Second Wave Petroleum Reports Q1 2010 Results; Drills Nine Oil Wells in
Quarter for 100 Percent Drilling Success

    
    TSX Venture Exchange: SCS
    70,779,294 Common Shares
    

CALGARY, May 25 /CNW/ - Second Wave Petroleum Inc. ("Second Wave" or the "Company") is pleased to announce its financial and operating results for the three months ended March 31, 2010. The audited financial statements and Management's Discussion and Analysis have been filed on SEDAR at www.sedar.com and on the Company's website at www.secondwavepetroleum.com.

Highlights of the first quarter are as follows:

    
    -  Second Wave increased production rates for the first quarter 2010 by
       24% year-over-year to 1,206 boe/d. This increase is net of a strategic
       disposition of 130 boe/d of non-core production early in the quarter.

    -  Second Wave's production rates continued to ramp upwards during the
       first quarter with an average production rate of 1,410 boe/d for
       March 2010.

    -  Second Wave's netbacks increased by 165% from the first quarter in
       2009 and 42% from the fourth quarter in 2009 to $25.98 per boe. Cash
       flow from operations increased 229% year over year and 67% quarter
       over quarter to $2.8 million.

    -  Subsequent to the end of the first quarter, Second Wave increased its
       undeveloped land base in Judy Creek to 91,000 net contiguous acres
       including 90,000 net acres of Pekisko mineral rights (140 sections)
       and 60,000 net acres of Beaverhill Lake mineral rights (95 sections).

    -  Second Wave invested in an expansion of processing and water injection
       facilities at Judy Creek from 4,000 bbl/d of fluids capacity to
       11,000 bbl/d of fluids capacity. Current fluids production is
       4,000 bbl/d.

    -  Second Wave initiated CO2 injection at the Battle Creek pilot
       project in the first quarter with approximately 800 tons of CO2 being
       injected to date in the Battle Creek West Madison oil pool.
    

Financial and Operating Highlights

    
    -------------------------------------------------------------------------
                                     Three months ended    Three months ended
                                            March 31,           December 31,
                                                         %                 %
                                    2010     2009   Change     2009   Change
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    FINANCIAL ($000, except
     as noted)
    Petroleum and natural
     gas sales                     6,015    3,325       81    4,522       33
    Cash flow from operating
     activities                      542      323       68      507        7
      Cash flow from operating
       activities per share         0.01     0.01        -     0.01        -
    Net income (loss)               (423)  (2,128)      80    1,329     (132)
      Net income (loss) per share  (0.01)   (0.06)      83     0.02     (150)
    Total capital expenditures    18,946    4,903      286   13,373       42
    Net debt                      10,971   26,342      (58)  15,662      (29)

    OPERATING
    -------------------------------------------------------------------------
    Production volumes
      Oil (bbl/d)                    672      510       32      498       35
      Natural gas liquids (bbl/d)     43       33       30       50      (14)
      Natural gas (mcf/d)          2,952    2,573       15    2,765        7
    -------------------------------------------------------------------------
      Total oil equivalent (6:1)   1,206      972       24    1,009       20
    Crude oil and liquids
     weighting (%)                    59       56        5       54        9
    Netbacks per boe
      Petroleum and natural
       gas sales                   55.42    38.02       46    48.71       14
      Royalties                    (6.82)   (4.65)      47    (7.13)      (5)
      Lease operating costs       (21.18)  (22.43)      (6)  (22.41)      (5)
      Transportation               (1.44)   (1.13)      27    (0.93)      55
    -------------------------------------------------------------------------
      Operating netback per boe    25.98     9.81      165    18.24       42
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

First Quarter Review

In the first quarter of 2010, the Company completed an active drilling and disposition program as it continued to focus its efforts on its internally developed Pekisko oil resource play in Judy Creek. During the quarter the Company drilled 9 (8.4 net) wells comprised of 7 (6.4 net) horizontal oil wells and 2 (2 net) vertical oil wells. In Judy Creek, the Company drilled 6 (6 net) horizontal oil wells and 2 (2 net) vertical oil wells with 7 (7 net) of these wells being successfully drilled into the Pekisko G oil pool and 1 (1 net) vertical well being successfully drilled into the Ellerslie A oil pool.

As at March 31, 2010, 4 (4.0 net) wells from the first quarter drilling program had been brought on stream with the remaining 5 (4.4 net) wells being placed on production in April 2010. In January of 2010, the Company disposed of 130 boe/d of non-core production for total proceeds of $8.9 million or $68,000 per boe/d. Subsequent to the successful first quarter drilling program and the above noted disposition the Company achieved a first quarter production average of 1,206 boe/d with a March 2010 monthly production average of 1,410 boe/d. This represents a 20% increase on a quarter over quarter basis with the March average production being 40% higher than the average rate achieved in the fourth quarter of 2009. The Company is currently producing approximately 1,550 boe/d as it enters into its second quarter drilling program.

Revenues from production for the first quarter increased 81% on a year over year basis and 33% on a quarter over quarter basis to $6.0 million. Netbacks per boe increased 165% on a year over year basis and 42% on a quarter over quarter basis to $25.98 per boe. Increases in revenues and netbacks can be attributed to higher commodity prices and continued improvements in costs from operating efficiencies.

General and administrative ("G&A") costs were reduced on a year over year basis by 22% on aggregate and by 37% to $4.58 per boe or $0.5 million of non-capitalized G&A per quarter. The Company has increased its staffing levels in 2010 to accommodate its capital program and although the aggregate G&A costs are expected to increase in 2010 management believes that the per unit costs will continue to trend downwards as additional production is added from its drilling program.

In the first quarter of 2010, the Company spent $24.4 million of capital incurring $10.0 million for drilling, completion and surface equipment on six horizontal wells in Judy Creek, $4.8 million for two vertical drills, conversion of five water injectors and an exploration well in Milo. Facility and infrastructure expenditures totaled $6.8 million including $1.0 million for the Battle Creek CO2 pilot project and $5.8 million in Judy Creek. Approximately $2.8 million was spent on land, seismic and capitalized G&A in the quarter. Taking into account the above noted property disposition the Company's net capital program for the quarter totaled $18.9 million.

During the quarter, the Company invested $5.8 million in facilities and infrastructure in its Judy Creek core area. These facility investments were designed to accommodate the development of the Company's Pekisko G pool in 2010 and 2011. As a result of these capital expenditures the fluid capacity for the battery was increased from 4,000 bbl/d to 11,000 bbl/d with the ability to expand this capacity to 22,000 bbl/d with an additional investment of $1.8 million. Currently the Company is producing 4,000 bbl/d of fluids in Judy Creek with sufficient capacity for the remainder of the 2010 and 2011 drilling program. The Company has also initiated a project to run electrical power into the Judy Creek field which will serve to reduce capital expenditures on new drilling projects and improve operating efficiencies in the field on a long term basis. The electrification of the field and the battery is expected to be completed by the end of 2010.

Over the long term these facility investments will substantially increase the operating efficiencies in the area by reducing fixed costs and capital associated with each boe produced at Judy Creek. Management believes that the operating costs in Judy Creek and in turn its Corporate operating costs will continue to trend downwards as its Pekisko development drilling program continues over the remainder of 2010 and 2011.

To facilitate the acceleration of its drilling program the Company completed an equity financing of 10 million shares in the first quarter at $2.00 per share for total proceed of $20 million. The Company has also arranged hedges for the second quarter of 2010 for 500 bbl/d of oil at $85.15 per bbl and 1,800 Gj's of gas at $5.37 per Gj. In the third quarter the Company has hedges covering 300 bbl/d of oil at $86.90 per bbl and 1,800 Gj's of gas at $5.45 per Gj. Subsequent to the first quarter ending the Company has also negotiated an increase in its credit facilities from $20.0 million to $30.0 million.

Corporate Outlook

Second Wave has continued to gain momentum in 2010 with continued drilling success on its Judy Creek Pekisko oil resource play.

Through a process of strategic dispositions, financings and an active hedging strategy the Company has positioned itself for future growth despite near term volatility in commodity prices. The total capital budget for 2010 has been set at approximately $49.7 million with $30.8 million being spent in the last three quarters of the year. The capital program plans for an additional 10 to 15 horizontal Pekisko oil wells in Judy Creek for the remainder of the year resulting in a budgeted production rate of 2,500 boe/d in December of 2010. This capital budget will be funded through cash flow, non-core dispositions and existing credit facilities.

The Company had a net debt of $10.9 million at the end of the first quarter and is budgeting cash flow from operations of $12.5 million over the last three quarters of the year. Currently within its debt the Company holds a $4.0 million convertible debenture which is scheduled to mature in June 2011. Based on the Company's trading history over the past 60 days the Company has the ability to convert the debenture into equity in advance of its maturity and plans to do so in the second quarter. Assuming successful execution of the capital program the Company is expecting that the yearend debt to cash flow ratio will be approximately 1:1.

Subsequent to the end of the quarter Second Wave has invested $5.1 million in the acquisition of an additional 19,650 acres (31 sections) of undeveloped Pekisko mineral rights in Judy Creek. The Company now holds 91,000 net undeveloped acres with 90,000 undeveloped acres (140 sections) of Pekisko mineral rights and 60,000 undeveloped acres (95 sections) of Beaverhill Lake mineral rights. The Company has utilized 29 square miles of proprietary 3-D seismic, 152 miles of 2-D seismic and 30 vertical well bores to map the Pekisko G pool over an area exceeding 60 sections or 38,400 acres. The Company now holds 95% of this prospective acreage at a 100% working interest.

As per the Company's internal mapping the structurally lowest known oil saturated core from the Pekisko G pool has been taken from the 00/10-03-062-11W5 well bore. The 10-03 well is 25 kilometers SW from the highest known producing horizontal Pekisko well at 100/16-34-063-09W5 and structurally the Pekisko formation top in the 10-03 well is 100 meters down dip from the 16-34 well. The closest well bore to the 10-03 well that has tested at economic rates out of the Pekisko formation is the 100/07-10-063-10W5 vertical well which had a 40 day production test completed in 1988. The 10-03 well is 14 kilometers SW of the 07-10 well and the Pekisko formation top at 10-03 is structurally down dip 80 meters from the 07-10 well. Management feels that the oil bearing Pekisko formation can now be mapped regionally between these known points. Second Wave now owns over 95% of the Pekisko mineral rights between the 16-34 well bore and the 10-03 well bore.

To further define the economic viability of this Pekisko resource the Company has initiated the licensing process on its next 28 horizontal delineation wells all of which reside within its existing proprietary 3-D seismic coverage. If successful these wells will economically delineate an additional 30 sections of Pekisko reservoir in addition to the 5 sections that the Company has developed to date. The Company is currently planning to drill 10-15 of these horizontal wells during the remainder of 2010 and believes that successful development of each section may require up to 10 horizontal wells. Based on the results from this delineation program the Company will evaluate further delineation drills on the remaining mapped acreage.

Currently the Company has 10 (10 net) horizontal oil wells and 3 (3 net) vertical oil wells producing out of the Pekisko formation at Judy Creek. All of the horizontal wells have been completed using a coil tubing acid squeeze technique whereas the open hole portion of the well bore is washed or squeezed with 100 to 200 m3 of 15% HCL. Results to date with this technique have been encouraging as production rates from the 9 long leg horizontal wells have averaged approximately 90 boe/d over the first 30 days of production (9 wells in the data set) with production rates after 6 months of approximately 70 boe/d (3 wells in data set). Using assumed capital of $1.3 million per well each of these horizontal wells would have pay-outs of less than two years and a rate of return exceeding 55% (assuming pricing of $80.00/bbl oil and $5.00 per mcf).

The Company has continued to evolve its completion techniques and is currently planning to apply multi-stage fracture completion technology to its next 4 horizontal Pekisko wells. The first two of these operations are scheduled to occur late in the second quarter of 2010 as part of the Company's ongoing drilling and completion program in Judy Creek. The Company plans to fracture stimulate each of these new horizontal wells using 6 to 12 individual stages of 60 m3 of 15% HCL. Application of this completion technology in similar carbonate reservoirs has lead to substantial production increases and improved capital efficiencies which in turn could lead to even more robust well economics. The Company plans to report the results from the first two multi stage frac wells by the end of the second quarter.

To view the Company's current Corporate Presentation, please visit the Second Wave website at www.secondwavepetroleum.com.

READER ADVISORIES

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Barrels of Oil Equivalent (BOEs). The term BOE refers to barrel of oil equivalent, with natural gas converted to crude oil equivalent at a ratio of six thousand cubic feet to one barrel. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of six mcf (six thousand cubic feet) to one bbl (one 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.

Reserves Disclosure. The reserves estimates attributed to Second Wave's properties are estimates only. Actual reserves may be greater or less than those estimated, and the difference may be material.

The determination of oil and gas reserves involves the preparation of estimates that have an inherent degree of associated risk and uncertainty. The estimation and classification of reserves is a complex process involving the application of professional judgment combined with geological and engineering knowledge to assess whether specific classification criteria have been satisfied. It requires significant judgments and decisions based on available geological, geophysical, engineering, and economic data as well as forecasts of commodity prices and anticipated costs. As circumstances change and additional data becomes available, reserves estimates also change. Revisions may be positive or negative.

It should not be assumed that the estimates of future net revenues presented in this news release represent the fair market value of the Company's reserves. There is no assurance that the price forecast and cost assumptions applied by GLJ Petroleum Consultants Ltd. in evaluating the reserves of Second Wave will be attained and variances could be material.

Forward-Looking Statements. This news release contains forward-looking statements as to the Company's internal projections, expectations and beliefs relating to future events or circumstances. Forward-looking statements are typically (but not necessarily) identified by words such as "anticipate", "believe", "plan", "estimate", "expect", "plan", "intend", "potential", "may", "will", "should" or similar words suggesting future outcomes. Although the Company believes that these forward-looking statements are reasonable, undue reliance should not be placed on them as they are subject to known and unknown risks and uncertainties, many of which are beyond the Company's control. Forward-looking statements are not guarantees of future outcomes. There can be no assurance that the plans, intentions or expectations contained in the forward-looking statements or upon which they are based will in fact occur or be realized, and actual results may differ from those expressed or implied in the forward-looking statements. The difference may be material.

Second Wave is subject to the inherent risks associated with the exploration, development, exploitation and production of oil and gas. More particularly, material risk factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements contained in this news release include: adverse changes in commodity prices, interest rates or currency exchange rates; accessibility of capital when required and on acceptable terms; lower than expected production of crude oil and natural gas; production delays; lower than expected reserve volumes on the Company's properties; increased operating costs; ability to attract and retain qualified personnel or to secure drilling rigs and other services on acceptable terms; competition for labour, equipment and materials necessary to advance the Company's projects; unforeseen engineering, environmental or geological problems; ability to obtain all required regulatory approvals on a timely basis and on satisfactory terms; and changes in laws and governmental regulations (including with respect to taxes and royalties). This list is not exhaustive. Readers should also review the risk factors described in other documents filed by the Company from time to time with securities regulatory authorities in Canada, including its most recent annual information form, copies of which are available electronically at www.sedar.com and at www.secondwavepetroleum.com.

Specific forward-looking statements contained in this news release include statements regarding: 2010 drilling plans generally; the number of delineation wells proposed to be drilled on the Judy Creek property; the expected timing for the commencement of drilling; the number of wells expected to be drilled in the second half of 2010; and the number of wells per section required to develop the Pekisko formation. In making such forward-looking statements, Second Wave has made various assumptions regarding, among other things: the accuracy of geological and geophysical data and interpretations of that data; future oil and natural gas prices; future capital requirements; future exchange rates; the accessibility and cost of capital (including credit); the Company's ability to economically produce oil and gas from its properties and the timing and cost to do so; and its ability to obtain qualified staff, equipment and supplies in a timely and cost-efficient manner.

The forward-looking statements included herein are made as of the date of this news release and Second Wave undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by securities laws.

%SEDAR: 00021382E

SOURCE Second Wave Petroleum Inc.

For further information: For further information: Colin B. Witwer, President and CEO, Randy Denecky, VP, Finance and CFO, Second Wave Petroleum Inc., Calgary, Alberta, Canada, Telephone: (403) 451-0165, Email: info@secondwavepetroleum.com, Web: www.secondwavepetroleum.com

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