WINNIPEG, Aug. 28 /CNW/ - Nordic Oil and Gas Ltd. (TSXV: NOG) today
announced the Company's financial results from operations for its second
quarter and six months ended June 30, 2008. All amounts referenced herein are
in Canadian dollars.
Revenue from natural gas and Coal Bed Methane ("CBM") sales for the
six-month period (including liquids and transport revenue and interest
revenue) totalled $524,724 up substantially from the $364,568 reported for
same period in 2007. The increase in the first half revenue totals was due to
a sharp rise in oil and gas revenue to $473,376 as compared to $348,541 a year
ago and an increase in interest income to $34,604 as compared to $3,626 in
Net cash flow from operating activities (cash received from operators
minus cash paid to suppliers and for royalties) was down slightly for the
first half of 2008 to $173,886 as compared to $182,877 during the same period
a year ago. This was due to the increase in both operating and royalty costs
for the period along with increased drilling costs.
Cash, including short term investments, accounts receivable, deposits and
deferred costs for the first six months of the year totalled $6,523,631 more
than double that of the $3,169,248 at the end of December, 2007. Total assets
as at June 30, 2008 were $12,723,058, up 65% from the $7,713,059 as at
December 31, 2007.
General and administrative expenses for the first half of 2008 totalled
$218,080, up from the $108,584 reported for the same period in 2007. Overall
expenses for the first half of 2008 were up approximately $388,000 at $929,524
compared to the first half of 2007 at $541,248.
The Company recorded a net loss of $272,233 for the first six months of
2008, a decrease of more than $80,000 over the same period a year ago
($354,745). The decrease in the net loss for the six-month period can be
attributed to the future income tax recovery of $451,441, along with a strong
increase in revenue.
Second Quarter Results
Revenue for the three-month period ended June 30, 2008 totalled $375,622,
the highest three-month total in more than two years This represents an
increase of approximately $230,000 over the Q1 2008 total of $145,854, and an
increase of about $200,000 over the 2007 Q2 total of $175,430. The increase in
quarter over quarter revenue totals was due to a higher average price for the
Company's gas and stronger production from some of its wells at Joffre,
General and administrative expenses for the three months under review
totalled $108,744, up about $40,000 from the $68,081 in the same period in
2007. Overall expenses for the second quarter under review totalled $342,201
up from those recorded in Q2 2007 ($307,457) by approximately $45,000 and down
substantially from the Q1 2008 total of $575,264.
For the quarter, the Company recorded a net loss of $135,730, an
improvement of more than $100,000 versus the $239,055 loss reported in Q2
Average production volume for the three months ended June 30, 2008 was
12.95 10(3)m(3)/day (475.46 GigaJoules/day), as opposed to 8.78 10(3)M(3)/day
(322.36 GJ/day) during the second quarter of 2007. The Company received
$9.6846/GJ as an average gas price during the second quarter of 2008 compared
to $6.7005/GJ for the second quarter last year.
Quarterly Corporate Review
Drilling of the Company's two potential oil wells commenced in
Preeceville in mid-May. The first well had to be abandoned due to the
intersection of faults, as the well deviated and the drilling tools became
lodged in the hole and could not be dislodged. Drilling subsequently commenced
at the second well and was completed at a depth of approximately 850 metres.
When the perforating and testing had been completed at the second well at
Preeceville, the results indicated that the well did not have any production
capabilities. However, the top perforations have been left open for possible
re-entry for shale gas.
In June, the Company announced that three new wells were licensed in
Lloydminster; the three were subsequently drilled in early July.
Also in June, a brokered private placement financing (the "Offering") was
completed with Raymond James Ltd. who offered the financing to a predetermined
select group of clients. The Offering consisted of 4,166,666 Units ("Units")
at a price of $0.60 per Unit for total gross proceeds to the Company of
Each Unit consisted of one Class A common share of the Company issued as
a "flow-through share" within the meaning of the Income Tax Act (Canada) and
one half of one Class A common share purchase warrant (a "Warrant"). Each
whole Warrant entitles the holder thereof to purchase one non flow-through
regular Class A common share of the Company at a price of $0.85 for a period
of two years from the date of issuance.
Mr. Benson stated that the Company is looking forward to the remainder of
2008 with considerable optimism: "While we were disappointed to learn that our
second well in Preeceville will not be commercially productive, we are
nonetheless very upbeat about our drilling programs in Lloydminster and
Earlier this month the Company began shipping oil from the first of its
new wells at Lloydminster. Testing has been completed on two wells, both of
which are capable of producing at least 30 barrels of oil per day (BBls/d). In
addition, the Company is currently in the process of testing its four well
bores acquired earlier this year at Lloydminster. As such, this will result in
even stronger revenue and production totals for the third quarter and beyond.
Three additional locations have been identified and surveying consent is in
the midst of being obtained.
At Joffre, Alberta, the Company's new Belly River well will be spud
shortly, and results from the drilling should be completed in the coming days.
"When all of these wells are on full production, both our production volumes
and revenue totals will be significantly enhanced," Mr. Benson added. "We are
targeting production of approximately 500 BOEs/d by the end of the year, along
with near record revenue levels."
In addition, notifications pertaining to the Company's compressor station
at Joffre have gone out, and barring any objections from anyone, the station
should be ready for use by October 2008.
In conjunction with this, Desoto Resources Limited, a sister company of
Nordic, which is also the operator in the area, also signed a contract with
Atco Pipelines to transport the Company's gas. "This will result in a
significant reduction in the costs to the Company's natural gas production in
the region," Mr. Benson added.
At Preeceville, Saskatchewan, the Company has received its re-entry
license, allowing it to drill to the basement the well that was originally
drilled in 2005. Arrangements are now being made for a drilling rig to be
deployed to the site at the earliest possible date.
About Nordic Oil and Gas Ltd.
Nordic Oil and Gas Ltd. is a junior oil and gas company engaged in the
exploration and development of oil, natural gas and Coal Bed Methane in
Alberta and Saskatchewan. The Corporation is listed on the TSX Venture
Exchange and trades under the symbol NOG. Nordic is one of the "2008 TSX
Venture 50" companies, a ranking of the top 10 public venture capital
companies in five industry sectors listed on the TSX Venture Exchange.
This news release contains certain statements that may be deemed
"forward-looking statements". All statements in this release, other than
statements of historical fact, that address events or developments that the
Corporation expects to occur, are forward looking statements. Forward looking
statements are statements that are not historical facts and are generally, but
not always, identified by the words "expects", "plans", "anticipates",
"believes", "intends", "estimates", "projects", "potential" and similar
expressions, or that events or conditions "will", "would", "may", "could" or
"should" occur. Although the Corporation believes the expectations expressed
in such forward-looking statements are based on reasonable assumptions, such
statements are not guarantees of future performance and actual results may
differ materially from those in forward looking statements. Factors that could
cause the actual results to differ materially from those in forward-looking
statements include market prices, exploration and drilling success, continued
availability of capital and financing and general economic, market or business
conditions. Investors are cautioned that any such statements are not
guarantees of future performance and actual results or developments may differ
materially from those projected in the forward-looking statements. Forward
looking statements are based on the beliefs, estimates and opinions of the
Corporation's management on the date the statements are made. The Corporation
undertakes no obligation to update these forward-looking statements in the
event that management's beliefs, estimates or opinions, or other factors,
(*) The term BOEs may be misleading, particularly if used in isolation. A
BOE conversion ratio of 6 Mcf: 1 barrel 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 TSX Venture Exchange has not reviewed nor accepts responsibility for
the adequacy or accuracy of the contents of this News Release.
For further information:
For further information: Don Bain, Chairman & CEO, Nordic Oil and Gas
Ltd., Tel. (204) 956-5042, Fax. (204) 897-7154, E-mail: firstname.lastname@example.org;
Donald Benson, Corporate Secretary, Nordic Oil and Gas Ltd., Tel. (204)
943-1810, Fax. (204) 943-1829, E-mail: email@example.com