Petroflow Energy Ltd. announces first quarter results for 2009



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

    CALGARY, May 25 /CNW/ - Petroflow Energy Ltd. ("Petroflow" or the
"Company") is pleased to announce that it has filed with Canadian and US
securities regulatory authorities its unaudited consolidated financial
statements for the three months ended March 31, 2009, and the accompanying
Management's Discussion and Analysis and Certification of Interim Filings
following becoming a non-venture issuer. 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 ended March 31, 2009 and March 31, 2008 comparatives are set out below
and should be read in conjunction with Petroflow's unaudited financial
statements complete with the notes to the financial statements and related
MD&A.

    
    OVERVIEW AND HIGHLIGHTS

    -   Petroflow's average sales production rate grew to 3,462 boe per day a
        60% increase over the first quarter of 2008 average sales production
        of 2,159 per day and an 8% increase over the fourth quarter of 2008
        average sales production of 3,201 boe per day.

    -   The Company continues to concentrate its capital expenditures in
        Oklahoma. The Company drilled one salt water disposal well and one
        natural gas well in the first quarter of 2009 and put the natural gas
        well and 6 wells drilled in the fourth quarter of 2008 on stream.

    -   Maintaining financial and operational flexibility remains a key
        element in Petroflow's business model. In the first quarter of 2009,
        the Company invested $15.2 million, which is consistent with the
        $15.3 million spent in the first quarter of 2008.

    -   Funds from operations declined by 61% in the first quarter of 2009 to
        $1.3 million from $3.3 million in the first quarter of 2008.

    -   Funds from operations for the first quarter were negatively impacted
        due to the decrease in commodity prices in the first quarter of 2009
        which more than offset increases in production.

    -   During the first quarter of 2009, Petroflow's average operating
        netback per boe (defined as revenue net of commodity derivatives;
        less, royalties, operating costs and transportation costs) was $17.39
        per boe.

    -   The realized gain on hedges was reduced by $1.8 million due to the
        purchase cost of additional puts in the period. The particular hedges
        will allow the Company to profit from price increase in the future.

    -   The Company recorded an $18,000 net loss in the first quarter of 2009
        ($0.00 per share - basic and diluted) compared to a net loss of $2.2
        million ($0.07 per share - basic and diluted) in the same period of
        2008. The decrease in commodity prices in the first quarter of 2009
        more than offset increases in production.

    -   The global economic and financial crisis has continued to reduce
        liquidity in financial markets, restrict access to financing and
        cause significant demand destruction for commodities and lower
        pricing. These have continued to affect the economy in the first
        quarter of 2009 and continue to impact the performance of the Company
        going forward. The Company will continue to be flexible in its
        capital spending in order to respond to changes in commodity prices,
        costs and capital markets. In this regard, the Company has
        temporarily suspended its drilling activity subsequent to March 31,
        2009. The Company intends to resume drilling when circumstances
        warrant.

    -   After the first quarter of 2009, Petroflow renegotiated its bank debt
        covenants to provide greater assurance in meeting its ongoing
        financial commitments.

    Petroflow is pleased to announce its financial and operational results for
the three months ended March 31, 2009


    Financial and Operating Summary

                                                Quarter ended March 31,
                                              2009         2008     % Change
    -------------------------------------------------------------------------
    Financials
    Oil sales                            1,947,888    2,756,771         (29%)
    Natural gas and NGL sales            7,624,587    7,463,339           2%
    Total oil, natural gas and NGL
     revenue                             9,572,475   10,220,110          (6%)
    Funds from operations(1)             1,293,023    3,317,143         (61%)
      Per share basic and diluted ($)         0.04         0.11         (62%)
    Net earnings (loss)                    (17,822)  (2,158,880)        (99%)
      Per share basic and diluted ($)        (0.00)       (0.07)        (65%)
    Capital expenditures                15,155,954   15,251,193          (1%)
    Net debt (end of period)           151,289,336   90,710,662          67%
    -------------------------------------------------------------------------
    Operating Highlights
    Production:
      Oil (bbls per day)                       419          332          26%
      Natural gas and NGL
       (mcf per day)                        18,255       10,960          67%
    -------------------------------------------------------------------------
      Total (boe per day) (6:1)              3,462        2,159          60%
    Average realized price:
      Oil ($ per bbl)                        51.66        92.25         (44%)
      Natural gas and NGL ($ per mcf)         4.64         7.47         (38%)
      Realized gain (loss) on
       commodity contracts                    4.65        (0.40)     (1,272%)
      Combined average ($ per boe)           35.38        51.62         (31%)
    Netback ($ per boe)
      Oil, natural gas and NGL sales         30.73        52.02         (31%)
      Royalties                               6.51        11.49         (43%)
      Operating expenses                     11.48         8.69          32%
      Transportation expenses                    -         0.60        (100%)
    -------------------------------------------------------------------------
    Operating netback                        17.39        30.84         (44%)
    -------------------------------------------------------------------------
    G&A expense                               6.89         6.11          13%
    Interest expense                          6,34         8.01         (21%)
    -------------------------------------------------------------------------
    Corporate netback                         4.16        16.72         (75%)
    -------------------------------------------------------------------------
    Common shares
    Common shares outstanding,
     end of period                      29,532,594   29,242,344           1%
    Weighted average basic shares
     outstanding                        29,865,715   29,242,344           2%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1) Management uses funds from operations (before changes in non-cash
        working capital) to analyze operating performance and leverage. Funds
        from operations as presented does not have any standardized meaning
        prescribed by Canadian GAAP and, therefore, may not be comparable
        with the calculation of similar measures for other entities.
    

    Operational Update:

    Oklahoma

    The Company drilled 2 wells in 2009, compared to 5 wells in the same
period of 2008. One of the wells was a salt water disposal well. The Company
put 7 wells on production in first quarter of 2009 compared to 8 wells in the
same period for 2008.

    Texas

    There was no drilling on this property during 2009. 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 72 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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