Bow Valley Energy Ltd. announces 2007 third quarter results



    CALGARY, Nov. 12 /CNW/ - BOW VALLEY ENERGY LTD. (BVX - TSX) announces its
financial and operating results for the nine months ended September 30, 2007.

    HIGHLIGHTS

    
    -  Funds flow from continuing operations totaled $9.1 million ($0.11 per
       share) in the third quarter of 2007, an increase of 95% (58% per
       share) from the year-ago period. Funds flow from continuing operations
       totaled $12.6 million ($0.16 per share) on a year-to-date basis, an
       increase of 47% (28% per share) compared to the year-ago period.
    -  Earnings from continuing operations totaled $6.7 million ($0.08 per
       share) in the third quarter of 2007, an increase of 362% (275% per
       share) from the year-ago period. Earnings from continuing operations
       totaled $11.5 million ($0.14 per share) on a year-to-date basis, an
       increase of 505% (426% per share) compared to the year-ago period.
    -  The Blane field came on-stream September 12, 2007, reaching an initial
       peak production of 17,000 boe/d gross (2,125 boe/d net). Due to the
       timing of first production relative to marketing arrangements, no oil
       or NGL sales volumes from the Blane field were recorded in the third
       quarter of 2007.
    -  Oil and natural gas sales of 1,861 boe/d were recorded in the third
       quarter of 2007, an increase of 104% compared to the year-ago period.
       Sales volumes of 1,159 boe/d were recorded on a year-to-date basis, an
       increase of 68% compared to the year-ago period.
    -  U.K. operating costs averaged $7.33 per boe in the third quarter of
       2007, and $6.42 per boe on a year-to-date basis. These low operating
       costs led to a robust field operating netback of $62.92 per boe in the
       third quarter of 2007. Operating costs per boe in the third quarter of
       2007 decreased by 18% compared to the year-ago period.
    -  Current corporate production is estimated to be 4,000 - 4,500 boe/d.
       The Company currently expects fourth quarter 2007 sales volumes to
       fall in this range.
    -  Production is expected to continue to grow over the coming quarters.
       The Chestnut field is expected to begin production late in the first
       quarter of 2008 at rates of 10,000 boe/d gross (1,513 boe/d net). The
       Ettrick field is expected to come on-stream in mid-2008 with rates
       growing to 20,000 boe/d gross (2,400 boe/d net).
    -  The Company plans to participate in two exploration wells in the
       fourth quarter of 2007. The Company's first operated exploration well,
       on the 9/28b block, is expected to spud shortly. The Company is paying
       6.25% of the capital costs to retain a 37.5% working interest in the
       well. A well on the Blackbird prospect (12% working interest) on block
       20/2a, offsetting the Ettrick field, is expected to spud in December,
       2007. These wells are estimated to take approximately 45 days to
       drill. The Company's second operated exploration well, on the 16/27a
       block, is expected to spud early in 2008.
    -  Due to liquidity issues facing the Asset Backed Commercial Paper
       ("ABCP") market, the Company has estimated the fair value of its
       holdings to be $2.4 million less than cost and accordingly has
       recognized an unrealized loss equal to that amount in the third
       quarter of 2007. The Company continues to monitor the situation and
       will provide updates as necessary. The Company also recorded an
       unrealized foreign exchange gain of $8.2 million in the third quarter
       of 2007 which is mainly attributable to the revaluation of the
       Company's U.S. dollar and British pound sterling denominated debt
       balances.
    -  The Company has approved a capital budget of $96 million for 2008,
       which includes $13 million to fund the Company's Alaska exploration
       and testing program; $31 million to fund the remaining development
       capital at the Ettrick field, $50 million for North Sea exploration
       and $2 million for other capital expenditures.
    

    FINANCIAL AND OPERATIONAL HIGHLIGHTS

    On April 30, 2007, the Company entered into an agreement with a third
party for the sale of its Canadian oil and natural gas interests which closed
on May 31, 2007. As a result, the Canadian operations have been accounted for
as discontinued operations and are excluded from the following financial and
operational highlights.

    
    -------------------------------------------------------------------------
                               Three Months Ended          Nine Months Ended
                                     September 30,              September 30,
                                                %                          %
                            2007      2006  Change     2007      2006  Change
    Financial ($000s
     except as noted)
    Gross oil and gas
     revenue              12,120     6,276     93    21,295    12,979     64
    Funds flow             9,120     4,681     95    12,581     8,550     47
      Basic per share
       ($/share)            0.11      0.07     58      0.16      0.12     28
      Diluted per
       share ($/share)      0.10      0.06     62      0.15      0.12     30
    Earnings               6,749     1,461    362    11,481     1,897    505
      Basic and
       diluted per
       share ($/share)      0.08      0.02    275      0.14      0.03    426
    Debt and working
     capital
     (deficiency)       (130,316)  (51,876)   151  (130,316)  (51,876)   151
    Capital
     expenditures
      Alaska               1,625         -      -    14,164         -      -
      United Kingdom      21,097    19,310      9   156,604    39,754    294
                        -----------------------------------------------------
      Total               22,722    19,310     18   170,768    39,754    330
    Shares
     outstanding (000s)
      Basic               86,087    69,852     23    86,087    69,852     23
    Weighted
     average (000s)
      Basic               85,872    69,641     23    79,934    69,433     15
      Diluted             86,921    72,154     20    81,633    72,103     13

    Operating
    Sales
      Natural gas
       (mcf/d)             2,074       457    354     1,732       662    162
      Oil and NGL
       ($bbl/d)            1,515       836     81       870       581     50
                        -----------------------------------------------------
      Oil equivalent
       (boe/d) (6:1)       1,861       912    104     1,159       691     68

    Prices
      Natural gas
       ($/mcf)              7.27      5.47     33      7.56      5.26     44
      Oil and NGL
       ($bbl/d)            76.98     78.70     (2)    74.58     75.91     (2)
                        -----------------------------------------------------
      Oil equivalent
       ($/boe) (6:1)       70.79     74.82     (5)    67.31     68.80     (2)

    Drilling activity
     (gross)
      Oil                      1         1      -         3         2     50
      Natural gas              -         -      -         -         -      -
      Abandoned                -         -      -         -         1   (100)
      Suspended                -         -      -         1         -    100
                        -----------------------------------------------------
      Total drilling
       activity (gross)        1         1      -         4         3     33

    Drilling
     activity (net)
      Oil                   0.12      0.10     20      0.44      0.30     47
      Natural gas              -         -      -         -         -
      Abandoned                -         -      -         -      0.10   (100)
      Suspended                -         -      -      0.20         -    100
                        -----------------------------------------------------
      Total drilling
       activity (net)       0.12      0.10     20      0.64      0.40     60
    -------------------------------------------------------------------------
    


    COMPANY UPDATE

    UNITED KINGDOM
    --------------
    The third of the Company's current field development projects, the Blane
field, reached first production on September 12, 2007. The field achieved peak
production of approximately 17,000 boe/d gross (2,125 boe/d net) in the third
quarter of 2007. The remaining field developments continue to progress towards
first production. First production from the Chestnut field is now expected
late in the first quarter of 2008 and first production from the Ettrick field
is expected in mid-2008. Work is continuing on a field development plan for
the Peik field, now expected to be submitted to regulatory authorities
sometime in 2008.
    At the Kyle field, production averaged 870 boe/d in the third quarter of
2007, an increase of 55% from 560 boe/d in the third quarter of 2006. This
production increase is due to the installation of a gas lift system, as well
as other mechanical work.
    Sales volumes for the third quarter of 2007 averaged 1,861 boe/d, an
increase of 104% from the same period of 2006. Sales were higher due to the
inclusion of sales volumes from the Enoch field. No oil or NGL sales volumes
were recorded from the Blane field in the third quarter of 2007. At the end of
the third quarter of 2007, the Company held approximately 73,000 barrels of
oil in inventory.
    Operating netbacks continue to be strong, averaging $62.92 per boe in the
third quarter of 2007. Operating costs were $7.33 per boe in the third quarter
of 2007, a decrease of 18% quarter-over-quarter.
    Bow Valley expects to spud its first operated North Sea offshore
exploration well on the 9/28b block shortly. Bow Valley initially owned the
prospect at 100%, and was successful at farming out its working interest,
paying 6.25% of the capital costs to retain a 37.5% working interest in the
well. The well is expected to take approximately 50 days to drill. After the
9/28b prospect is drilled, the rig is scheduled to move to the Company's
16/27a block, where a second operated offshore exploration well is expected to
spud early in 2008. Bow Valley owns the 16/27a block at 100% working interest,
and is in advanced discussions with a number of parties regarding farming out,
or otherwise joint venturing, a portion of its interests. The Company believes
that owning exploration lands at 100% and farming out a portion of those
interests helps the Company manage its capital and risk profile. In addition
to the above wells, the Company is participating in the drilling of the
Blackbird prospect (12% working interest), offsetting the Ettrick field, which
is expected to spud in December 2007. The Company plans to participate in the
drilling of three to five exploration wells per year over the next three to
five years, thereby increasing its chances of a meaningful exploration
success.

    ALASKA
    ------
    In the fourth quarter of 2006, the Company committed to participate in a
multi-year, multi-well exploration program on the North Slope of Alaska.
During the first nine months of 2007, the Company invested $14.2 million in
drilling two wells and acquiring one 3D seismic survey. The drilling resulted
in one oil discovery and one dry hole. The discovery (Northshore No. 1) is
approximately 1,100 feet west of, and appears to be comparable to, the 1974
Mobil Gwyder Bay South No. 1 well, which flowed at an average rate of 2,263
bopd on production test from the same formation. The potential size and
economic viability of the Northshore No. 1 discovery will be evaluated using
3D seismic data which the joint venture group acquired over the prospect area
during the 2006/2007 winter season and through a testing program scheduled in
the first quarter of 2008. The co-venturers have also agreed to drill three
exploration wells and acquire additional 3D seismic during the 2008 winter
drilling season.
    At the October 24, 2007 Beaufort and Northslope lease sales, the
co-venturers were successful in the acquisition of six tracts, all of which
are adjacent to or near currently held acreage.

    OUTLOOK AND BUDGET
    ------------------
    Production, cash flow and earnings are beginning to grow due to the
achievement of first production at the Enoch and Blane fields. With the
Chestnut field expected to reach first production late in the first quarter of
2008, and the Ettrick field expected to reach first production in mid-2008,
sales volumes, cash flow and earnings are expected to continue to grow
substantially over the next twelve months.
    Bow Valley is forecasting capital spending of approximately $32 million
in the fourth quarter of 2007 to fund U.K. field development & exploration
($30 million) and Alaska exploration ($2 million). The estimate of capital
expenditures for the full year 2007 has increased due to slightly higher
capital expenditures on the Company's current development projects. The
Company has approved a 2008 capital budget of $96 million. This capital budget
is expected to fund remaining U.K. field development capital ($31 million);
U.K. exploration ($50 million); Alaska exploration ($13 million); and other
capital expenditures ($2 million). The Company expects to finance capital
spending through existing and/or new bank lines, funds flow from operations
and potentially the issue of additional equity.
    The Company is emerging into a fully funded, sustainable, full cycle,
international oil and natural gas company. The Company's diversified
production base provides a reliable revenue source. Field development of
existing discoveries delivers a low risk and sustainable growth profile over
the next three years. An expanding exploration effort, both in the U.K. North
Sea and the Alaskan North Slope, will provide the potential for exponential
growth, whereas a continuing acquisition agenda will balance the risk and
timing of the Company's existing asset portfolio.

    Copies of the 2007 third quarter financial statements and related MD&A
are available by request from the Company, on the Company website at
www.bvenergy.com, as well as on the SEDAR website at www.sedar.com

    Bow Valley Energy Ltd. is an international oil and natural gas
exploration, development and production company with operations in the U.K.
sector of the North Sea and Alaska. The common shares of the Company trade on
the Toronto Stock Exchange under the symbol BVX.

    Certain statements included or incorporated by reference in this news
release constitute forward-looking statements or forward-looking information
under applicable securities legislation. Forward-looking statements or
information typically contain statements with words such as "anticipate",
"believe", "expect", "plan", "intend", "estimate", "propose", or similar words
suggesting future outcomes or statements regarding an outlook. Although the
Company believes that the expectations reflected in such forward-looking
statements or information are reasonable, undue reliance should not be placed
on forward-looking statements because the Company can give no assurance that
such expectations will prove to be correct. Forward-looking statements or
information are based on current expectations, estimates and projections that
involve a number of risks and uncertainties which could cause actual results
to differ materially from those anticipated by the Company and described in
the forward-looking statements or information. The forward-looking statements
or information contained in this news release are made as of the date hereof
and the Company undertakes no obligation to update publicly or revise any
forward-looking statements or information, whether as a result of new
information, future events or otherwise, unless so required by applicable
securities laws. The forward looking statements or information contained in
this news release are expressly qualified by this cautionary statement.

    Where amounts are expressed on a barrel of oil equivalent (boe) basis,
natural gas volumes have been converted to barrels of oil equivalent at six
thousand cubic feet to one barrel of oil equivalent (6 mcf = 1 boe). This
conversion ratio is the conversion used in the oil and natural gas industry
and is based on an energy equivalency conversion method primarily applicable
at the burner tip and does not represent a value equivalency at the wellhead.
The use of boe's may be misleading, particularly if used in isolation.

    %SEDAR: 00008379E




For further information:

For further information: Bow Valley Energy Ltd.: Robert G. Moffat,
President and Chief Executive Officer, Matthew L. Janisch, Vice President
Finance & Chief Financial Officer, Phone (403) 232-0292, website:
www.bvenergy.com

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BOW VALLEY ENERGY LTD.

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