Trafalgar Energy Ltd. announces year end 2007 reserves and operational update



    CALGARY, Jan. 31 /CNW/ - Trafalgar Energy Ltd. (TSX:TFL) ("Trafalgar" or
the "Company") is pleased to announce its 2007 year end reserves as evaluated
by GLJ Petroleum Consultants ("GLJ") in accordance with National Instrument
51-101 and an operational update. Trafalgar anticipates releasing its audited
2007 year end financial results on or about March 13, 2008.

    Highlights:

    
    -   85% increase for proved plus probable reserves during 2007 to
        2.6 million boe.

    -   14% increase in reserve life index during 2007 to 7.2 years.

    -   $12 to $13 per boe estimated proved plus probable finding and
        development costs for 2007 including changes in future development
        capital.

    -   63% increase in our net undeveloped land holdings during 2007 to
        114,000 net undeveloped acres.

    -   Strong balance sheet with no bank debt outstanding at
        December 31, 2007.

    -   $4.45 to $4.55 net asset value per share estimated at
        December 31, 2007, a 10% to 15% increase for the year.

    -   50% increase to 2007 exit production rate of 1,000 boepd versus
        2006 exit rate.

    -   Active winter drilling program of 8 to 10 wells underway with an
        attractive prospect inventory positioned to deliver value to our
        shareholders during 2008, 2009 and beyond.

    -   2008 average production volumes are expected to increase 25% to 40%
        to 1,225-1,325 boepd.

    -   In excess of $55 million in the tax pools to shelter future income.
    

    2007 Reserves and Current Operational Update

    Proved plus probable reserves increased 85% to 2,641 thousand barrels of
oil equivalent ("mboe") from 1,429 mboe and proved reserves increased 86% to
1,689 mboe from 908 mboe during the year ended December 31, 2007.
Approximately 87% of the Company's reserves, on a barrels of oil equivalent
("boe") basis, are natural gas. Trafalgar's proved plus probable reserve life
index has increased 14% to 7.2 years as compared to 6.3 years one year ago.
    Finding and development costs, including changes to future development
capital, for the year ending December 31, 2007 are estimated to be $12.00 to
$13.00 per boe on proved plus probable basis and $17.00 to $18.00 per boe on a
proved basis. Comparable 2006 finding and development costs, including changes
in future development capital, were $13.23 per boe on a proved plus probable
basis and $22.18 on a proved basis.
    Trafalgar's net undeveloped land holdings increased 63% during 2007 to
approximately 114,000 net undeveloped acres. Trafalgar will continue to add to
its high quality land and prospect inventory over the course of 2008.
    Trafalgar estimates its December 31, 2007 before tax net asset value
("NAV") at $4.45 to $4.55 per share which is an increase of 10% to 15% as
compared to our December 31, 2006 NAV of $3.97 per share calculated with the
same approach. Trafalgar's December 31, 2007 NAV includes: (i) the NPV of
proved plus probable reserves at a 10% discount rate, (ii) undeveloped land at
an independently determined value of approximately $7.7 million, (iii) the
cost of a new and currently unutilized compressor held in fixed assets, and
(iv) net working capital balances.
    Trafalgar exited 2007 at 1,000 barrels of oil equivalent per day
("boepd") representing a 50% increase over the 2006 exit level. Average
production for the 2007 year was over 930 boepd. Trafalgar has met both our
forecasted average 2007 production target of 900 to 950 boepd and 2007 exit
target of 950 to 1,050 boepd.
    Trafalgar has maintained a strong balance sheet and generated value on a
per share basis. As at December 31, 2007, there was no bank debt outstanding
under a $15 million credit facility and shares outstanding at December 31,
2007 have remained unchanged for the year at 11,835,883 voting and non-voting
common shares.
    Based upon currently available information the Company expects the
proposed Alberta royalty framework to have a negligible impact on the net
present value ("NPV") of our reserves at current GLJ commodity price
forecasts.
    In early January 2008 Trafalgar commenced its planned 8 to 10 well
drilling program targeting natural gas at our Mackay project in northern
Alberta. Currently, 6 wells have reached target depth with completion
operations now ongoing. This winter, Trafalgar plans to construct a 7 million
cubic feet per day ("mmcf/d") compressor station for the Mackay area to
process current and future production volumes.
    At Grouard, water injection operations commenced in late 2007 into the
Bluesky "B" pool. This oil pool is estimated to have 17 million barrels
("bbls") estimated original oil in place with a low recovery of 550 thousand
bbls of oil produced to date. Current pool production is averaging
approximately 60 bbls per day with initial response from the waterflood
project anticipated during the second quarter of 2008.
    Based on Trafalgar's Q1 activity, 2008 production is forecast to increase
to an average of 1,225 to 1,325 boepd representing a 25% to 40% increase over
2007 average levels.
    Throughout 2007, the Company established 100% working interest land
positions on several high impact exploratory prospects in its North Central
Alberta focus area. These light oil and natural gas prospects form the
foundation of Trafalgar's future growth and complements our existing
development inventory at Mackay. The first of these prospects, a Gilwood light
oil exploration well at Grouard, is scheduled to start drilling in mid
February 2008 targeting a 3D seismic defined structure. Success may lead to
additional development wells and initiate the acquisition of additional 3D
seismic to define and confirm existing leads in the Grouard area. Given the
3 season access nature of the majority of our exploration portfolio,
additional drilling is being planned for summer 2008.
    Trafalgar's proved plus probable finding and development cost targets of
$12 per boe for natural gas projects and $18 per boe for oil projects were
achieved during 2007 and will remain in place for 2008. Projects of this type
are highly economic and profitable within the current commodity price
environment before and after full consideration of the Alberta government's
proposed new royalty framework.
    Despite challenging business conditions in 2007 Trafalgar has maintained
a strong balance sheet, executed an efficient low cost finding and development
program, increased net asset value, substantially increased production and
reserves on a gross and per share basis, and significantly expanded our high
quality prospect inventory. Trafalgar is optimistic regarding the
opportunities available in our current industry and is very well positioned to
continue our efficient growth throughout 2008, 2009 and beyond.
    An updated presentation will be available on February 1, 2008 on our
website at www.trafalgarenergy.ca for interested parties.

    
    2007 Oil and Gas Reserves

                       Summary of Oil and Gas Reserves
                           as of December 31, 2007
                          Forecast Prices and Costs

                                     Oil and Gas Reserves
                       Light and
                       Medium Oil          Heavy Oil          Natural Gas
    RESERVES       Gross(1)    Net(2)  Gross(1)    Net(2)  Gross(1)    Net(2)
     CATEGORY       (Mbbls)   (Mbbls)   (Mbbls)   (Mbbls)   (MMcf)     (MMcf)

    Proved
      Developed
       Producing        38        36        92        87     8,297     6,672
      Developed
       Non-Producing     -         -         -         -     1,058       830
      Undeveloped        -         -         -         -         -         -
                   --------  --------  --------  --------  --------  --------
    Total Proved        38        36        92        87     9,355     7,502
    Probable            13        13       208       194     4,383     3,423
                   --------- --------  --------  --------  --------  --------
    Total Proved
     Plus Probable      51        49       300       281    13,737    10,925
                   --------- --------  --------  --------  --------  --------
                   --------- --------  --------  --------  --------  --------


                     Oil Equivalent
     RESERVES      Gross(1)    Net(2)
      CATEGORY      (MBoe)     (Mboe)

    Proved
      Developed
       Producing     1,513     1,235
      Developed
       Non-Producing   176       138
      Undeveloped        -         -
                   --------  --------
    Total Proved     1,689     1,374
    Probable           952       777
                   --------  --------
    Total Proved
     Plus Probable   2,641     2,150
                   --------  --------
                   --------  --------

    (1) In relation to the above table, "Gross" reserves means, in relation
        to our interest in production and reserves, our interest (operating
        and non-operating) before deduction of royalties and without
        including any of our royalty interests.
    (2) In relation to the above table, "net" means, in relation to our
        interest in production and reserves, our interest (operating and
        non-operating) after deduction of royalty obligations, plus our
        royalty interest in production or reserves.


                                   Net Present Values of Future Net Revenue
                                              Before Income Taxes
                                           Forecast Prices and Costs

    Reserves Category               0%       5%       10%      15%      20%
                                  ($000s)  ($000s)  ($000s)  ($000s)  ($000s)
    Proved
      Developed Producing         39,035   33,243   29,056   25,899   23,437
      Developed Non-Producing      4,888    4,046    3,395    2,884    2,476
      Undeveloped                      -        -        -        -        -
                                 -------- -------- -------- -------- --------
    Total Proved                  43,923   37,289   32,451   28,783   25,913
    Probable                      25,117   17,087   12,426    9,490    7,519
                                 -------- -------- -------- -------- --------
    Total Proved Plus Probable    69,040   54,376   44,878   38,273   33,432
                                 -------- -------- -------- -------- --------
                                 -------- -------- -------- -------- --------



            GLJ Summary of Pricing and Inflation Rate Assumptions
             Forecast Prices and Costs Effective January 1, 2008

                                    Edmonton        Hardisty
                      WTI           Par Price         Heavy          NYMEX
                    Cushing        40 degrees      12 degrees       NATURAL
                   Oklahoma            API             API            GAS
      Year         ($US/Bbl)       ($Cdn/Bbl)      ($Cdn/Bbl)     (US$/MMBtu)
    --------      -----------     -----------     -----------     -----------
    2008              92.00           91.10           54.02             7.50
    2009              88.00           87.10           51.61             8.25
    2010              84.00           83.10           49.19             8.25
    2011              82.00           81.10           47.98             8.25
    2012              82.00           81.10           47.98             8.25
    2013              82.00           81.10           49.04             8.25
    2014              82.00           81.10           50.09             8.45
    2015              82.00           81.10           51.15             8.62
    2016              82.02           81.12           52.21             8.79
    2017              83.66           82.76           53.29             8.46
    2018           +2.0%/yr        +2.0%/yr        +2.0%/yr             9.14
    2019                                                            +2.0%/yr

            GLJ Summary of Pricing and Inflation Rate Assumptions
             Forecast Prices and Costs Effective January 1, 2008

                     NATURAL
                       GAS
                    AECO Gas        INFLATION        EXCHANGE
                      Price           RATES            RATE
      Year        ($Cdn/MMBtu)      (%/Year)       ($US/$Cdn)
    --------      ------------    ------------    ------------
    2008               6.75            2.00            1.00
    2009               7.55            2.00            1.00
    2010               7.60            2.00            1.00
    2011               7.60            2.00            1.00
    2012               7.60            2.00            1.00
    2013               7.60            2.00            1.00
    2014               7.80            2.00            1.00
    2015               7.97            2.00            1.00
    2016               8.14            2.00            1.00
    2017               8.31            2.00            1.00
    2018               8.48            2.00            1.00
    2019           +2.0%/yr
    

    Disclosures - Readers are advised that the financial estimates contained
in this release are subject to audit and may be amended as necessary.

    BOEs may be misleading, particularly if used in isolation. A BOE
conversion ratio of 6 Mcf:1bbl is based on an energy equivalency conversion
method primarily applicable at the burner tip and does not represent a value
equivalency at the wellhead.
    All evaluations of future net revenue are after the deduction of future
income tax expenses, royalties, development costs, production costs and well
abandonment costs but before consideration of indirect costs such as
administrative, overhead and other miscellaneous expenses. The estimated
future net revenue contained herein does not necessarily represent the fair
market value of our reserves. There is no assurance that the forecast price
and cost assumptions used in calculating the reserves will be attained and
variations could be material. The recovery and reserve estimates on our
properties described herein are estimates only. Actual reserves on our
properties may be greater or less than those calculated.
    The aggregate of the exploration and development costs incurred in the
most recent financial year and the change during that year in estimated future
development costs generally will not reflect total finding and development
costs related to reserves additions for that year.

    Forward Looking Statements - Certain information regarding Trafalgar set
forth in this document, including management's assessment of Trafalgar's
future plans and operations, contains forward-looking statements that involve
substantial known and unknown risks and uncertainties. These forward-looking
statements are subject to numerous risks and uncertainties, certain of which
are beyond Trafalgar's control, including the impact of general economic
conditions, industry conditions, volatility of commodity prices, currency
fluctuations, imprecision of reserve estimates, environmental risks,
competition from other producers, the lack of availability of qualified
personnel or management, stock market volatility and ability to access
sufficient capital from internal and external sources. Trafalgar's actual
results, performance or achievement could differ materially from those
expressed in, or implied by, these forward-looking statements and,
accordingly, no assurance can be given that any of the events anticipated by
the forward-looking statements will transpire or occur, or if any of them do
so, what benefits that Trafalgar will derive therefrom.





For further information:

For further information: TRAFALGAR ENERGY LTD., Robert Wollmann,
President and CEO, Telephone (403) 216-2706, Email
rwollmann@trafalgarenergy.ca; Daniel Belot, Vice President Finance and CFO,
Telephone (403) 216-2707, Email dbelot@trafalgarenergy.ca, Website
www.trafalgarenergy.ca

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