Suroco Energy Inc. announces filing of second quarter financial statements and MD&A and provides operational update



    
    /NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA/
    

    CALGARY, Aug. 26 /CNW/ - Suroco Energy Inc. (TSX Venture Exchange: SRN)
(the "Corporation") is pleased to announce that it has filed its interim
unaudited consolidated financial statements and related Management's
Discussion and Analysis ("MD&A") for the quarter ended June 30, 2009 on the
System for Electronic Document Analysis and Retrieval ("SEDAR").
    Copies of these documents can be found on the SEDAR website at
www.sedar.com.

    
    Financial & Operating Highlights
    --------------------------------

    (All references to $ are Canadian dollars unless otherwise noted)

                            3 months ended June 30    6 months ended June 30

                                 2009         2008         2009         2008
                                         (Restated)                (Restated)
    -------------------------------------------------------------------------
    Financial
    Oil and gas
     revenue ($)           $2,985,512   $3,278,441   $4,800,460   $3,326,302
    Funds flow from
     operations(1)            307,073      923,946     (151,835)     943,074
      Per share -
       basic ($)                 0.01         0.03         0.00         0.03
      Per share -
       diluted ($)               0.01         0.02         0.00         0.03
    Net income (loss) ($)     878,279     (101,649)    (563,026)  (2,007,742)
      Per share -
       basic ($)                 0.02         0.00        (0.01)       (0.06)
      Per share -
       diluted ($)               0.01         0.00        (0.01)       (0.06)
    Total assets ($)       31,420,021   35,500,499   31,420,021   35,500,499
    Net working
     capital(1) ($)         3,926,663    7,222,012    3,926,663    7,222,012
    Common shares
     outstanding,
     end of period
      Basic                58,045,240   36,795,268   58,045,240   36,795,268
      Diluted              66,060,301   38,670,268   66,060,301   38,670,268
    -------------------------------------------------------------------------

    Average daily net
     production (boe
     per day)                     305          200          253          103

    -------------------------------------------------------------------------
    Note:
    (1) Non-GAAP measure. See "Non-GAAP Measures" section within the MD&A.

    Highlights

    -   First full quarter of production since closing on acquisition of the
        35% non-controlling interest in NCT P&G Corporation which the
        Corporation did not already own and a 25% working interest in the
        Vetra-NCT Consortium, which resulted in record production of 305 boe
        per day.

    -   Significant increase in netbacks per quarter over first quarter of
        2009 due to lower operating expenses and higher oil prices.

    -   Completed first ever 3D seismic program in Suroriente block in
        Colombia in April 2009.

    -   Closed private placement subsequent to quarter end for gross proceeds
        of approximately $7.2 million.

    -   Positive funds flow from operations for the second quarter of 2009 of
        $307,073 compared to negative funds flow from operations in the first
        quarter of 2009 of $(455,375).

    -   Continued to focus the Company's existing activities and future
        growth opportunities in Colombia.

    -   Completed 110 km of 2D seismic in the Alea 1848A Block in Colombia.

    -   Continued preparations to commence development drilling in Suroriente
        Block in Colombia in third quarter.

    Operational Update
    ------------------

    Oil Production in Colombia
    

    The Corporation's oil production in Colombia, which averaged 297 barrels
of oil per day (net to the Corporation after royalty) through the second
quarter of 2009, has increased to 340 barrels of oil per day and is
anticipated to further increase through the development drilling program in
the Suroriente Block described below, which is expected to commence in
September and continue through December. Based upon this development drilling
activity, the Corporation is targeting a production rate of approximately 600
barrels of oil per day (net) once the new wells are on production. Recent oil
sales have been made at a discount of approximately $4.00 against the
prevailing WTI oil price with an average, before tax netback, through the
second quarter of 2009 of approximately $44.00. The recent disruption to the
Trans-Andean pipeline did not impact the Corporation's production volumes as
crude was temporarily trucked to an alternative receiving facility.

    Suroriente Block - Colombia

    Cohembi Pool Production Increase: Following a workover and ESP
installation, production from the Cohembi 1 well in the Suroriente Block has
now increased by approximately 300 barrels of oil per day to 1,250 barrels of
oil per day (182 barrels of oil per day net to the Corporation after royalty).
The Cohembi pool is currently being produced from a single well which, since
2004, has produced in excess of 1.6 million barrels with negligible water
production. With the recent acquisition of 3D seismic over this area, it is
anticipated that further development drilling may be undertaken in the future.

    Suroriente Development Drilling Program: Having signed a rig sharing
contract, the Corporation expects its two well drilling program in the
Suroriente block to commence in September. The rig will be mobilized from its
current location in the central Putumayo Basin, where it has been drilling for
a third party. Due to the rig sharing agreement with this third party, the
Corporation will benefit from reduced mobilization and de-mobilization costs.
The development well locations are being selected using the recently acquired
3D seismic data, with the first well expected to be located approximately 850
metres to the north of the Pinuna 1 well, which is currently producing 900
barrels of oil per day (131 barrels of oil per day net to the Corporation
after royalty). Alternative options for the second development drilling
location are being considered and the final location selection will be
dependent upon the results of the first well.

    Exploration Block Activity

    Alea 1947C Block - Colombia: The Corporation expects to acquire a 2D
infill seismic program in the Alea 1947C Block in the near future. This
seismic program is intended to detail exploration leads previously identified
along an extension of a productive trend that runs from Ecuador into the
Colombian portion of the Putumayo Basin.
    Alea 1848A Block - Colombia: As previously disclosed, a 2D seismic
program was recently completed in the Alea 1848A Block. Once that seismic has
been evaluated, a decision to enter the next phase will be required.
    If the Corporation proceeds to the next phase in one or both of the
aforementioned Alea Blocks, exploration drilling is anticipated in mid-to-late
2010.

    
    Corporate Activity and Cash Flow Forecast
    -----------------------------------------
    

    The Corporation previously announced on July 9, 2009 the closing of a
private placement which raised gross proceeds of approximately $7.2 million.
With this financing and the cash flow derived from its Suroriente production,
the Corporation is anticipating financing its forthcoming development drilling
from cash flow and its 2010 exploration and development drilling from combined
cash flow and funds in its treasury.

    
    References to BOE
    -----------------
    

    References herein to "boe" mean barrels of oil equivalent derived by
converting gas to oil in the ratio of six thousand cubic feet (Mcf) of gas to
one barrel (bbl) of oil. Boe may be misleading, particularly if used in
isolation. A boe conversion ratio of 6 Mcf: 1 bbl is based on an energy
conversion method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead.

    
    Forward Looking Statements
    --------------------------
    

    Certain information regarding the Corporation contained herein may
constitute forward looking statements within the meaning of applicable
securities laws. Forward looking statements may include estimates, plans,
expectations, opinions, forecasts, projections, guidance or other statements
that are not statements of facts. Although the Corporation believes that the
expectations reflected in such forward looking statements are reasonable, it
can give no assurance that such expectations will be realized. These
statements are subject to certain risks and uncertainties and may be based on
assumptions that could cause actual results to differ materially from those
anticipated or implied in the forward looking statements. The Corporation's
forward looking statements are expressly qualified in their entirety by this
cautionary statement.
    The Corporation is a Calgary-based junior oil and gas company, which
explores for, develops, produces and sells crude oil, natural gas liquids and
natural gas in Colombia and Western Canada. The Corporation's common shares
trade on the TSX Venture Exchange under the symbol SRN.

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





For further information:

For further information: Travis Doupe, VP Finance and Chief Financial
Officer of the Corporation, or visit our website at www.suroco.com; Telephone:
(403) 232-6784, Facsimile: (403) 264-7455

Organization Profile

SUROCO 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