Petroflow Energy Ltd. announces second quarter results for 2009



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

    CALGARY, Aug. 14 /CNW/ - Petroflow Energy Ltd. ("Petroflow" or the
"Company") announces that it has filed with Canadian and US securities
regulatory authorities its unaudited consolidated financial statements for the
three and six months ended June 30, 2009, 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 and
six months ended June 30, 2009 and June 30, 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 4,250 boe per day,
        a 75% increase over the second quarter of 2008 average sales
        production of 2,426 per day, and a 22% increase over the first
        quarter of 2009 average sales production of 3,462 boe per day.

    -   Funds from operations increased by 76% in the second quarter of 2009
        to $4.6 million from $2.6 million in the second quarter of 2008.

    -   Funds from operations for the second quarter were positively impacted
        as a result of the realized gain on the monetization of derivative
        instruments, which helped offset the impact of declining commodity
        prices.

    -   During the second quarter of 2009, Petroflow's average operating net
        back per boe (defined as revenue including commodity derivatives,
        less royalties, operating costs and transportation costs) was $25.25
        per boe.

    -   The realized gain on its commodity contracts increased by 921% in the
        second quarter of 2009 to $7.7 million from a realized loss of
        $0.9 million during the second quarter of 2008. The increase was a
        result of the monetization of derivative instruments in the second
        quarter of 2009.

    -   The Company recorded $0.29 loss per share for the second quarter of
        2009 compared to a loss of $0.30 in the same period of 2008. Net loss
        was $8.6 million for the second quarter of 2009, a decrease of 4%
        from a net loss of $8.9 million for the same period in 2008.

    -   Operating costs increased 7% to $12.53 per boe in the second quarter
        of 2009 as compared to $11.73 per boe in the second quarter of 2008
        and $11.48 per boe in the first quarter of 2009. The Company
        performed extensive workovers on six wells during the second quarter.
        The workovers were designed to enhance long term production and
        ultimately lower operating expenses. The cost of this program was
        $0.55 per boe.

    -   During the second quarter of 2009 and shortly thereafter, significant
        changes in the management of the Company occurred with the
        resignations of the Chairman of the Board of Directors, Mr. Richard
        Clark; followed by the CEO of the Company, Mr. John Melton. Mr. David
        Elgie, a professional engineer with considerable public company
        experience has replaced Mr. Clark. The remainder of the Company's
        management team, headed by Mr. Sandy Andrew as President has remained
        in place.

    -   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 factors have continued to affect the economy in the
        second quarter of 2009 and continue to impact the performance of the
        economy 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.

    Petroflow announces its financial and operational results for the three
and six months ended June 30, 2009


    Financial and Operating Summary

                                              Three months ended June 30,
                                           2009         2008        % Change
    -------------------------------------------------------------------------
    Financials
    Oil sales                            2,207,782    4,711,123         (53%)
    Natural gas and NGL sales            6,714,341   10,681,188         (37%)
    Total oil, natural gas
     and NGL revenue                     8,922,123   15,392,311         (42%)
    Funds from operations(1)             4,551,366    2,578,764          76%
      Per share basic and diluted ($)         0.16         0.09          76%
    Net loss                            (8,572,558)  (8,884,498)         (2%)
      Per share basic and diluted ($)        (0.29)       (0.30)         11%
    Capital expenditures(2)                      -   20,023,615        (100%)
    Net debt (end of period)(3)        142,430,358   78,729,439          81%
    -------------------------------------------------------------------------
    Operating Highlights
    Production:
      Oil (bbls per day)                       388          409          (5%)
      Natural gas and NGL (mcf per day)     23,173       12,099          92%
    -------------------------------------------------------------------------
      Total (boe per day) (6:1)              4,250        2,426          75%
    Average realized price:
      Oil ($ per bbl)                        62.60       126.48         (51%)
      Natural gas and NGL ($ per mcf)         3.18         9.70         (67%)
      Realized gain (loss) on
       commodity contracts ($ per bbl)       20.04        (4.27)        569%
      Combined average ($ per boe)           43.11        65.45         (34%)
    Netback ($ per boe)
      Oil, natural gas and NGL sales         23.07        69.73         (67%)
      Realized gain (loss) on
       commodity contracts                   20.04        (4.27)        569%
      Royalties and severance taxes           5.33        14.90         (64%)
      Operating expenses                     12.53        11.73           7%
      Transportation expenses                    -         0.37        (100%)
    -------------------------------------------------------------------------
    Operating netback                        25.25        38.46        (34)%
    -------------------------------------------------------------------------
    G&A expense                               5.85        13.94         (58%)
    Interest expense                          7.66         6.48          18%
    -------------------------------------------------------------------------
    Corporate netback                        11.74        18.04         (35%)
    -------------------------------------------------------------------------
    Common shares
    Common shares outstanding,
     end of period                      29,509,894   29,423,894           0%
    Weighted average basic shares
     outstanding                        29,529,762   29,341,315           1%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                               Six months ended June 30,
                                           2009         2008        % Change
    -------------------------------------------------------------------------
    Financials
    Oil sales                            4,155,670    7,467,894         (44%)
    Natural gas and NGL sales           14,338,968   18,144,527         (21%)
    Total oil, natural gas
     and NGL revenue                    18,494,638   25,612,421         (28%)
    Funds from operations(1)             5,844,388    5,895,907          (1%)
      Per share basic and diluted ($)         0.20         0.20          (2%)
    Net loss                            (8,590,380) (11,043,378)        (21%)
      Per share basic and diluted ($)        (0.29)       (0.38)        (23%)
    Capital expenditures(2)             14,680,987   35,455,885         (59%)
    Net debt (end of period)(3)        142,430,358   78,729,439          81%
    -------------------------------------------------------------------------
    Operating Highlights
    Production:
      Oil (bbls per day)                       403          369           9%
      Natural gas and NGL (mcf per day)     20,728       11,541          80%
    -------------------------------------------------------------------------
      Total (boe per day) (6:1)              3,858        2,292          68%
    Average realized price:
      Oil ($ per bbl)                        56.95       111.25         (49%)
      Natural gas and NGL ($ per mcf)         3.82         8.64         (56%)
      Realized gain (loss) on
       commodity contracts ($ per bbl)       13.17        (2.45)        638%
      Combined average ($ per boe)           39.66        58.94         (33%)
    Netback ($ per boe)
      Oil, natural gas and NGL sales         26.49        61.39         (57%)
      Realized gain (loss) on
       commodity contracts                   13.17        (2.45)        638%
      Royalties and severance taxes           5.86        13.30         (56%)
      Operating expenses                     12.06        10.29          17%
      Transportation expenses                    -         0.48        (100%)
    -------------------------------------------------------------------------
    Operating netback                        21.74        34.87         (38%)
    -------------------------------------------------------------------------
    G&A expense                               6.32        10.25         (38%)
    Interest expense                          7.07         7.20          (2%)
    -------------------------------------------------------------------------
    Corporate netback                         8.35        17.42         (52%)
    -------------------------------------------------------------------------
    Common shares
    Common shares outstanding,
     end of period                      29,509,894   29,423,894           0%
    Weighted average basic shares
     outstanding                        29,574,152   29,291,630           1%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (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.
    (2) Includes non-cash capital expenditures through leases.
    (3) Net debt is total of bank loan, obligation under capital lease less
        working capital (excluding derivative contract).


    Operational Update

    Oklahoma
    

    Oklahoma's average sales production grew to 4,166 boe per day for the
second quarter of 2009, a 101% increase over the second quarter of 2008
average sales production of 2,074 boe per day. There were no new capital
expenditures during the second quarter of 2009. The Company drilled nine wells
and put eight wells on production for the same period in 2008.
    Oklahoma's average sales production rate grew to 3,787 boe per day for
the first half of 2009, a 105% increase over the first half of 2008 average
sales production of 1,848 per day. The Company drilled two wells in the first
half of 2009, one being a salt water disposal well compared to seventeen wells
in the same period of 2008. The Company put seven wells on production in the
first half of 2009 compared to sixteen wells in the same period for 2008.

    Texas

    There was no drilling on this property during 2009. This property
currently produces on average 77 boes per day.

    Canada (Alberta)

    There were no capital expenditures on the Company's properties in Canada.

    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. More particularly, this press release contains statements
concerning anticipated: (i) production weighting for 2009, (ii) capital
expenditures for 2009 and (iii) exploration and development activities and
results.
    The forward-looking statements are based on certain key expectations and
assumptions made by Petroflow, including expectations and assumptions
concerning the performance of existing wells and success obtained in drilling
new wells, anticipated expenses, cash flow and capital expenditures and the
application of regulatory regimes.
    Although the Company believes that the expectations and assumptions on
which the forward-looking statements are based are reasonable, undue reliance
should not be placed on the forward-looking statements because the Company can
give no assurance that they will prove to be correct. Since forward-looking
statements address future events and conditions, by their very nature they
involve inherent risks and uncertainties. Actual results could differ
materially from those currently anticipated due to a number of factors and
risks. These include, but are not limited to, risks associated with the oil
and gas industry in general (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),
commodity price and exchange rate fluctuations and uncertainties resulting
from potential delays or changes in plans with respect to exploration or
development projects or capital expenditures. Certain of these risks are set
out in more detail in Petroflow's Annual Information Form which has been filed
on SEDAR and can be accessed at www.sedar.com.
    The forward-looking statements contained in this press release are made
as of the date hereof and Petroflow 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.
    Note: Boe means barrel of oil equivalent on the basis of 1 boe to 6,000
cubic feet of natural gas. Boe may be misleading, particularly if used in
isolation. A boe conversion ratio of 1 boe for 6,000 cubic feet of natural gas
is based on an energy equivalency conversion method primarily applicable at
the burner tip and does not represent a value equivalency at the wellhead.
Boe/d means barrel of oil equivalent per day.
    In this press release: (i) mcf means thousand cubic feet; (ii) mcf/d
means thousand cubic feet per day (iii) bbls means barrels (iv) bbls/d means
barrels per day

    
    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. Sanford Andrew, President & COO, Petroflow
Energy Ltd., (307) 277-2145, www.petroflowenergy.com; Mr. Duncan Moodie, CFO,
Petroflow Energy Ltd., (403) 539-4320, www.petroflowenergy.com

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PETROFLOW ENERGY LTD.

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