Spry announces second quarter financial and operating results

CALGARY, Feb. 25 /CNW/ - Spry Energy Ltd. is pleased to announce our financial and operating results for the three and six months ended December 31, 2009.

    
    HIGHLIGHTS

    -   We drilled four (2.2 net) successful East Pembina oil wells during
        the quarter, placing one (0.4 net) of the four on-stream. Two of the
        remaining wells were placed on-stream in January and February 2010
        with the fourth scheduled to be on-stream in April. For the month of
        December 2009, we had four (2.2 net) Pembina oil wells on-stream with
        production averaging 754 (413 net) boes per day.

    -   Subsequent to the end of the quarter, we completed the drilling of
        three (1.8 net) oil wells and we are currently drilling two (1.0 net)
        at Pembina. Thus far, we have drilled a total 13 (7.0 net) wells at
        Pembina with Spry operating 12 of the 13 wells.

    -   Production rates for the quarter averaged 1,456 boes per day, a
        decrease of 18 percent over the average production rates of
        1,776 boes per day for the same quarter ended in 2008. The decrease
        was attributed to natural declines in production as a result of our
        decision to defer our capital spending program in late 2008 in
        response to the economic downturn. The majority of our natural gas
        production was also shut-in for the first half of October in response
        to low commodity prices. We continue to have 870 mcf per day of
        higher operating cost natural gas production shut-in. We also
        experienced a 52 percent decrease in heavy oil production due to the
        watering out of three Marwayne wells. The decreases in natural gas
        and heavy oil production was partially offset by a 38 percent
        increase in light oil production as our new Pembina core area
        averaged 285 barrels per day for the quarter.

    -   Funds from operations during the quarter decreased 27 percent to
        $3,513,000 from $4,798,000 during the same period last year due
        mainly to the decrease in realized gains from our hedging activities.
        Lower petroleum and natural gas revenues were offset by lower
        expenses.

    -   Net debt was $19.0 million which equated to 1.4 times annualized
        second quarter cash flow. In November 2009 our credit facility was
        renewed at the existing $23.0 million borrowing limit.

    -   Net loss for the quarter was $205,000 versus net earnings of
        $2,187,000 for the same period in 2008. The change in revenue
        generated from financial instruments was the primary reason for the
        decrease. Lower natural gas volumes and prices also contributed to
        the decrease, however, this was offset by lower expenses.

    -   Subsequent to the end of the quarter, we closed a non-brokered
        private placement on February 11, 2010, issuing 1,670,000 common
        shares at $6.00 per share for proceeds of $10 million.


                                                       Three months ended
                                                   December 31,  December 31,
                                                          2009          2008
    Financial
    ($ thousands except per share amounts)
    Petroleum and natural gas revenue                    6,925         7,219
    Funds from operations                                3,513         4,798
      Basic per share                                     0.18          0.24
      Diluted per share                                   0.17          0.24
    Net income (loss)                                     (205)        2,187
      Basic and diluted per share                        (0.01)         0.11
    Capital expenditures, cash based                     8,065         5,155
    Working capital deficit, excluding bank debt         4,410           324
    Bank debt                                           14,572         8,494
    Shares outstanding at end of period (000s)          19,974        19,892

    Operations
    Production
      Natural gas (mcf/d)                                4,005         6,214
      Light and medium oil (bbls/d)                        659           473
      Heavy oil (bbls/d)                                   129           268
      Total (boes/d)                                     1,456         1,776
    Prices
      Natural gas ($/mcf)                                 4.67          6.79
      Light and medium oil ($/bbl)                       73.52         54.59
      Heavy oil ($/bbl)                                  62.62         38.71
    Operating netback ($/boe)(1)                         32.46         21.54
    Realized financial instrument gains (losses)
     ($/boe)                                             (0.68)        15.08
    Other expenses affecting funds from operations
     ($/boe)                                             (5.55)        (7.26)
    Funds from operations ($/boe)                        26.23         29.36

    (1) Operating netback is petroleum and natural gas revenues less;
        royalties, operating expenses and transportation expenses.
    

A complete copy of the interim report for the three and six months ended December 31, 2009 along with the CEO and CFO certifications of interim filings can be found on the SEDAR website at www.sedar.com.

SOURCE SPRY ENERGY LTD.

For further information: For further information: Kenneth J. Bowie, President & CEO, (403) 984-6352

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