Sure Energy announces first quarter 2010 financial and operating results

CALGARY, May 12 /CNW/ - Sure Energy Inc. ("Sure Energy" or the "Company") today announced its financial and operating results for the quarter ended March 31, 2010.

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

    
    During the first quarter of 2010, Sure Energy accomplished the following:

    -   Production for the first quarter of 2010 increased to 945 BOE/d up
        from 708 BOE/d in the fourth quarter of 2009

    -   Funds flow doubled from fourth quarter 2009 $672,000 ($0.01 per
        share) to $1,218,000 ($0.03 per share) in the first quarter of 2010

    -   Drilled four gross wells in the first quarter of 2010 resulting in
        one gas well and two potential oil wells

    -   Increased credit facility to $15 million as a result of increased
        production and reserves bookings


    HIGHLIGHTS                                   Three Months Ended March 31,
                                                           2010         2009
    -------------------------------------------------------------------------
    ($000 except share and per share amounts)
    Financial
    Petroleum and Natural Gas Revenues                    3,073        1,735
    Funds Flow from Operations(1)                         1,218          314
      Per Share, Basic and Diluted                         0.03         0.01
    Loss                                                   (719)        (508)
      Per Share, Basic and Diluted                        (0.02)       (0.01)
    Capital Expenditures                                  2,303          860
    Total Assets                                         38,620       34,352
    Net Debt(1)                                           5,594       (1,671)
    Shareholders' Equity                                 29,394       31,048
    Common Shares Outstanding
      Basic                                          46,849,464   37,659,208
      Diluted                                        49,996,464   40,898,208
      Fully Diluted with Performance Rights          53,501,464   44,403,208
    Weighted Average Common Shares Outstanding
      Basic and Diluted                              46,852,127   37,659,208

    Share Trading
      High                                                 0.99         0.35
      Low                                                  0.57         0.21
      Close                                                0.93         0.31
    Trading Volume                                    2,816,123    1,348,128
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    HIGHLIGHTS                                   Three Months Ended March 31,
                                                           2010         2009
    -------------------------------------------------------------------------
    Operations
    Production
      Natural Gas (Mcf/d)                                 4,978        3,435
      Oil (bbls/d)                                           72           29
      NGLs (bbls/d)                                          44           27
      BOE/d                                                 945          628

    Average Selling Price
      Natural Gas ($/Mcf)                                  5.17         4.99
      Oil ($/bbl)                                         77.92        38.04
      NGLs ($/bbl)                                        63.89        38.64
      BOE ($/BOE)                                         36.11        30.68

    Operating Netback ($/BOE)(1)                          18.65        12.27
    Funds Flow Netback ($/BOE)(1)                         14.33         5.58
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Please refer to Management's Discussion and Analysis for definition
        of Non-GAAP measures.


    OPERATIONAL REVIEW

    Cash expenditures for the period were as follows:

                                                 Three Months Ended March 31,
    Capital Program Summary                                2010         2009
    -------------------------------------------------------------------------
    ($000s)
    Land                                                    569           52
    Geological and geophysical                              152          227
    Drilling                                              1,186           63
    Completions                                             278           51
    Recompletions and workovers                             168          233
    Production equipment and facilities                     110          143
    Capitalized exploration G&A                              95           91
    Drilling credits                                       (450)           -
    -------------------------------------------------------------------------
                                                          2,108          860

    Asset acquisition                                       171            -
    Asset retirement obligation                              24            -
    -------------------------------------------------------------------------
                                                          2,303          860
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Drilling activity for the quarter is summarized as follows:

                                Gas               Oil              Total
                          Gross     Net     Gross     Net     Gross     Net
    -------------------------------------------------------------------------
    Exploration              1      1.0        -        -        1      1.0
    Development              -        -        2      0.8        2      0.8
    Dry and Abandoned        -        -        1      1.0        1      1.0
    -------------------------------------------------------------------------
    Total                    1      1.0        3      1.8        4      2.8
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

Areas of Activity

Peace River Arch

The Company's production increased from 107 BOE/d to 379 BOE/d on the Peace River Arch from Q4, 2009 to Q1, 2010 based on production from a new gas discovery. This well was drilled on proprietary 3D seismic data and was successful in the primary targeted zone. The Company is monitoring the well's production performance before determining if follow-up locations exist.

Sure Energy has an inventory of five additional locations on the Peace River Arch, two of which are targeting new pools. One of these is a gas prospect and is programmed to be drilled in late 2010.

Plains (Redwater)

The Company owns 7,495 net acres of land on an emerging light oil resource play in the Viking formation. At Redwater the lower Viking sand is easily mappable in a regionally extensive northwest to southeast fairway, and is hydrocarbon bearing throughout. The sandstone is actually a finely laminated sand/shale sequence with relatively good horizontal permeability in the sands but with limited vertical permeability. Vertical wells typically produce at less than 7 BOE/d when stabilized, but exhibit low declines, indicating that they are accessing large reserves. Recent horizontal activity by other oil and gas companies in the area has significantly improved production rates, with some wells coming on at 100 to 275 BOE/d. The higher producing wells are exhibiting post flush rates of 50 to 70 BOE/d.

In the southern part of the trend Sure Energy currently owns 2,215 acres of land, most of which was acquired through the purchase of a small private company in the summer of 2009. The Company added 520 acres in the first quarter of 2010 at a crown landsale and through a small property acquisition which also included four producing vertical Viking oil wells and an oil battery.

In February Sure Energy drilled two horizontal wells (40% working interest each). These wells will be completed after break-up using the Packers Plus multi-fracture system. The Company has an additional inventory of 22 proven, five probable and 16 unbooked locations (43 gross - 27 net locations) in the southern area alone, based on drilling three wells per quarter section in the northern area.

In the northern extension of the trend the Company has 5,280 acres of Lower Viking rights in the prospective oil fairway (8.25 sections). The northern end of the trend is less drilled and therefore less proven, but older vertical wells drilled in the immediate area to Sure Energy's land produce similar to those to the south. Recent horizontal wells drilled by other oil and gas companies in the area appear to be exhibiting similar initial production rates to wells to the south, most being in the 60 to 275 BOE/d range. Sure Energy's land is all 100% owned and the Company plans to drill at least one horizontal on the northern block in 2010 to investigate the area's production potential. Sure Energy has identified in excess of 80 potential drilling locations based on three wells per quarter section in the northern area.

Currently companies are using a variety of horizontal well technologies including multi-leg laterals, "packers-plus", multi-frac "monobores", and dual laterals. Sure Energy is monitoring the activity and results in the area to determine the best method to develop its resource.

Southern Plains (Chinook)

The Company has had success exploring for gas in the Southern Plains of Alberta in the Lloydminster sand. In the Chinook area the Company produced 261 BOE/d of sweet gas in the current quarter from two gas wells. The Company plans to drill an additional seismically defined prospect on the same trend in the second quarter, immediately after break-up.

Using the knowledge gained at Chinook the Company mapped the producing reservoir regionally and identified two similar prospects, one containing gas and one containing heavy oil. The 100% working interest gas prospect was drilled in January and was successful. This well has been tied in and is currently on production at about 40 BOE/d. A follow-up 2D seismic program is planned to optimize the development of the project. The heavy oil prospect is planned to be drilled in the fourth quarter. This well will target a resource of cold flow heavy oil which could impact Sure Energy's reserves and production profile.

Tweedie

The Company currently produces 144 BOE/d of sweet gas from shallow Cretaceous reservoirs in the Tweedie area, just northeast of Edmonton. The production is from approximately 35 wells and declines at low rates. Sure Energy has an inventory of 17 locations at Tweedie, all defined by both geology and 2D seismic, but only intends to drill a maximum of 2 to 3 wells in the area per year, to maintain production levels.

West Central

Sure Energy produces 109 BOE/d of low decline, liquids rich gas in West Central Alberta. The Company owns 12,160 net acres of undeveloped land in the area and has an inventory of three drillable prospects.

SE Saskatchewan

The Company owns 1,725 acres of land on a prospective light oil fairway at Queensdale in southeast Saskatchewan. After shooting 13 square kilometres of proprietary 3D seismic the Company identified an extension of an adjacent pool on to its acreage. This pool extension will be evaluated in June with a horizontal well and could lead to three follow-up wells. This light oil project could add to Sure Energy's production. A separate structure identified on the 3D seismic was drilled and abandoned this January (100% working interest).

Production

Production for the period by major property is as follows:

    
                                        Three Months Ended March 31, 2010
                                  -------------------------------------------
                                    Gas         Oil        NGLs        Total
                                   Mcf/d      Bbls/d      Bbls/d       BOE/d
    -------------------------------------------------------------------------
    Peace River                    2,074          17          17         379
    Plains                            27          47           -          52
    Southern Plans                 1,496           -          12         261
    Tweedie                          861           -           -         144
    West Central                     520           8          15         109
    -------------------------------------------------------------------------
    Total                          4,978          72          44         945
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

OUTLOOK

Sure Energy had a reasonably active first quarter drilling four gross wells of which one is now a producing natural gas well at Sedalia, and two others are potential Viking oil wells at Redwater that are awaiting completion after breakup. The Company's base capital budget for 2010 remains at $10 million and with its increased credit facility of $15 million provides good financial flexibility for the remainder of the year. Upcoming in the second quarter of 2010 Sure Energy has plans to complete the two potential oil wells at Redwater along with drilling two high impact 100% working interest natural gas prospects at Chinook and Sedalia. Into the early summer Sure Energy will be drilling two 100% horizontal oil prospects at Redwater and Queensdale that will lead to extensive followup drilling. The Company also continues to build on its undeveloped land base and prospect inventory which is in excess of 160 locations for future growth. Sure Energy Inc. is a publicly traded oil and gas exploration and development company listed on the Toronto Stock Exchange under the symbol "SHR".

For further information, please visit our website at www.sureenergyinc.com or contact: Mr. Jeff Boyce, President and CEO Mr. Lance Wirth, Vice President, Finance and CFO Phone: (403) 410-3100 Fax: (403) 410-3111 Email: info@sureenergyinc.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 statements in the section "Outlook" in the MD&A and the Company's stated intentions and expectations for drilling and development on its main producing properties are forward looking information. Sure Energy's Annual Information Form and other documents filed with securities regulatory authorities (accessible through the SEDAR website www.sedar.com) describe the risks, material assumptions and other factors that could influence actual results and which are incorporated herein by reference. 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.

%SEDAR: 00024118E

SOURCE Sure Energy Inc.

For further information: For further information: please visit our website at www.sureenergyinc.com or contact: Mr. Jeff Boyce, President and CEO or Mr. Lance Wirth, Vice President Finance and CFO, Phone: (403) 410-3100, Email: info@sureenergyinc.com

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