Sure Energy announces second quarter 2010 financial and operating results

CALGARY, Aug. 10 /CNW/ - Sure Energy Inc. ("Sure Energy" or the "Company") today announced its financial and operating results for the quarter ended June 30, 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 second quarter of 2010, Sure Energy accomplished the following:

    
    -   Production for the second quarter of 2010 averaged 771 BOE/d which
        was lower than anticipated due to plant turnarounds.

    -   Funds flow from operations was $929,000 ($0.02/share).

    -   The Company drilled two wells in the Southern Plains Area during the
        quarter resulting in a new natural gas discovery that is now on
        production.

    -   Sure Energy completed two 40 percent Viking oil wells in the South
        Redwater Area which will add over 60 BOE/d of net production.

    HIGHLIGHTS         Three Months Ended June 30,  Six Months Ended June 30,
                                2010         2009          2010         2009
    -------------------------------------------------------------------------
    ($000 except share
     and per share amounts)
    Financial
    Petroleum and
     Natural Gas Revenues      2,165        1,398         5,238        3,133
    Funds Flow from
     Operations(1)               929          372         2,147          686
       Per Share, Basic
        and Diluted             0.02         0.01          0.05         0.02
    Loss                        (951)      (1,140)       (1,670)      (1,648)
       Per Share, Basic
        and Diluted            (0.02)       (0.03)        (0.04)       (0.04)
    Capital Expenditures       2,132          307         4,435        1,167
    Total Assets                                         38,513       32,154
    Net Debt (1)                                          6,797        1,678
    Shareholders' Equity                                 28,615       29,254
    Common Shares Outstanding
      Basic                                          46,849,464   37,659,208
      Diluted                                        51,154,464   40,806,208
      Fully Diluted with
       Performance Rights                            54,659,464   44,311,208
    Weighted Average
     Common Shares
     Outstanding
      Basic and Diluted   46,849,464   37,659,208    46,849,329   37,659,208

    Share Trading
      High                      1.20         0.45          1.20         0.45
      Low                       0.80         0.26          0.57         0.24
      Close                     0.80         0.29          0.80         0.29
    Trading Volume         3,925,239    1,682,845     6,741,362    2,777,345
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    HIGHLIGHTS         Three Months Ended June 30,  Six Months Ended June 30,
                                2010         2009          2010         2009
    -------------------------------------------------------------------------
    Operations
    Production
      Natural Gas (Mcf/d)      3,982        3,626         4,478        3,531
      Oil (bbls/d)                68           21            70           25
      NGLs (bbls/d)               39           27            41           27
      BOE/d                      771          653           858          640

    Average Selling Price
      Natural Gas ($/Mcf)       4.11         3.56          4.70         4.25
      Oil ($/bbl)              74.47        67.40         76.24        50.42
      NGLs ($/bbl)             60.67        38.56         62.36        38.60
      BOE ($/BOE)              30.88        23.54         33.75        27.03

    Operating Netback
     ($/BOE)(1)                18.17        11.03         18.44        11.64
    Funds Flow Netback
     ($/BOE)(1)                13.24         6.25         13.84         5.93
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (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:

    Capital Program    Three Months Ended June 30,  Six Months Ended June 30,
     Summary                    2010         2009          2010         2009
    -------------------------------------------------------------------------
    ($000s)
    Land                         133           93           702          145
    Geological and
     geophysical                 151          140           303          367
    Drilling                     518          (15)        1,704           48
    Completions                  305           (1)          583           50
    Recompletions and
     workovers                   626           38           794          271
    Production equipment
     and facilities              341          (40)          451          103
    Capitalized
     exploration G&A              88           92           183          183
    Drilling credits               -            -          (450)           -
    -------------------------------------------------------------------------
                               2,162          307         4,270        1,167

    Asset acquisition            (30)           -           141            -
    Asset retirement
     obligation                    -            -            24            -
    -------------------------------------------------------------------------
                               2,132          307         4,435        1,167
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Drilling activity for the six months is summarized as follows:

                     Gas            Oil      Dry and Abandoned     Total
                Gross   Net     Gross   Net    Gross   Net      Gross   Net
    -------------------------------------------------------------------------
    Exploration     1   1.0       -        -     2      2.0      3      3.0
    Development     1   1.0       2      0.8     -        -      3      1.8
    -------------------------------------------------------------------------
    Total           2   2.0       2      0.8     2      2.0      6      4.8
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

Areas of Activity

Peace River Arch

The Company produced 312 BOE/d on the Peace River Arch in the first six months of 2010. In the second quarter of 2010 the area produced 245 BOE/d. The drop was mainly due to a third party plant turnaround which effected Sure Energy's new discovery well at Gordondale. The well is back on at around 1.2 MMcf/d thus restoring the area's production to approximately 290 BOE/d.

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 land sale 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 have been completed and came on production in early July 2010. One well is on at approximately 70 barrels a day of oil with the water cut steadily dropping. The second well looks capable of producing at a similar rate but will also produce 0.5 MMcf/d of gas. The well will have to be tied-in and is anticipated to be on production in early September. Both wells together should increase Sure Energy's production at Redwater to approximately 125 BOE/d from 64 BOE/d. 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 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. The Company has drilled a dual lateral openhole horizontal well on its lands in the northern area and expects this oil well to be on production in the next couple of weeks. Sure Energy has identified in excess of 80 further drilling locations (based on three wells per quarter section).

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 238 BOE/d of sweet gas in the first six months of 2010. The Company drilled a third, seismically defined prospect in the second quarter of 2010 which discovered a new pool. This well came on stream on August 4, 2010 and should add 35 - 50 BOE/d.

Using the knowledge gained at Chinook the Company mapped the producing reservoir regionally and identified a heavy oil prospect. This prospect is planned to be drilled in the fourth quarter and will target a resource of cold flow heavy oil.

Tweedie

The Company produced 144 BOE/d in the first six months of 2010 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 produced 106 BOE/d in the first six months of 2010 of low decline, liquids rich gas in West Central Alberta in the second quarter of 2010. The Company owns 8,032 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 September with a horizontal well which could lead to three follow-up wells. The closest offset well in the existing pool came on production at 130 Bbls/d and produced 26,000 barrels of oil in the first year.

Production

Production for the period by major property is as follows:

    
                                    Six Months Ended June 30, 2010
                        -----------------------------------------------------
                                 Gas          Oil          NGLs        Total
                               Mcf/d       Bbls/d        Bbls/d        BOE/d
    -------------------------------------------------------------------------
    Peace River                1,669           16            18          312
    Plains                        65           47             -           58
    Southern Plans             1,372            -            10          238
    Tweedie                      866            -             -          144
    West Central                 506            7            13          106
    -------------------------------------------------------------------------
    Total                      4,478           70            41          858
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

OUTLOOK

The Company has recently finished drilling the first of its 100 percent Viking dual lateral open hole horizontal wells in North Redwater. Early indications are positive and the well is expected to be placed on production in the next couple of weeks. If successful this sets up over 80 follow-up drilling locations in the area.

In addition work is underway to drill a 100 percent working interest horizontal oil prospect in southeast Saskatchewan. The Company plans to spud the well in September 2010. If successful this well will lead to three follow-up locations.

Sure Energy continues to look for business opportunities that can grow and expand its asset base and prospect inventory.

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

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 intentions and expectations for drilling, development and production 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; Mr. Lance Wirth, Vice President, Finance and CFO, Phone: (403) 410-3100, Fax: (403) 410-3111, Email: info@sureenergyinc.com

Organization Profile

Sure Energy Inc.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890