Petroflow Energy Ltd. announces financial and operational results for 2008



    (TSX Symbol - PEF; NYSE Amex Symbol - PED)

    CALGARY, April 27 /CNW/ - Petroflow Energy Ltd. ("Petroflow" or the
"Company") is pleased to announce that it has filed with Canadian and US
securities regulatory authorities its audited consolidated financial
statements for the year ended December 31, 2008, and the accompanying
Management's Discussion and Analysis. These filings are available in their
entirety at www.sedar.com and in the US at www.sec.gov/edgar. A summary of
these results is given below.
    Certain selected financial and operational information for the three
months and year ended December 31, 2008 and December 31, 2007 comparatives are
set out below and should be read in conjunction with Petroflow's audited
financial statements complete with the notes to the financial statements and
related MD&A.

    
    Overview:

    -   The Company was very active in 2008, continuing to concentrate its
        capital expenditures in Oklahoma. It drilled 30 Hunton wells in 2008
        compared to 24 wells in 2007 and put 30 wells on production.

    -   The Company's production volumes grew by 91% in 2008 to an average of
        2,633 boe per day from the 2007 average of 1,382 boe per day.

    -   The Company's current average production for the first quarter of
        2009 is 3,697 boe per day.

    -   The Company added 5.8 million boes to its proved developed reserves.

    -   Funds from operations grew by 1,135% to $12.6 million in 2008 from
        $1.0 million in 2007.

    -   Funds from operations for the fourth quarter were negatively impacted
        by approximately $3.0 million due to a temporary influx of natural
        gas from the Rocky Mountain Express Pipeline system.

    -   On a per share basis, average production increased by 74%. Production
        revenue increased by 149% as a result of the increase in production
        volumes and a 30% increase in commodity prices for the year.

    -   Petroflow's team continued to achieve low finding, development, and
        acquisition costs in 2008. With total capital expenditures in the
        year of $84 million, this represents FD&A costs of approximately
        $14.48 per boe based on applying all capital expenditures against
        incremental proved developed reserves added in the year.

    -   Based on fourth quarter average production of 3,201 boe per day and
        proved plus probable reserves of 28.1 million boes, Petroflow's
        reserve life index was 24.1 years at year end 2008.

    -   During 2008, Petroflow's average operating net back per boe (defined
        as revenue net of commodity derivatives, less royalties, operating
        costs and transportation costs) was $31.29 per boe.

    -   The Company's interest in the Juniper project, located in the San
        Juan basin was sold in May 2008 for net proceeds of US $28 million.


    -   On a per share basis net income increased 160% to $0.15 per basic
        share in 2008 compared to a net loss of $0.25 per basic share in
        2007. Net income was $4.3 million in 2008, an increase of 163% from a
        net loss of $6.8 million in 2007.

    -   In light of the rapid drop in commodity prices, Petroflow is
        suspending its drilling efforts for a short time. The Company has
        undertaken to re-evaluate all the costs associated with its
        operations. Once the Company has resolved these issues, the drilling
        program will resume.

    -   Petroflow also increased its bank line from $53.5 million to
        $110 million in 2008.

    -   Subsequent to year end and in recognition of low commodity prices,
        Petroflow renegotiated its bank debt covenants to provide greater
        assurance in meeting its ongoing financial commitments.

    2008 Highlights:

    Petroflow is pleased to announce its financial and operational results for
the three months and year ended December 31, 2008.

    -------------------------------------------------------------------------
                              Three months ended            Year ended
                                  December 31,              December 31,
    -------------------------------------------------------------------------
                                                 %                         %
                             2008     2007  Change     2008     2007  Change
    -------------------------------------------------------------------------
    Financial ($ 000's,
     except per
     share amount)

    Petroleum and
     natural gas sales     12,485    6,361     96%   54,716   21,993    149%

    Funds from operations     730   (1,092)   167%   12,649    1,024  1,135%
      Per share
        Basic                0.02    (0.04)   150%     0.43     0.04    975%
        Diluted              0.02    (0.04)   150%     0.40     0.04    900%

    Net income (loss)       3,302   (3,837)   186%    4,290   (6,787)   163%
      Per share
        Basic                0.11    (0.14)   179%     0.15    (0.25)   160%
        Diluted              0.10    (0.14)   171%     0.13    (0.25)   152%
    Capital
     expenditures(1)       26,387   20,652     28%   84,016   56,027     50%
    Total long term
     debt(2)              116,836   60,777     92%  116,836   60,777     92%
    -------------------------------------------------------------------------

    Operating
    -------------------------------------------------------------------------

    Daily Sales Volumes
      - Average
    Crude oil (bbls/day)      494      255     94%      436      258     69%
    Natural gas &
     natural gas
     liquids (mcf/day)     16,240    8,679     87%   13,183    6,743     96%
    Barrels of oil
     equivalent
     (boe/day 6:1)          3,201    1,702     88%    2,633    1,382     91%

    Average Prices
    Crude Oil ($/bbl)       83.70    89.12     (6%)  105.42    75.35     40%
    Natural gas & natural
     gas liquids ($/mcf)     5.81     5.34      9%     7.86     6.05     29%
    Barrels of oil
     equivalent
     (boe/day 6:1)          42.40    40.63      4%    56.78    43.60     30%

    Operating netback
     ($/boe)

    Petroleum and natural
     gas sales              42.40    40.63      4%    56.78    43.60     30%

    Realized gain (loss)
     on financial
     instruments             0.16    (1.66)   110%    (1.57)   (0.51)  (207%)
    Royalties               (9.45)   (9.44)     0%   (12.28)   (9.78)    26%
    Operating expense      (12.99)  (14.31)    (9%)  (11.43)  (12.23)    (7%)
    Transportation
     expenses               (0.02)   (0.64)   (97%)   (0.21)   (0.53)   (60%)
    -------------------------------------------------------------------------

    Operating netback       20.10    14.58     37%    31.29    20.55     52%

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

    G&A expenses            (9.21)  (11.12)   (17%)  (10.20)  (10.11)    (1%)
    Interest expense        (5.32)   (8.42)   (37%)   (6.33)   (8.55)   (26%)
    -------------------------------------------------------------------------

    Corporate netback        5.57    (4.96)   212%    14.76     1.89    681%

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

    Common shares (000s)
    Shares outstanding,
     end of period         29,571   29,242      1%   29,571   29,242      1%
    Weighted average
     basic shares
     outstanding           29,570   29,242     (3%)  29,422   26,815     10%
    Weighted average
     diluted shares        31,994   31,221      2%   31,953   27,312     17%
    -------------------------------------------------------------------------
    (1) Capital expenditures before dispositions
    (2) Includes the long-term portion of the obligation under capital lease,
        fair value of financial instruments, long term debt and the asset
        retirement obligation
    

    Operational Update:

    Oklahoma

    The Hunton Resource Play in the State of Oklahoma is the Company's
primary asset and opportunity for future growth. Petroflow's focus during 2008
was on drilling opportunities located on the area of mutual interest lands
acquired by Petroflow under the terms of the farm-in agreement with Enterra
Energy Trust ("Enterra"). Under the terms of this agreement, the Company has
the right to drill wells on the basis of paying, as a percentage of Enterra's
working interest, 100% of the capital costs in the property to earn a 70%
working interest. These percentages are proportional to Enterra's working
interest on a property by property basis, and generally result in the Company
paying about 80% of total costs to earn a 56% net working interest. The
Company's right to drill is subject to meeting minimum drilling commitments.
These include maintaining a two rig running commitment or drilling not less
than thirty wells during any twenty-month period beginning January 1, 2008
(subject to normal force majeure clauses). The Company is the operator during
the drilling and tie-in process, with Enterra taking over operatorship once
each well is put on production.
    The Company drilled 30 wells in 2008 compared to 24 wells in 2007. The
Company put 30 wells on production in 2008, compared to 24 wells in 2007. In
the fourth quarter, the Company drilled 9 wells and put 8 wells on production
in 2008 compared to 8 wells drilled and 7 wells put on production in 2007.

    New Mexico

    The San Juan Basin is one of the largest coal bed methane producing areas
in North America and is situated in New Mexico. The Company's interest in the
Juniper project, located in this basin, was purchased in August of 2005. The
Company developed this property during the course of its ownership and in May
2008, sold this property for net proceeds of US $28 million.

    Texas

    The Company purchased an operated oil producing property in the Permian
Basin in Midland, Texas, in December of 2005. There was no drilling on this
property during 2008. The Permian Basin in Midland is considered to be a
steady cash flow property and has a positive impact on the Company's overall
operations. This property currently produces on average 74 boes a day.

    Canada (Alberta)

    Capital expenditures in Canada were limited to further testing of the
Company's two potential coal bed methane wells. These wells remain prospective
at this time.

    Forward-Looking Statements:

    This news release contains statements about oil and gas production and
operating activities that may constitute "forward-looking statements" or
"forward-looking information" within the meaning of applicable securities
legislation as they involve the implied assessment that the resources
described can be profitably produced in the future, based on certain estimates
and assumptions.
    Forward-looking statements are based on current expectations, estimates
and projections that involve a number of risks, uncertainties and other
factors that could cause actual results to differ materially from those
anticipated by Petroflow and described in the forward-looking statements.
These risks, uncertainties and other factors include, but are not limited to,
adverse general economic conditions, operating hazards, drilling risks,
inherent uncertainties in interpreting engineering and geologic data,
competition, reduced availability of drilling and other well services,
fluctuations in oil and gas prices and prices for drilling and other well
services, government regulation and foreign political risks, fluctuations in
the exchange rate between Canadian and US dollars and other currencies, as
well as other risks commonly associated with the exploration and development
of oil and gas properties. Additional information on these and other factors,
which could affect Petroflow's operations or financial results, are included
in Petroflow's reports on file with Canadian securities regulatory
authorities. We assume no obligation to update forward-looking statements
should circumstances or management's estimates or opinions change unless
otherwise required under securities law.

    BOEs derived by converting gas to oil in the ratio of six thousand cubic
feet of gas to one barrel of oil (6 Mcf: 1 bbl). BOEs 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.

    
    The TSX has not reviewed and does not accept responsibility for the
    adequacy or accuracy of this news release.
    





For further information:

For further information: Mr. John Melton, CEO, Petroflow Energy Ltd.,
(985) 796-8080, www.petroflowenergy.com; Mr. Duncan Moodie, CFO, Petroflow
Energy Ltd., (403) 539-4320, www.petroflowenergy.com

Organization Profile

PETROFLOW ENERGY LTD.

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