Iteration Energy (ITX) announces December 31, 2007 year end results



    (All amounts are in Canadian dollars, unless stated otherwise)

    CALGARY, March 20 /CNW/ - Iteration Energy Ltd. (TSX-ITX) ("Iteration" or
the "Company") announced today its financial and operating results as at and
for the year ended December 31, 2007. The financial statements, together with
Management's Discussion and Analysis (MD&A), have been filed on the Company's
SEDAR profile at www.sedar.com. They are also available on the Company website
at www.iterationenergy.com.

    FINANCIAL AND OPERATIONAL HIGHLIGHTS

    Acquisition of Cyries Energy Inc.

    On January 21, 2008, Iteration announced an Arrangement Agreement (the
"Arrangement") with Cyries Energy Inc. ("Cyries") whereby each Cyries
shareholder would receive 1.475 Iteration common shares for each Cyries share
held. On March 3, 2008 the exchange ratio was increased to 1.62 Iteration
common shares for each Cyries share.
    On March 7, 2008, Cyries held a Shareholder Meeting at which the
Arrangement was approved by the shareholders. Court approval of the
Arrangement was also obtained on March 7, 2008. Pursuant with the terms of the
Arrangement, Iteration issued 93,990,604 Iteration common shares to complete
the transaction. Upon completion of the Arrangement, Cyries became a wholly
owned subsidiary of Iteration, and current Iteration shareholders, option
holders and warrant holders hold approximately 47% of the combined entity. The
acquisition will be accounted for using the purchase method and the purchase
equation will be based on management's estimate of the fair values of the
assets and liabilities of Cyries as at January 21, 2008.
    Following the closing of the Arrangement Iteration has become an
intermediate sized producer with the following attributes:

    
    -   Production in excess of 20,000 boed (approximately 65% gas)

    -   An undeveloped land base of over 700,000 net acres.

    -   An extensive inventory of drilling prospects for future growth.

    -   A strong balance sheet that gives the potential for further accretive
        acquisitions.

    The major highlights of the three months ended December 31, 2007 include:

    -   Drilled 6.0 net wells with a success rate of 83%;

    -   Increased production by approximately 27% over the previous quarter
        to 7,990 boed and by approximately 53% as compared to the fourth
        quarter of 2006; and

    -   Increased the year over year exit rate for the Company by
        approximately 36% to 8,250 boed.

    Major highlights for the year ended December 31, 2007 are as follows:

    Iteration Energy had an active year in 2007, resulting in considerable
production and reserve growth on a per share basis. Highlights include:

    -   Drilled 44.4 net wells with a success rate of 96%;

    -   An 81% increase in Total Proved reserves to 12.7 mmboe and a 75%
        increase in Total Proved plus Probable reserves to 19.1 mmboe,
        representing a 46% increase in Total Proved plus Probable reserves
        per diluted share;

    -   Replaced production by a factor of 4.4 times on a Proved plus
        Probable basis;

    -   Finding and Development and Acquisition costs for Proved plus
        Probable reserves, including the change in future development costs,
        were $15.45/boe;

    -   A 50% increase in annual average production to 6,620 boed,
        representing a 27% increase in annual average production per share;

    -   Increased the crude oil and natural gas liquids proportion of total
        production from approximately 7% at December 31, 2006 to
        approximately 27% at December 31, 2007;

    -   Increased the crude oil and natural gas liquids proportion of Proved
        plus Probable reserves from 6% at December 31, 2006 to approximately
        37% by the end of 2007;

    -   Successfully administered a $144 million capital program, which
        included $57 million of property acquisitions; and

    -   Successfully completed two equity issues, one which contributed gross
        proceeds of $39.2 million, and the second which contributed gross
        proceeds of $28.7 million, including amounts raised on the exercise
        of an over-allotment option granted to the underwriters.

    The following table provides comparative data for the years ended December
31, 2007 and 2006.


                                   December   December          %   % Change
                                   31, 2007   31, 2006     Change  per share

    Total Proved Reserves (mboe)     12,654      6,982         81         47
    Proved plus Probable Reserves
     (mboe)                          19,064     10,894         75         41
    NAV PV10 Proved plus Probable
     Reserves ($million)                345        208         66         34
    Annual Average Production
     (boed)                           6,620      4,420         50         21
    Exit Production (boed)            8,250      6,050         36         10
    Capital Expenditures ($million)     144        114         26          2
    Proved plus Probable Finding
     and Development costs without
     change in future Capital
     ($/boe)                          12.48      15.00        (17)       (33)
    Proved plus Probable Finding
     and Development costs with
     change in future Capital
     ($/boe)                          15.22      18.39        (17)       (33)
    Proved plus Probable Finding,
     Development and Acquisition
     costs with change in future
     Capital ($/boe)                  15.45      19.92        (22)       (37)
    Shares outstanding (million)       71.0       57.4         24        n/a
    Undeveloped land base
     (thousand net acres)               267        193         38        n/a



    FINANCIAL SUMMARY

    Year over year comparative results are as follows:

    -------------------------------------------------------------------------
                             Three Months Ended Dec 31,    Year Ended Dec 31,
    -------------------------------------------------------------------------
                                       2007       2006       2007       2006
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Production (boed)                 7,990      5,210      6,620      4,420
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Realized commodity price
    -------------------------------------------------------------------------
      Natural gas ($/mcf)              6.11       6.03       6.76       6.42
    -------------------------------------------------------------------------
      Natural gas liquids ($/bbl)     40.12      61.05      48.55      66.96
    -------------------------------------------------------------------------
      Light oil ($/bbl)               66.21      49.88      68.77      49.24
    -------------------------------------------------------------------------
      Heavy oil ($/bbl)               40.35        n/a      42.68        n/a
    -------------------------------------------------------------------------
      Blended ($/boe)                 39.84      37.41      42.24      40.02
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Royalty expense ($/boe)            8.12       6.62       8.59       8.04
    -------------------------------------------------------------------------
    Production expense ($/boe)        11.97       8.92       8.97       7.78
    -------------------------------------------------------------------------
    Transportation expense ($/boe)     1.09       0.87       1.29       0.81
    -------------------------------------------------------------------------
    General and admin expense
     ($/boe)                           2.37       2.90       2.26       2.53
    -------------------------------------------------------------------------
    Operating netbacks ($/boe)        18.66      21.00      23.39      23.40
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Production revenue before
     royalties ($M)                  29,265     17,940    101,976     64,539
    -------------------------------------------------------------------------
    Funds from operations ($M)(1)    11,103      8,290     48,506     32,927
    -------------------------------------------------------------------------
    Funds from operations per
     basic and diluted share ($)(2)    0.16       0.15       0.76       0.63
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Net loss ($M)                    (3,149)    (3,225)    (9,442)    (4,416)
    -------------------------------------------------------------------------
    Earnings (loss) per basic and
     diluted share ($)(2)             (0.05)     (0.06)     (0.15)     (0.08)
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------

    (1) Management uses funds from operations and funds from operations per
        share (before changes in non-cash working capital and asset
        retirement expenditures) to analyze operating performance and
        leverage. Funds and funds per share as presented do not have any
        standardized meaning prescribed by Canadian GAAP and therefore they
        may not be comparable with the calculation of similar measures for
        other entities. Funds as presented is not intended to represent
        operating cash flow or operating profits for the period nor should it
        be viewed as an alternative to cash flow from operating activities,
        net earnings or other measures of financial performance calculated in
        accordance with Canadian GAAP. All references to funds and funds per
        share throughout this report are based on cash flow from operating
        activities before changes in non-cash working capital and asset
        retirement expenditures.

    (2) For periods with positive net earnings, per share amounts are based
        on weighted average basic and diluted common shares outstanding for
        the period. For periods with a net loss, per share amounts are based
        on basic common shares outstanding for the period.
    


    Outlook for 2008

    The acquisition of Cyries Energy Inc. closed on March 7, 2008, and has
transformed the Company into an intermediate producer. Production is now in
excess of 20,000 boed and the Company has an inventory of drilling prospects
which is expected to result in further production growth by year end. The exit
rate of production for the first quarter of 2008 is expected to be
approximately 22,000 boed.
    For 2008, the largest focus areas for the Company will be in the
Deep Basin and Peace River Arch areas of Western Alberta and North East
British Columbia. These two areas currently account for approximately two
thirds of the Company's production and are prospective for liquids rich gas
and light oil. Production from these areas will be complemented by exploration
and exploitation opportunities for dry gas and heavy oil in Eastern Alberta,
as well as additional light oil prospects in North West and South East
Alberta.
    The range of prospects provides a mixture of summer and winter access
opportunities and allows the Company flexibility to focus its activity in
those areas which will provide maximum return under prevailing commodity
prices and conditions. A very strong balance sheet will allow the Company to
take advantage of accretive acquisitions should they arise to further enhance
production growth.

    Advisory - Forward-Looking Information

    Natural gas is converted to crude oil equivalent at a ratio of six
thousand cubic feet to one barrel. 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.
    This press release was prepared on March 20, 2008 and is management's
assessment of Iteration's historical financial and operating results. The
reader should be aware that historical results are not necessarily indicative
of future performance. This press release contains forward-looking statements
relating to future events or future performance. In some cases,
forward-looking statements can be identified by terminology such as "may",
"will", "should"," expects", "projects", "plans", "anticipates" and similar
expressions. These statements represent management's expectations or beliefs
concerning, among other things, future operating results and various
components thereof affecting the economic performance of Iteration. Undue
reliance should not be placed on these forward-looking statements which are
based upon management's assumptions and are subject to known and unknown risks
and uncertainties, including the business risks discussed below, which may
cause actual performance and financial results in future periods to differ
materially from any projections of future performance or results expressed or
implied by such forward-looking statements. Accordingly, readers are cautioned
that events or circumstances could cause results to differ materially from
those predicted. The Company undertakes no obligation, except as required by
applicable securities legislation, to update publicly or to revise any of the
included forward looking statements, whether as a result of new information,
future events or otherwise.
    The forward looking statements contained herein are expressly qualified
by this cautionary statement. Readers are cautioned that the following list of
risk factors is not exhaustive.
    In particular, this discussion contains forward-looking statements and
information pertaining to the following:

    
    -   The quantity and recoverability of our reserves;
    -   The timing and amount of future production;
    -   Prices for natural gas produced;
    -   Operating and other costs;
    -   Business strategies and plans of management;
    -   Supply and demand of natural gas;
    -   Expectations regarding our ability to raise capital and to add to our
        reserves through acquisitions as well as exploration and development;
    -   The focus of capital expenditures on development activity rather than
        exploration;
    -   The sale, farming in, farming out or development of certain
        exploration properties using third party resources;
    -   The use of development activity and acquisitions to replace and add
        to reserves;
    -   The impact of changes in natural gas prices on cash flow after
        hedging;
    -   Drilling plans;
    -   The existence, operation and strategy of the commodity price risk
        management program;
    -   The approximate and maximum amount of forward sales and hedging to be
        employed;
    -   The Company's acquisition strategy, and the criteria to be considered
        and the benefits to be derived;
    -   The impact of Canadian federal and provincial governmental regulation
        on the Company relative to other issuers of similar size;
    -   Our treatment under governmental regulatory regimes;
    -   The goal to sustain or grow production and reserves through prudent
        management and acquisition;
    -   The emergence of accretive growth opportunities; and
    -   The Company's ability to benefit from the combination of growth
        opportunities and the means to grow through the capital markets.

    Iteration's actual results could differ materially from those anticipated
in our forward-looking statements as a result of the risk factors set forth
below and noted elsewhere in this MD&A which include but are not limited to:

    -   Volatility in market prices for natural gas;
    -   Risks inherent in our operations;
    -   Uncertainties associated with estimating reserves;
    -   Competition for, among other things: capital, acquisitions of
        reserves, undeveloped lands and skilled personnel;
    -   Incorrect assessments of the value of acquisitions;
    -   Geological, technical, drilling and process problems;
    -   General economic conditions including fluctuations in the price of
        natural gas;
    -   Royalties payable in respect of Iteration's production;
    -   Governmental regulation of the oil and gas industry, including
        environmental regulation;
    -   Fluctuation in foreign exchange or interest rates;
    -   Unanticipated operational events that can reduce production or cause
        production to be shut-in or delayed;
    -   Stock market volatility and market valuations;
    -   The need to obtain required approvals from regulatory authorities;
    -   Environmental risks;
    -   Insurance limitations risks;
    -   Risks inherent in replacing reserves;
    -   Reliance on operators and key employees;
    -   Access to funding and issuance of debt;
    -   Aboriginal claims; and
    -   Availability of drilling equipment, access restrictions and cost
        inflation.
    

    Many of these risk factors and uncertainties are discussed in further
detail in the Management's Discussion and Analysis for the year ended
December 31, 2007.

    The TSX has not reviewed this press release and does not accept
    responsibility for the accuracy of any of the data presented here-in.

    %SEDAR: 00002576E




For further information:

For further information: Iteration Energy Ltd., Mr. Brian Illing,
President and CEO; or Mr. Sean Johnson, CFO, (403) 261-6883

Organization Profile

ITERATION ENERGY LTD.

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