Breaker Energy Ltd. announces year end results and successful winter drilling program



    CALGARY, March 28 /CNW/ - Breaker Energy Ltd. ("Breaker" or "Company")
(TSX: WAV.A and WAV.B) is pleased to announce its financial and operating
results for the quarter and year ended December 31, 2006.

    
    Financial and Operating Summary

                           Year ended                   Quarter ended
                  December  December         %  December  December         %
                  31, 2006  31, 2005    Change  31, 2006  31, 2005    Change
    -------------------------------------------------------------------------
    Financial
     ($000s except
     per share
     amounts)
    Petroleum
     sales          26,010     9,254       181     8,472     3,213       164
    Natural gas
     sales          25,913    13,576        91     9,496     6,152        54
    Processing
     sales             376        30        nm       295         3        nm
    Total petroleum
     and natural
     gas revenue    52,299    22,860       129    18,263     9,368        95
    Funds from
     operations(1)  26,760    12,223       119     9,132     5,282        73
      Per share
       basic ($)      0.91      0.65        40      0.25      0.29       (14)
      Per share
       diluted ($)    0.89      0.62        44      0.25      0.28       (11)
    Net earnings     2,083     3,361       (38)    1,077     1,600       (33)
      Per share
       basic ($)      0.07      0.18       (61)     0.03      0.09       (67)
      Per share
       diluted ($)    0.07      0.17       (59)     0.03      0.08       (63)
    Capital
     expendi-
     tures(2)      142,584    53,500       167    18,283    10,632        72
    Net debt
     (end of
     period)        35,421     8,523       316    35,421     8,523       316
    -------------------------------------------------------------------------
    Operating
     Highlights
    Production:
      Crude oil
       (bbls per
       day)          1,039       383       171     1,472       523       181
      Natural gas
       (mcf per
       day)         10,809     3,846       181    15,205     5,855       160
      Total (boe
       per day)
       (6:1)         2,840     1,024       177     4,006     1,499       167
    Average
     realized
     price:
      Crude oil
       ($ per bbl)   68.62     66.19         4     62.56     66.77        (6)
      Natural gas
       ($ per mcf)    6.57      9.67       (32)     6.79     11.42       (41)
      Combined
       average
       ($ per boe)   50.45     61.16       (18)    49.55     67.94       (27)
    Netback
     ($ per boe)
    Petroleum and
     natural gas
     sales           50.45     61.16       (18)    49.55     67.94       (27)
    Royalties        (7.64)   (11.32)      (33)    (7.83)   (10.80)      (28)
    Operating
     expenses       (10.56)   (11.73)      (10)    (9.19)   (12.06)      (24)
    Transportation
     expenses        (1.55)    (1.72)      (10)    (1.56)    (2.43)      (36)
    Operating
     netback         30.70     36.39       (16)    30.97     42.65       (27)
    G&A expenses     (2.99)    (3.54)      (16)    (3.45)    (4.48)      (23)
    Interest
     expense         (0.85)    (0.13)       nm     (0.94)     0.20        nm
    Corporate
     netback         26.86     32.72       (18)    26.58     38.37       (31)
    -------------------------------------------------------------------------
    Common Shares
     (000s)
    Shares
     outstanding,
     end of period  35,745    20,462        75    35,745    20,462        75
    Weighted
     average
     Class A
     shares         27,889    17,208        62    34,845    19,562        78
    Weighted
     average
     Class B
     shares            900       900         -       900       900         -
    Conversion of
     Class B
     shares
     - weighted
     average(3)      1,544     1,685        (8)    1,544     1,685        (8)
    Weighted
     average basic
     shares out-
     standing(3)    29,433    18,893        56    36,389    21,247        71
    Stock option
     dilution
     (treasury
     method)           703       801       (12)      700       880       (20)
    Weighted
     average
     diluted
     shares out-
     standing(3)    30,136    19,694        53    37,089    22,127        68
    -------------------------------------------------------------------------
    (1) Management uses funds from operations (before changes in non-cash
        working capital) to analyze operating performance and leverage. Funds
        from operations as presented do not have any standardized meaning
        prescribed by Canadian GAAP and, therefore, may not be comparable
        with the calculation of similar measures for other entities.
    (2) Capital expenditures includes cash additions for the period,
        acquisition additions, and capitalized general and administrative
        expense.
    (3) For the period ended December 31, 2006 the Class B shares are
        converted at the quarter-end Class A share price of $5.83 and added
        to the Class A shares to calculate basic shares outstanding. For the
        period ended December 31, 2005 the conversion price was $5.34.

    Breaker's achievements in its second full year of operation include the
    following:

    -   Increased reserves by more than 155 percent from 4.9 million boe to
        12.5 million boe;

    -   On a per share basis Breaker grew proved plus probable reserves by
        approximately 49 percent from 230 boe of proved plus probable
        reserves per thousand shares at year end 2005 to 342 boe of proved
        plus probable reserves per thousand shares at year end 2006;

    -   Invested $142.6 million in 2006, which resulted in proved plus
        probable Finding, Development and Acquisition (FD&A) costs of
        $16.56 per boe, excluding future capital and $19.87 per boe including
        future capital (discounted at 10 percent). Excluding acquisitions
        Breaker achieved Finding and Development (F&D) costs of $14.21 per
        boe (before future development capital) in 2006;

    -   Grew production by more than 177 percent to 2,840 boe per day from
        the 2005 average of 1,024 boe per day, exceeding a target exit rate
        of 4,300 boe per day and averaging 4,006 boe per day in the fourth
        quarter;

    -   On a per share basis production grew by 56 percent from 70.6 boe per
        million shares in the fourth quarter of 2005 to 110.1 boe per million
        shares in the fourth quarter of 2006;

    -   Based on fourth-quarter 2006 average production of 4,006 boe per day
        and proved plus probable reserves of 12.5 million boe, Breaker's
        reserve life index is 8.5 years;

    -   Funds from operations grew 119 percent to $26.8 million in 2006 from
        $12.2 million in 2005. On a per share basis funds from operations
        grew 40 percent to $0.91 per basic share in 2006 from $0.65 per basic
        share in 2005. Primarily as a result of an increase in DD&A and a
        decrease in commodity prices, net income was $2.1 million, a decrease
        of 38 percent from $3.4 million in 2005. On a per share basis net
        income was $0.07 per basic share in 2006 as compared to $0.18 per
        basic share in 2005;

    -   Achieved a gross drilling success rate of 93 percent, drilling
        41 (36.5 net) wells;

    -   Reduced operating costs by 24 percent from $12.06 per boe in the
        fourth quarter 2005 to $9.19 per boe in the same period of 2006;

    -   Made two significant asset acquisitions, which added approximately
        1,320 boe per day. The assets are operated with high working interest
        and have all-season access, providing year-round operational
        flexibility;

    -   Through farm-in, doubled access to exploratory acreage in the
        Girouxville Area, where Breaker has had numerous significant light
        oil discoveries;

    -   Added approximately 25,000 net acres of 100 percent working interest
        land at East Prairie, which is on-trend with recent Viking
        discoveries and significant production additions;

    -   Maintained access to a significant land base in the Western Canada
        Sedimentary Basin, which was approximately 345,000 net acres at year-
        end 2006. This was primarily achieved through acquisitions and
        farm-ins;

    -   Completed two equity issues in 2006 for total gross proceeds of
        $93.5 million and increased its bank line from $21 million at year
        end 2005 to $71 million in March 2007; and

    -   Maintained a conservative level of leverage at year-end with a debt
        to annualized fourth quarter cash flow ratio of 1.0 and more than
        $35 million of unused debt capacity at year end.

    -   Graduated from the TSX Venture Exchange to the Toronto Stock
        Exchange; and

    -   Issued upwardly revised guidance twice in 2006 and exceeded exit
        production guidance of 4,300 boe per day.
    

    Operations Update
    -----------------

    Breaker is near the end of its most active winter drill program ever. A
total of 11 gross (9.75 net) wells have been drilled at East Prairie, doubling
the total number of wells drilled there to date by Breaker. The Viking sand
target was encountered in 9 of the 11 wells which are in various stages of
completion. Notable successes so far include: a 100% working interest stepout
well currently on production at sustained rates exceeding 2.5mmcf/d;
4 successful offset wells to the 200bbls/d light oil discovery announced in
January; a new 50 bbls/d light oil discovery with significant offset
potential; and a gathering system upgrade which will lower system pressure and
result in an increase in production. At Irricana, the company has drilled its
first horizontal light oil well, on schedule and under budget, intersecting
over 1400 metres of dolomite pay.

    East Prairie
    ------------

    Breaker has been very successful in extending its Viking trend to the
north onto recently-acquired 100% working interest land. Three newly-drilled
gas wells will be tied into a gathering system which was significantly
expanded in the first quarter. These wells include the highest productivity
gas well yet drilled on the trend, which is currently producing at stable
rates in excess of 2.5mmcf/d ((greater than)400 boed) net to Breaker. These
wells represent an extension of the previously-known Viking gas trend, adding
significant reserves.
    The light oil discovery well announced in January has been producing at
stable rates of approximately 90bbls/d gross (Breaker 75%), at low GOR and
with no appreciable water. GPP was recently obtained on this well, and the
company is in a position to increase the well's production toward the original
test rate of 200bbls/d gross. All four wells drilled offsetting this discovery
were successful. Three of these wells have defined an oil column exceeding
10m, while the fourth has defined a potential gas cap, which would lead to
very high recovery factor in this high perm zone. Two of the three offsets are
each producing at stable rates between 50-100bbls/d gross (Breaker 75%), with
no appreciable water, and are currently waiting on GPP determination. The
third well is awaiting equipping operations. This shallow, light oil discovery
in high perm rock is yet to be fully delineated, with another 3-4 outpost
locations being planned in summer accessible areas.
    A similar, new light oil discovery was made 2 miles along trend to the
southwest. Currently being tied in, this well is capable of steady production
of 50 bbls/d gross (Breaker 75%) of light oil production with no appreciable
water. Up to four offset locations have been identified, approximately half of
which are summer accessible.
    In addition to extending its operated gathering system to new wells,
Breaker also twinned over 4 miles of existing pipeline to handle its higher
gas volumes. This facility expenditure will also lower the gathering system
pressure on its oil wells, allowing for higher production rates upon receipt
of GPP.
    Since acquisition of the East Prairie property two years ago, Breaker has
grown net production from 70 boed to an estimated post-breakup rate of more
than 1,300 boe/d, an 18-fold increase. Some additional oil production may be
added throughout the year upon receipt of GPP on several wells. An additional
300 boed of gas deliverability in winter access areas remains behind pipe. The
company has discovered and developed large new gas reserves, and has just
begun delineation and development of new light oil pools with internally
estimated original oil in place of 5 to 10 million bbls gross.

    Irricana
    --------

    Breaker has successfully drilled its first horizontal light oil well at
Irricana, intersecting over 1400m of net dolomite pay. Breaker's deepest and
most complex well yet was finished on time and under budget. Completion
operations, including a multiple-frac program, are currently waiting on dry
weather, and the removal of road bans.

    Outlook
    -------

    Breaker anticipates a busy oil-weighted Q2 drilling program after
breakup, with another horizontal well at Irricana, 1.5 (net) exploratory wells
at Girouxville, and a three well program at Medicine Hat. The Girouxville
wells include a 50% working interest follow-up to the first successful farmin
well drilled in late 2006, and the first high-impact well on new 100% acreage
acquired at a Crown landsale in January.
    Breaker maintains an inventory of more than 200 predominantly medium to
low risk, year round accessible drill locations. This high quality inventory
is comprised of a balanced blend of both oil and natural gas opportunities.
With these attributes Breaker has the rare flexibility to quickly shift
capital expenditures between its oil and natural gas opportunities in response
to any significant fluctuations to commodity prices, should they occur.

    Outlook and 2007 Guidance
    -------------------------

    Breaker's prospects for continued per share growth in reserves,
production and cash flow are excellent. The Company is well positioned with a
base of operated, long-life natural gas and medium/light oil reserves and
production.

    
    -   High quality assets strategically focused in 2 core areas, with
        operatorship (more than 95%) and high working interests (an average
        of approximately 90%).

    -   Access to approximately 345,000 net acres of land to fuel future
        growth.

    -   Drilling inventory of more than 200 drilling locations.

    -   Forecast capital expenditures of $46 million to drill 41 gross
        (37.7 net) wells in 2007.

    -   Forecast production to average 4,750 boed in 2007 with a year-end
        exit of 5,250 boed.

    -   Current production is balanced approximately 57% to natural gas and
        43% to oil.

    -   An excellent balance sheet with a conservative debt to cash flow
        ratio.
    

    Breaker has had an excellent start to 2007 with the operations it
performed in the first quarter and is well positioned to meet or exceed its
production targets.

    Financial Statements, Management's Discussion and Analysis and Annual
    ---------------------------------------------------------------------
    Information Form
    ----------------

    Breaker has filed with Canadian securities regulatory authorities its
audited financial statements for the quarter and year ended December 31, 2006
and the accompanying Management's Discussion and Analysis. The Company has
also filed its Annual Information Form ("AIF") in respect of fiscal year 2006,
which includes its reserves data and other oil and gas information for the
period ended December 31, 2006, as mandated by National Instrument 51-101
Standards of Disclosure of Oil and Gas Activities. These filings are available
for review at www.sedar.com.

    Breaker Energy Ltd. is a junior oil and gas company focused on creating
shareholder value by growing per share production and reserves through
acquisitions and a focused exploration, development and exploitation plan.
    Breaker has 35,123,674 Class A shares and 900,000 Class B shares
outstanding.
    Breaker Energy trades on the TSX under the symbols WAV.A and WAV.B.

    FORWARD-LOOKING STATEMENTS

    This press release contains forward-looking statements concerning the
Company's expectations of future production, cash flow, earnings and expansion
of its oil and gas property interests and concerning the Company's exploration
and development drilling, seismic operations, regulatory applications, payout
estimates, capital expenditures, number and drilling locations for 2007,
seismic acquisitions and facility upgrades. These statements are based on
current expectations that involve a number of risks and uncertainties, which
could cause actual results to differ from those anticipated. These risks
include, but are not limited to: the risks associated with the oil and gas
industry (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), acquisitions, commodity price, price
and exchange rate fluctuation and uncertainties resulting from competition
from other producers and ability to access sufficient capital from internal
and external sources. Additional information on these and other risk factors
that could affect the Company's operations and/or financial results are
included in the Company's reports on file with Canadian securities regulatory
authorities.
    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.

    Oil and Gas Advisory

    This press release contains disclosure expressed as "Boe/d". Boe means
barrel of oil equivalent and Boe/d means Boe per day. All oil and natural gas
equivalency volumes have been derived using the ratio of 6,000 cubic feet of
natural gas to 1 barrel of oil. Boe equivalency measures may be misleading,
particularly if used in isolation. A conversion ratio of 6,000 cubic feet of
natural gas to 1 barrel of oil is based on an energy equivalency conversion
method primarily applicable at the burner tip and does not represent a value
equivalency at the well head.
    In this press release: (i) mmboe means million boe; (ii) boe/d means boe
per day; (iii) bbls/d means barrels per day; (iv) mcf means thousand cubic
feet; (v) mmcf means million cubic feet; (vi) mcf/d means thousand cubic feet
per day; and (vii) mmcf/d means million cubic feet per day.

    The TSX does not accept responsibility for the adequacy or accuracy of
    this release.

    %SEDAR: 00021180E




For further information:

For further information: Dan O'Neil, President & Chief Executive
Officer, (403) 215-5264; or Max Lof, Vice President, Finance & Chief Financial
Officer, (403) 215-5264, info@breakerenergy.com, www.breakerenergy.com

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