation's first new oil pool discovery at Edson. This 100 percent working interest Edson oil well is producing 39.1 degrees API light sweet oil at rates in excess of 300 bbls per day. - Capital spending of $8.7 million for the quarter with the majority spent on drilling, completion and the tie-in of 3.0 net wells. - Average operating costs of $4.77 per boe for the quarter, 47 percent lower than in Q3 2007. Operating costs are forecasted to continue to decline as production and operating efficiencies increase. - Completed a corporate reserves update to September 30, 2008 indicating that the Corporation's proved plus probable reserves have more than doubled. All-in finding and development costs per boe of reserves added in 2008 are on-track to be lower than in previous years. President's Message It is a great pleasure to report on Stonefire's activities during the third quarter of 2008. During the quarter Stonefire continued to experience success in executing its business growth plan, delivering record production, record cash flow and continued exploration success. Average production for the quarter of 938 boe per day represented a 738 percent increase over the third quarter of 2007 and a 30 percent increase over the second quarter of 2008. Production exceeded the Corporation's prior third-quarter guidance of 900 boe per day in spite of the shut-in of approximately 225 boe per day at McLeod for most of July due to a third-party pipeline disruption. With the new Edson light oil discovery well on production with GPP status Stonefire's current total production is approximately 1,300 boe per day of which one third is light oil and natural gas liquids. Current production now exceeds the Corporation's previous guidance for a 2008 exit rate of 1,000 boe per day and Stonefire is on track to exceed all targets originally set for 2008 including the average production rate of 800 boe per day for the year. Stonefire enjoyed significant exploration success in the quarter, drilling three 100 percent working interest exploration wells. Two wells were drilled in the Corporation's core Edson field. The first was a successful multi-zone gas well with an initial production rate of approximately 1.0 mmcf per day which is tied-in to Stonefire's 100 percent working interest Edson gas plant. The second well made a significant light oil pool discovery. It encountered over 12 metres of net pay and was completed as a flowing oil well with rates as high as 400 bbls per day of sweet 39.1 degrees API oil. The well received GPP (Good Production Practice) status for October from the ERCB, allowing it to produce at unrestricted rates. The well is currently flowing at a restricted rate of 300 bbls per day of clean oil with solution gas tied-in to Stonefire's Edson gas gathering system. This promising discovery has triggered a major follow-up program and the Corporation is currently preparing drilling locations for up to four offset wells. The first of these delineation wells spud in late-October 2008. Stonefire's third well drilled in the third quarter was in the Leaman field. The 100 percent working interest exploration well was cased and completed in the target zone which proved to be oil and gas-bearing but with lower permeability than anticipated. It has potential as a lower rate well and is currently shut-in while Stonefire evaluates production options. Capital expenditures for the quarter totaled $8.7 million with the majority ($8.1 million) spent on the drilling, completion and tie-in of the 3.0 net exploration wells. Operating costs averaged $4.77 per boe down significantly from $6.77 per boe in the second quarter due to increased production and operating efficiencies at the Corporation's core Edson area. Operating costs per unit of production are expected to continue declining with increasing production rates. The Corporation delivered record cash flow from operations of $2.8 million with operating netbacks averaging $37.54 per boe. The Corporation also posted net earnings of $0.78 million. Also in the quarter Stonefire's bank lines were increased from $17 million to $30 million. With current net debt and working capital deficiency totaling only $18.1 million, plus its rising cash flow, the Corporation has significant financial flexibility to carry out its capital expenditure plans. As a result of its strong successes in 2008 Stonefire has increased its capital budget for the year from the original forecast of $12 million to a planned total of $18-$20 million. Looking forward the Corporation is on track to exceed all targets originally set for 2008 and is very well-positioned to deliver continued organic growth in 2009 using its cash flow and existing bank lines. At present the Corporation is preparing for the drilling of up to 3.0 gross (2.5 net) wells before year-end 2008. Stonefire's 100 percent working interest gas plant at Edson is nearing full capacity and preliminary engineering is underway for a possible plant expansion in 2009. Following the exploration success in 2008 the Company's drilling inventory stands at 42 gross (30.0 net) locations many of which are now lower-risk development gas wells and delineation oil wells at Edson. In spite of recent volatility in commodity prices and equity markets, Stonefire remains on firm footing to execute its business growth plan. The Corporation operates all its capital projects and 98% of current production, and controls the majority of its gas processing through its 100 percent gas plant at Edson, which means it is not vulnerable to project cancellations or schedule changes imposed by operating partners. The Corporation's low and declining operating costs provide a cushion against volatile commodity prices. Stonefire's long-life production base is solid with multiple producing zones per well and no water production in this Deep Basin area of Alberta. The resulting overall low cost structure and stable production base create a strong foundation to cash flow should commodity prices continue to soften. Just as oil and gas prices likely overshot to the high side in mid-2008, the reverse appears to now be happening at present, overshooting to the low side at the end of Q3 2008. I believe that in the near future market forces and the fundamentals of supply and demand will bring commodity prices back to somewhere around the middle of the range, hopefully with somewhat less volatility. In the meantime Stonefire has significant unused credit lines available and a large inventory of high-quality drilling prospects. With our high average working interest, low finding costs and control of all capital spending we can react quickly and appropriately to developing market conditions to ensure continued success and value creation. Stonefire Energy Corp. is an Alberta-based company formed to participate in oil and gas exploration, development and acquisitions focusing in the West Central region of Alberta. The Company's shares trade on the TSX Venture Exchange under the symbols SFE.A and SFE.B. The Company currently has 18,265,000 Class A shares and 1,012,000 Class B shares outstanding. As referred to above, to view a full copy of the Corporation's unaudited financial results for the period ended September 30, 2008, including the Corporation's unaudited financial statements and accompanying MD&A, please refer to the SEDAR website at www.sedar.com or on the Corporation's website at www.stonefire-energy.com. Reader Advisory This news release contains certain forward-looking statements, including management's assessment of future plans and operations, and capital expenditures and the timing thereof, that involve substantial known and unknown risks and uncertainties, certain of which are beyond Stonefire's control. Such risks and uncertainties include, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, the impact of general economic conditions in Canada, the United States and overseas, industry conditions, changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof, and obtaining required approvals of regulatory authorities. Stonefire's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits, including the amount of proceeds, that Stonefire will derive therefrom. Readers are cautioned that the foregoing list of factors is not exhaustive. All subsequent forward-looking statements, whether written or oral, attributable to Stonefire or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and Stonefire does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws. Petroleum and natural gas volumes are converted to an equivalent measurement basis referred to as a "barrel of oil equivalent" (boe) on the basis of 6 thousand cubic feet of natural gas equalling 1 barrel of oil. This is based on an energy equivalency conversion method applicable at the burner tip and does not necessarily represent a value equivalency at the wellhead. Readers are cautioned that boe figures may be misleading, particularly if used in isolation. To request a free copy of Stonefire's financial report or if you would like to be put on Stonefire's mailing list please contact Ronald Williams, Vice President, Finance and CFO at rwilliams@stonefire-energy.com.
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