Synenco Energy releases third quarter results



    (Conference call to be held Thursday, November 1 at 9:00 a.m. Mountain /
    11:00 a.m. Eastern. Please see details at end of release.)

    CALGARY, Oct. 31 /CNW/ - Synenco Energy Inc. today released its interim
financial results and operating highlights for the third quarter and
nine-month period ended September 30, 2007.
    Synenco reported a net loss for the nine-month period ended September 30,
2007 of $16.8 million ($0.33 per share) compared with net income of
$4.3 million ($0.08 per share) for the same period in 2006. The net loss for
the period ended September 30, 2007 includes an impairment charge of
$35.5 million for Northern Lights Partnership (NLP) downstream engineering and
development costs. Synenco's share of the impairment charge, after tax, was
$15.3 million ($0.30 per share). The net loss for the period also includes
restructuring costs resulting from the reprioritization of Northern Lights
development activities announced on May 1, 2007.
    For the third quarter, Synenco Energy reported a net loss of
$15.8 million ($0.31 per share) compared with a net income of $1.3 million
($0.03 per share) for the same period in 2006. The net loss includes the asset
impairment charge recorded on NLP downstream engineering and development
costs.
    The impairment charge results from an analysis by management that
concluded that certain assets capitalized for NLP downstream engineering and
development activities would not likely produce adequate future cash flow to
recover their carrying value, based on the corporation's current plans.
    "Our development focus continues to be on activities that will reduce the
operational and execution risks for the upstream portion of the Northern
Lights project, and we are pleased with the progress in this respect," said
Todd Newton, President and Chief Operating Officer. "In parallel, our
corporate options review process continues."
    Capital expenditures in the quarter were mainly related to upstream
engineering activities, technology and piloting-related costs, personnel
costs, work related to the upstream regulatory application, and signing of the
Fort MacKay/Firebag aerodrome joint venture. The company reported consolidated
capital expenditures of $17.7 million for the third quarter of 2007. With its
60-percent ownership of the Northern Lights Partnership, Synenco's share of
these expenditures amounted to $10.7 million.
    Most costs incurred relate to NLP project development activities and are
capitalized. As a development stage entity, Synenco Energy expects it will
mainly report net losses until project development activities are complete and
operations commence.

    Corporate Developments

    Operational highlights in the quarter included:

    
    -   Synenco, on behalf of the NLP, signed a joint venture agreement to
        participate in the Fort MacKay/Firebag Aerodrome, a private, full-
        service airport under construction about 30 kilometres southeast of
        NLP's proposed oil sands mine site. Synenco believes that the
        aerodrome is the most effective and cost-efficient way for future
        employees and contractors to reach the site.

    -   The company made final preparations for an extraction process pilot
        test, to be conducted at a newly constructed testing facility located
        at Fort MacKay, Alberta, and owned by SGS Canada Inc. Start-up and
        commissioning of the facility continued through October; Synenco
        expects its extraction testing to be complete in early 2008.

    -   Synenco received Supplemental Information Requests from regulatory
        authorities regarding the Northern Lights Mining and Extraction
        Application, originally filed in June 2006. Management expects to
        file responses to these requests during the fourth quarter. In July,
        the Alberta Energy and Utilities Board issued a letter to Synenco
        accepting the company's request for a time-out in processing the
        Northern Lights Upgrader Application.

    -   Plans were developed for a 2007-2008 winter drilling program to
        assist with NLP mine planning and to further delineate resources on
        both the NLP and McClelland leases. Meanwhile, the independent
        geologist report for the 2006-2007 drilling program has been delayed
        until late in the fourth quarter due to lab analysis delays. As the
        majority of the last winter drilling activity was in-fill drilling to
        support mine planning, management does not expect that resource
        estimates will change materially from those previously disclosed.

    Selected Financial Information

    A summary of Synenco's consolidated financial results as at, and for the
periods ended, September 30, 2007 and 2006 is included below. The full interim
report can be found on www.synenco.com.

    (in thousands except per share data)
    -------------------------------------------------------------------------
                                      Three-months ended   Nine-months ended
                                            September 30,       September 30,
    -------------------------------------------------------------------------
                                          2007      2006      2007      2006
    -------------------------------------------------------------------------
    Interest income                      3,742     4,321    11,709    12,093
    Downstream asset impairment charge  35,548         -    35,548         -
    Personnel costs                        766       952     3,145     3,140
    Restructuring costs                    205         -     2,303         -
    Stock-based compensation               357       413     1,139     1,086
    Office, corporate and other costs    3,739     1,663     8,667     4,058
    Non-controlling interest share in
     Partnership income (loss)         (14,867)       52   (15,699)       89
    Income tax recovery                 (6,168)      (75)   (6,619)     (540)
    Net income (loss)                  (15,838)    1,316   (16,775)    4,260
    Net income (loss) per share
      Basic                              (0.31)     0.03     (0.33)     0.09
      Diluted                            (0.31)     0.03     (0.33)     0.08
    Total assets                       645,527   625,512   645,527   625,512
    Shareholders' equity               426,978   438,800   426,978   438,800
    Common shares outstanding           50,451    50,153    50,451    50,153
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    About Synenco Energy and Northern Lights

    Synenco Energy (TSX: SYN) is a Calgary-based oil sands company which,
with a 60-percent interest, is the managing partner of the Northern Lights
Partnership and operator of the Northern Lights oil sands project. Synenco, on
behalf of the NLP, holds five coal lease applications in northeastern Alberta.
In addition, Synenco Energy also holds a 100-percent interest in the
McClelland oil sands lease adjacent to Northern Lights project lands.
    SinoCanada Petroleum Corporation, an indirect wholly owned subsidiary of
China-based Sinopec, owns the remaining 40 percent of the Northern Lights
Partnership and project.

    Conference Call

    Synenco Energy will host a conference call to discuss second quarter
results and provide a corporate update.

    
    Date:  November 1, 2007
    Time:  9:00 a.m. Mountain (11:00 a.m. Eastern)

    Participants are invited to attend by connecting 10 minutes prior to the
    call to one of the following:

    Audio web cast: www.synenco.com
    Toll free:      800 595 8550

    Media are invited to participate in listen-only mode. The company will be
    available to address media questions following the call.

    A re-broadcast of the conference call may be accessed by:

    Audio web cast: www.synenco.com
    Telephone: 416 640 1917 Pass code: 21250897 (followed by the number sign)
    Toll free: 877 289 8525 Pass code: 21250897 (followed by the number sign)
    

    Cautionary note regarding forward-looking statements

    This news release contains "forward-looking statements" relating to
Synenco Energy Inc. ("Synenco") and NLP that are subject, in their entirety,
to this cautionary note. Forward-looking statements are often, but not always,
identified by the use of words such as "seek", "anticipate", "plan",
"continue", "estimate", "expect", "may", "will", "intend", "could", "might",
"should", "believe" and similar expressions.
    Estimates of NLP's in-place bitumen "Discovered Resources" are made as of
December 2006. Estimates of coal mineral resources in lands subject to NLP
coal lease applications are as of May 8, 2007. Estimates of NLP's bitumen
"Contingent Resource" are made as of June 2007 and are forward-looking
statements. (The terms "Contingent Resource" and "Discovered Resource" are
defined in the COGE Handbook. The terms "Inferred mineral resources" and
"Indicated mineral resources", as relating to coal, are defined in the CIM
Standards.) Further classification into contingent resources and/or reserves
is dependent on additional feasibility studies, validation through pilot
testing of the planned extraction process, and the issuance by the Government
of Alberta of a mine permit. Resource estimates are inherently uncertain and
are generally considered more uncertain than estimates of reserves. Future
estimates of recoverable resources and actual recoverable resources will
differ and may differ materially from the estimate of in-place bitumen
Discovered Resources or other resources.
    Statements with respect to the estimated capital costs for the project,
anticipated capital cost savings associated with the modular
construction/northern transportation strategy, capital cost sensitivities,
operating costs, netbacks, yields, cash flow, estimated rates of return, oil
price assumptions, natural gas and power requirements, costs of capital, the
project's proposed design, execution strategy and development schedule,
anticipated production, anticipated cash expenditures and commitments, the
proposed northern route, the benefits of modularization, anticipated water
consumption, the anticipated reclamation cycle, the timing of regulatory
review and approval, the economic impact of utilization of the coal resources,
and the sufficiency of cash resources are all forward-looking statements. All
other statements suggesting future plans and outcomes, including without
limitation statements regarding possible transactions are forward-looking
statements. Readers are strongly cautioned that forward-looking statements are
inherently uncertain and based on a number of estimates and assumptions and
subject to known and unknown risks and uncertainties. Undue reliance must not
be placed on them. Actual results will differ and may differ materially.
    Factors which could cause actual results to differ materially from those
expressed or implied include but are not limited to: availability and
fluctuating price of oil and energy commodities; heavy/light crude oil
differentials; operating conditions and costs; interest rate fluctuations;
costs of construction materials, labour and transportation; labour
disruptions; the level of engineering data available for estimations; changes
or refinements in project design and engineering or transportation and
execution strategy; economic recoverability of resources; ability to transport
modules as contemplated or at all; ability to secure adequate product and
diluent transportation; ability to finalize a binding agreement with Agrium or
others for the sale of by-products from the upgrader; changes in law or
government policy such as changes in the oil sands royalty regime and/or tax
regime, the regulatory environment and federal and provincial environmental
legislation; public opinion with respect to water usage, environmental issues
and socio-economic impacts of oil sands and energy projects; the ability to
obtain regulatory and governmental approvals and licenses on a timely basis or
at all (including, without limitation, approvals in respect of coal leases for
which NLP has made application); the ability to identify and successfully
negotiate commercially advantageous transactions; and the availability and the
cost of debt and equity financing. Refer also to the risk factors in Synenco's
annual information form dated March 9, 2007. Forward-looking statements are
made as at the date of this news release and are not guarantees of future
performance. Synenco expressly disclaims any obligation to update publicly or
revise any of the forward-looking statements except as required by law.
    Forward-looking information relating to the modular construction/northern
transportation strategy for the upstream project including its estimated
capital cost of $4.4 billion (2006 dollars) is based upon preliminary study by
management, and management's estimates and assessment of feasibility. Given
the early stage of the Project, there is no assurance that the proposed
strategy can be implemented, or implemented at the estimated costs. Management
has assumed the ability to negotiate and finalize binding agreements with
module fabricators and transportation companies for the manufacture and
transport of modules as contemplated by Synenco's modular
manufacturing/northern transportation strategy including the costs and
timeframes estimated by management. The modular construction/northern
transportation strategy also assumes that the risks associated with the
transportation routing proposed by management including those associated with
the weather and other physical and timing constraints imposed by the northern
routing can be successfully mitigated. This strategy also assumes that Asian
political, economic and labour sectors, and the costs of materials including
steel, and labour will not undergo significant change within the timeframes
projected for fabrication.





For further information:

For further information: Media, Scott Ranson, General Manager, Public
Affairs, Telephone: (403) 451-5212, Cellular: (403) 619-5038,
scott.ranson@synenco.com; Kelli Stevens, Public Affairs Coordinator,
Telephone: (403) 451-5240, Cellular: (403) 470-5567,
kelli.stevens@synenco.com; Investment community, Idar Eikrem, Executive
Vice-President and Chief Financial Officer, Telephone: (403) 451-4612,
idar.eikrem@synenco.com; Or visit www.synenco.com

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