Sure announces second quarter, 2008 financial and operating results



    CALGARY, Aug. 6 /CNW/ - Sure Energy Inc. ("Sure Energy" or the "Company")
is pleased to announce results for the second quarter 2008, ending June 30,
2008.
    The Company's MD&A and Financial Statements and Notes can be viewed or
downloaded at www.sureenergyinc.com or www.sedar.com.

    
    During the second quarter of 2008, Sure Energy accomplished the following:

    -   Funds flow from operations for the second quarter of 2008 increased
        69 percent from the first quarter 2008 to $779,000 ($0.03/share)

    -   Drilled and tested a 100 percent working interest natural gas
        discovery in Central Alberta that is currently being tied-in and will
        add approximately 100 BOE/d of net production by early August 2008

    -   Commenced construction of a natural gas processing facility at
        Boundary Lake which is expected to be completed in early September
        2008 and will add approximately 90 BOE/d of net natural gas
        production

    -   In mid July closed an $8 million equity financing leaving the Company
        in a very strong financial position with no debt, $8 million cash and
        $8.5 million undrawn credit facility

    -   Increased 2008 Capital Budget to $15 million from $9.5 million


    HIGHLIGHTS         Three Months Ended June 30,  Six Months Ended June 30,
                                2008         2007          2008         2007
    -------------------------------------------------------------------------
    ($000 except share and per share amounts)

    Financial

    Petroleum and Natural
     Gas Revenues              1,883        1,202         3,315        2,267
    Funds Flow from
     Operations(1)               779          404         1,239          722
      Per Share, Basic
       and Diluted              0.03         0.01          0.04         0.03
    Loss                         (98)        (517)         (497)        (985)
      Per Share, Basic
       and Diluted             (0.01)       (0.02)        (0.02)       (0.03)
    Capital Expenditures       1,433          980         7,043        3,463
    Total Assets                                         27,174       25,002
    Working Capital(1)                                     (592)       5,322
    Shareholders' Equity                                 23,880       22,720
    Common Shares
     Outstanding
      Basic                                          30,767,210   28,509,148
      Diluted                                        33,482,210   30,574,148
      Fully Diluted with
       Performance Rights                            37,451,210   35,551,148
    Weighted Average
     Common Shares
     Outstanding
      Basic and Diluted   30,767,210   28,509,148    30,584,073   28,509,148

    Share Trading
      High                      1.35         1.36          1.35         1.36
      Low                       0.82         0.89          0.80         0.86
      Close                     1.17         1.30          1.17         1.30
    Trading Volume         3,015,556    5,209,382     5,997,041    9,956,351
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    HIGHLIGHTS         Three Months Ended June 30,  Six Months Ended June 30,
                                2008         2007          2008         2007
    -------------------------------------------------------------------------
    Operations

    Production
      Natural Gas (Mcf/d)      1,744        1,810         1,758        1,683
      Oil (bbls/d)                14            3            13            4
      NGLs (bbls/d)               15            -            17            -
      BOE/d                      319          305           323          285

    Average Selling Price
      Natural Gas ($/Mcf)      10.29         7.17          9.01         7.26
      Oil ($/bbl)             128.42        72.80        110.13        69.63
      NGLs ($/bbl)             63.39            -         54.23            -
      BOE ($/BOE)              64.77        43.33         56.33        43.96

    Operating Netback
     ($/BOE)(1)                39.10        23.83         33.69        23.59
    Funds Flow Netback
     ($/BOE)(1)                26.78        14.59         21.06        13.99
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Please refer to Management's Discussion and Analysis for definition
        of Non-GAAP measures.

    Capital expenditures for the period were as follows:

                       Three Months Ended June 30,  Six Months Ended June 30,
                                2008         2007          2008         2007
    -------------------------------------------------------------------------
    ($000s)
    Land                         126           71           378          595
    Geological and
     geophysical                 239          317           455          582
    Drilling                     135          225           305        1,093
    Completions                    6           53            21          215
    Recompletions and
     workovers                   162            -           162            -
    Production equipment
     and facilities              658          227           684          743
    Capitalized
     exploration G&A              92           87           182          174
    -------------------------------------------------------------------------
                               1,418          980         2,187        3,402

    Asset disposition              -            -          (158)           -
    Corporate acquisition
     - Argent                      -            -         4,993            -
    Asset retirement
     obligation                   15            -            15           61
    Other assets                   -            -             6            -
    -------------------------------------------------------------------------
                               1,433          980         7,043        3,463
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Sure Energy's activity for the quarter included the drilling of one
successful well in June. This well is currently being tied-in and is expected
to be on production in August. Facilities construction for Sure Energy's
Boundary well was started in June. Construction is ongoing and the well is
expected to be on production early in September.

    Producing Properties

    Sure Energy currently has three main producing areas, Tweedie, Valhalla
and Chinook. A fourth, Boundary Lake, will be a new producing area in
September 2008.

    Tweedie

    The Company currently produces 1.25 MMcf/d (200 BOE/d) of sweet gas from
shallow Cretaceous reservoirs in this area, located 180 kilometres northeast
of Edmonton. The Company owns 20,600 acres of contiguous land, a 25 percent
working interest in the main gas plant and a working interest in the pipeline
infrastructure in the area. The Company plans to drill three to four wells
this winter, to maintain production at Tweedie. Sure Energy expects our
inventory of 17 gas prospects will sustain production levels from this
property for the next four to five years.

    Valhalla

    Sure Energy is currently producing 85 BOE/d of production which it
acquired from Argent Energy in January 2008. Of this, 78 BOE/d comes from the
Charlie Lake in the greater Valhalla area on the Peace River Arch. The four
wells that contribute this production vary from 30 percent to 75 percent
working interest and are either liquids rich gas or gassy oil wells.

    Chinook

    The Company currently produces 47 BOE/d from one 60 percent working
interest well that it drilled in the third quarter of 2007. The well is
producing at a reduced rate because of localized restricted pipeline capacity,
but is producing at minimal declines from a proved plus probable reserve base
of 1 BCF of sweet gas.

    Boundary Lake

    Sure Energy will add an additional 90 BOE/d when a Halfway well it
drilled in the first quarter of 2007 is tied-in. After protracted partner
negotiations and government approvals this sour gas well will be turned on at
a rate of 2.4 MMcf/d, thus contributing approximately 90 BOE/d for the
Company's 25 percent working interest. The well is interpreted to be producing
from a proved plus probable reserve base of 4 BCF which again will mean
relatively minimal declines in the early stages of production. This well
should come on stream in early September.

    Central Alberta

    The Company is currently tying in a well drilled in the second quarter of
2008 which will add approximately 100 BOE/d beginning in early August.

    Exploration and Upside Potential

    For the past 12 to 18 months the Company has been very conservative with
its capital spending and has focused on increasing its prospect inventory.
Sure Energy's Management and Board are now comfortable that improved market
conditions enable it to more aggressively evaluate the Company's prospect
inventory. Sure Energy plans a $15 million capital budget for the fiscal year
2008.
    Sure Energy will be evaluating the following prospects:

    Horizontal Light Oil at Red Water, Alberta

    The Company owns seven and three-quarters sections of 100 percent land
(31 oil spacing units) on trend with an emerging light oil play in the Basal
Viking, at Redwater, located 35 kilometres north of Edmonton. The land is
immediately offset by a horizontal well which was drilled in 1993 and is still
producing at 10 BOE/d from that formation. Modern horizontal drilling
techniques are being used in the same reservoir eight miles to the southeast
with improved initial production rates, some wells with rates in excess of
100 BOE/d.
    Sure Energy will commence its evaluation of this prospect with a
horizontal well in the third quarter of 2008.

    Horizontal Light Oil in Southeast Saskatchewan

    The Company has purchased two sections of land on a prospective light oil
fairway in southeast Saskatchewan. The land is in close proximity to an analog
pool which has produced 11.6 million barrels to date and is still producing at
2,500 barrels per day from horizontal wells.
    The Company will drill an initial horizontal well into this prospect in
the third quarter of 2008.

    Shallow Gas at Chinook

    The Company has had success exploring for gas in a highly permeable gas
sand in the Cretaceous in the Chinook area, northeast of Calgary, close to the
Saskatchewan border. Sure Energy has an inventory of three locations on this
trend and intends to drill two of these in the third quarter of 2008. These
prospects are anticipated to be similar to the well drilled by Sure Energy in
July 2007, discussed above. Both wells will be 100 percent working interest
subject to a non-convertible override.

    Peace River Arch Drilling and Completions

    Sure Energy will be drilling two wells on the Peace River Arch in 2008,
one exploring for shallow gas in the Cretaceous and one for Triassic oil. The
shallow gas prospect is relatively low risk as it is offsetting missed pay.
The Triassic oil prospect is a close offset to a new discovery well currently
producing 60 BOE/d of light oil and gas. Should Sure Energy's well be
successful it could prove up two to three follow-up locations.
    The Company will also be participating in the completion of a Charlie
Lake zone which is interpreted to be an edge well to a new pool. If successful
the well could lead to three follow-ups on Sure Energy owned land. A second
completion will evaluate the Montney, a relatively tight Triassic gas sand.

    Peace River Arch Farm-Outs

    The Company is in the fortunate position of having more projects than it
can currently finance so it is actively seeking partners on its more risky
exploration prospects. Sure Energy has farmed-out a deep prospect targeting a
prolific turbidite trend in the Montney formation. Although Management
believes this well has very attractive upside (wells on the trend commonly
produce 2 to 3 MMcf/d) and is well defined on 3D data, Sure Energy elected to
take a partner in order to manage its cost risk. The well should be commenced
in July of this year.
    The Company is also actively seeking partners to drill two exploration
wells in its Boundary Lake core area, one seeking Cretaceous gas and the other
Triassic gas or oil. The Company will participate in both wells for a minimum
of 20 percent working interest. They are scheduled to be drilled in December
2008 and January 2009.

    Alberta Royalty Changes

    On October 25, 2007 the Government of Alberta introduced the framework
for a new Alberta royalty structure based on recommendations made by the
Alberta Royalty Review Panel. The proposed implementation date for most of the
framework is January 1, 2009.
    All of Sure Energy's production is in Alberta and the majority is subject
to Alberta crown royalties. Sure Energy wells are generally low volume gas
producers, and estimates show minimal impact to current net asset value and
future cash flow as a result of the new royalty regime.

    
    Production

    Production for the six months ended June 30, 2008 by major property is as
follows:

                                       Six Months Ended June 30, 2008
                                      ---------------------------------------
                                 Gas          Oil          NGLs        Total
                               Mcf/d       Bbls/d        Bbls/d        BOE/d
    -------------------------------------------------------------------------
    Tweedie                    1,197            -             -          199
    Valhalla                     278           11            17           75
    Chinook                      234            -             -           39
    Redwater                      49            2             -           10
    -------------------------------------------------------------------------
    Total                      1,758           13            17          323
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Production has remained relatively flat for the first half of 2008.
Production deliverability was actually higher as production of our Valhalla
properties were somewhat curtailed due to downtime of third-party facilities
and weather related shut-downs during break-up.

    OUTLOOK

    The outlook for the remainder of 2008 and beyond looks very positive for
the Company. Production is ramping up, activity levels are increasing and the
financial position remains very positive.
    The third quarter of 2008 will see production increasing from 340 BOE/d
to 530 BOE/d by early September 2008 as Boundary Lake and Central Alberta
natural gas wells get tied in. Activity levels will be the busiest in the
Company's history as it increases its 2008 capital budget to $15 million.
    Highlighted activities include the drilling of two high impact 100%
working interest natural gas prospects at Chinook and two significant
horizontal wells at Redwater and S.E. Saskatchewan targeting large crude oil
prospects, that if successful, will have extensive development potential.
    The Company continues to build on its large prospect inventory and land
base for future growth. In addition the Company continues to remain in a
strong financial position with $8 million of cash, no debt, and an
$8.5 million undrawn credit facility and over $40 million in tax pools.
    The Company continues to remain positive on the long term outlook for
natural gas prices but sees further weakness in near term gas prices and will
use this weakness to pursue additional accretive acquisitions that can expand
its asset base.

    The Company's MD&A and Financial Statements and Notes can be viewed or 
downloaded at www.sureenergyinc.com or www.sedar.com.

    Forward-looking Information

    Certain statements contained in this release constitute forward-looking
information. These statements relate to future events or Sure Energy's future
performance. The use of any of the words "could", "expect", "believe", "will",
"projected", "estimated" and similar expressions and statements relating to
matters that are not historical facts are intended to identify forward-looking
information and are based on Sure Energy's current belief or assumptions as to
the outcome and timing of such future events. Actual future results may differ
materially. In particular, Sure Energy's stated expectation as to when its new
natural gas discoveries in the Chinook and Boundary Lake areas are to be tied
in and on production and stated intentions and expectations for drilling and
production levels on its main producing properties are forward looking
information. Sure Energy's annual report to shareholders and other documents
filed with securities regulatory authorities (accessible through the SEDAR
website www.sedar.com) describe the risks, material assumptions and other
factors, such as changes in business plans and potential delays or changes in
plans with respect to development projects or capital expenditures, that could
influence actual results. Sure disclaims any intention or obligation to
publicly update or revise any forward-looking information, whether as a result
of new information, future events or otherwise, except as may be expressly
required by applicable securities laws.

    Sure Energy Inc. is a publicly traded oil and gas exploration and
development company listed on the Toronto Stock Exchange under the symbol
"SHR".

    %SEDAR: 00024118E




For further information:

For further information: Mr. Lance Wirth, Vice President Finance and
CFO, Mr. Jeff Boyce, President and CEO, Phone: (403) 410-3100, Email:
info@sureenergyinc.com, Web: www.sureenergyinc.com

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