Bengal Energy Announces Third Quarter Results



    CALGARY, Feb. 13 /CNW/ - Bengal Energy Ltd. (TSX: BNG) ("Bengal" or the
"Company") today announced its financial and operating results for the three
and nine months ended December 31, 2008. Highlights are as follows:

    
    -   Quarterly production of 205 boe/d and 203 boe/d for the nine months
        ended December 31, 2008.

    -   Quarterly revenue of $825,000 and $4,259,000 for the nine months.

    -   Quarterly earnings loss of $6,196,000 and $7,359,000 for the nine
        months, after non-cash impairment charges of $4,892,000.

    -   Quarterly funds flow from operations(2) of ($29,000) and $1,185,000
        for the nine months.

    -   Official award of NELP-VII Block CY-ONN-2005/1 in India.

    The Company recorded $1.8 million of goodwill as a result of the
acquisition of Bengal Energy Inc. on February 13, 2008. The goodwill was
determined to be impaired as a result of the decline in the trading price of
the Company's stock, making market capitalization less than book equity. In
addition the Company recorded a ceiling test impairment charge of $3.1 million
on the Company's Australian assets.

    Financial Highlights

    -------------------------------------------------------------------------
    $000's except per            Three Months Ended        Nine Months Ended
     share, volumes and   ---------------------------------------------------
      netback amounts       12/31/08  12/31/07  09/30/08  12/31/08  12/31/07
    -------------------------------------------------------------------------
    Revenue
      Natural gas            $   516   $   144   $   476   $ 1,753   $   585
      Natural gas liquids         67       104       138       411       283
      Oil                        242       708       868     2,095     1,447
    -------------------------------------------------------------------------
      Total                      825       956     1,482     4,259     2,315
    -------------------------------------------------------------------------
    Royalties                    125       111       258       739       299
      % of revenue              15.2      11.6      17.4      17.4      12.9
    -------------------------------------------------------------------------
    Operating &
     transportation              211       142       372       862       393
    -------------------------------------------------------------------------
    Netback(1)                   489       703       852     2,658     1,623
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Funds flow from
     operations:(2)              (29)      165       367     1,185        33
      Per share ($)
       (basic & diluted)       (0.00)     0.00      0.02      0.07      0.00
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net (loss):               (6,196)   (1,702)     (812)   (7,359)   (3,013)
      Per share ($)
       (basic & diluted)       (0.34)    (0.02)    (0.04)    (0.40)    (0.04)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Capital expenditures     $(1,096)  $   (77)  $ 3,823   $ 6,470   $ 1,008
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Volumes
      Natural gas (mcf/d)        842       244       609       729       332
      Natural gas liquids
       (boe/d)                    19        14        15        19        16
      Oil (bbl/d)                 46        79        69        63        59
    -------------------------------------------------------------------------
      Total (boe/d at 6:1)       205       134       186       203       130
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Netback ($/boe)(1)
      Revenue                $ 43.69   $ 77.80  $  86.53   $ 76.22   $ 64.59
      Royalties                 6.63      9.05     15.05     13.23      8.34
      Operating &
       transportation          11.16     11.51     21.73     15.43     10.96
    -------------------------------------------------------------------------
      Total                  $ 25.90   $ 57.24   $ 49.75   $ 47.56   $ 45.29
    -------------------------------------------------------------------------
    (1) Netback is a non-GAAP measure. Netback per boe is calculated by
        dividing the revenue and costs in total for the company by the total
        production of the company measured in boe.
    (2) Funds flow from operations is a non-GAAP measure. The comparable GAAP
        measure is cash flow from operations. Funds flow from operations is
        calculated as cash flow from operations before deducting changes in
        non-cash working capital.
    


    Operations Update

    In continuing the execution of our international growth strategy,
Bengal's wholly-owned subsidiary, Bengal Energy International Inc., along with
its two joint bidding partners, has received the official award of the
NELP-VII Block CY-ONN-2005/1 (the "Block") on December 22, 2008, at a formal
signing ceremony with the Government of India ("GOI"). Following this final
award of the block by the GOI and the signing of the Production Sharing
Contract, the granting of Petroleum Exploration License ("PEL") from the state
(i.e. provincial) government is expected to occur by June 2009, subsequent to
which the exploration period will commence. The Block is a 946 square
kilometer (233,761 acre) land block located in the Cauvery Basin, a proven
producing basin in southeast India. Bengal has a 30% interest in the Block.
The operator of the Block, GAIL (India) Limited, holds a 40% interest and
Gujarat State Petroleum Corporation holds a 30% interest.
    In the first year of the initial four year phase of exploration
activities in the Block, Bengal and its partners intend to undertake 2,000
kilometers of airborne magnetometry survey, reprocess 1,000 kilometers of
existing 2D seismic survey data, and complete the design of 500 square
kilometers of 3D seismic survey. Bengal's net cost exposure to this first
year's exploration activity is estimated at $330,000. Bengal will be required
to submit a bank guarantee of 35% of the first year's estimated expenditure.
    On October 17, 2007, Bengal announced that it had signed a formal
agreement with Santos Ltd. (Santos), a major Australian oil and gas explorer
and producer, whereby Bengal and Santos would jointly explore and develop,
subject to certain terms and conditions, exploration license ATP 752P within
the Cooper/Eromanga Basin of Queensland, Australia. ATP 752P - a large,
868,000 gross acre parcel, divided into northern (Barta area) and southern
(Wompi area) blocks - represents some 45% of Bengal's overall gross
Cooper/Eromanga Basin acreage. On the northern 631,093-acre Barta Block, the
new well Cuisinier-1 was drilled and completed as the first well of the Santos
Joint Venture in May 2008. Cuisinier-1 exhibited good hydrocarbon shows in an
uphole zone called the Murta Sandstone with open-hole logs initially
suggesting minimum 6 meters of pay sands. In September 2008, the entire
13-meter Murta sandstone interval was perforated in the Cuisinier-1 well and
flowed clean oil to surface over a 29-hour test period. The oil is a low
viscosity, light (52 API gravity), sweet, premium crude. The Cuisinier-1 well
will be completed in the second quarter of calendar 2009 with a beam pumping
unit and the initial productivity estimate offered from the experience of the
operator Santos is between 200-300 barrels of oil per day. Estimated
completion and tie-in costs are $320,000 net to Bengal. Santos's Cook oilfield
battery is located approximately 6 kilometers to the east and will allow for
tie-in once surface access, native title, and processing agreements are
settled. Santos has estimated a production start in Q2 2009. In addition to
the new Murta fairway, the deeper Hutton zone, with established production at
the offsetting Cook oilfield, also remains prospective in the Barta/Cuisinier
area. To further evaluate the discovery and exploration potential, and as part
of the Joint Venture and farm-in terms (at no cost to Bengal), the operator
Santos has plans to acquire 103 Km(2) of additional new 3D seismic data over
the Cuisinier-1 discovery. The new 3D seismic program is presently expected to
be complete in April 2009. The Company has an earned 17.5% interest in the
Barta Block but has an option to increase its working interest to a final 25%
simply by funding 55% of the next well to be drilled. Although the operator
has identified a number of follow-up locations to the Cuisinier discovery, the
next well to be drilled will be determined after the new 3D seismic is
processed and evaluated and a partner meeting is held to determine an
appropriate development plan for the project. The next well is anticipated to
be drilled in the first quarter of 2010.
    On the southern portion of ATP 752P (the Wompi Block), in ongoing
fulfillment of the joint venture and farm-in terms, the operator Santos has
completed the acquisition of 206 Km(2) of new 3D seismic (again at no cost to
Bengal). Following thorough evaluation of the new 3D seismic data, the JV and
farm-in agreement allows for Santos to drill up to four new exploration wells.
The Company is carried by Santos for the costs of the initial 3 exploration
wells but Bengal retains as an option the opportunity to fund 60% of the final
exploration well in order to retain its 30% working interest in the Wompi
block. Drilling is expected to begin in the third quarter of 2009.
    The Company holds a 10% interest in the offshore Timor Sea Permit AC/P
24, which the Company earned through the drilling of the oil discovery well
Katandra-1 in December 2004. The Joint Venture had earlier decided that an
additional processing stage would be required on the 3D seismic shot over
Katandra prior to making a decision regarding the proposal of follow-up
appraisal drilling. The Joint Venture has received approval from the Northern
Territory Government to carry out 180 square kilometers of 3D Pre-Stack Depth
Migration ("PSDM") processing and geotechnical studies for the year commencing
on June 8th 2008 as the minimum work requirement for the year at an estimated
net cost to Bengal of $42,500. Any follow-up appraisal drilling would then be
contingent on the outcome of the PSDM processing and would occur in the
subsequent year (i.e. year commencing June 2009).
    Bengal (50% interest) is the Operator of the Cooper Basin ATP 934P
exploration block in Queensland, Australia - the other partners are Seoul City
Gas (30%) and Mosaic Oil (20%). Bengal is working on clearing Native Title
issues on this land. ATP 934P has an area of 361,260 gross acres, is in the
heart of the central Cooper Basin gas province and is surrounded by Permian
gas fields, with more recent activities nearby having resulted in Jurassic and
Cretaceous oil discoveries.
    Bengal's third quarter Management's Discussion and Analysis and
Consolidated Financial Statements can be viewed at www.bengalenergy.ca or
www.sedar.com.

    About Bengal

    Bengal Energy Ltd. is an international junior oil and gas exploration and
production company based in Calgary, Alberta. The Company is committed to
growing shareholder value through international exploration, production and
acquisitions. Bengal trades on the TSX under the symbol BNG. Additional
information is available at www.bengalenergy.com.

    Disclaimers

    This press release contains certain forward-looking statements that
involve substantial known and unknown risks and uncertainties, many of which
are beyond Bengal's control, including: the impact of general global economic
conditions in Canada and in the United States, 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 operating or management
personnel, fluctuations in commodity prices, foreign exchange or interest
rates, stock market volatility and fluctuations in market valuations of
companies with respect to announced transactions and the final valuations
thereof, and the ability to obtain required approvals from regulatory
authorities. Bengal's actual results, performance or achievement 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
Bengal will derive therefrom.

    When converting natural gas to equivalent barrels of oil, Bengal uses the
widely recognized standard of 6 thousand cubic feet (Mcf) to one barrel of oil
(boe). However, boe's may be misleading, particularly if used in isolation. A
boe conversion ratio of 6 Mcf: 1 bbl is based on an energy equivalency
conversion method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead.

    %SEDAR: 00003559E




For further information:

For further information: Bengal Energy Ltd.: Bradley Johnson, Chief
Executive Officer, Chayan Chakrabarty, President, (403) 205-2526, Email:
investor.relations@bengalenergy.ca, Website: www.bengalenergy.ca

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