Trafalgar Energy Ltd. announces year end reserves, estimated net asset value and operational update



    CALGARY, Feb. 18 /CNW/ - Trafalgar Energy Ltd. (TSX symbol: TFL)
("Trafalgar" or the "Company") is pleased to announce its 2008 year end
reserves, estimated net asset value and operational update. Reserves have been
evaluated by GLJ Petroleum Consultants ("GLJ") in accordance with National
Instrument 51-101. Trafalgar anticipates releasing its audited 2008 year end
financial information on or about March 18, 2009.

    
    2008 Year End Reserves
    ----------------------

    -   Proved Producing gross reserves up 42% over 2007 to 2.15 MMboe.
    -   Total Proved gross reserves up 42% over 2007 to 2.40 MMboe.
    -   Total Proved plus Probable gross reserves up 29% over 2007 to
        3.42 MMboe.
    -   Total Proved plus Probable reserve additions replaced of 310% of 2008
        production.
    -   Reserve life index ("RLI")(*):
    -   Proved Producing 5.6 years.
    -   Total Proved 6.3 years.
    -   Proved plus Probable 8.9 years.

    (*) RLI based upon gross reserves divided by the product of existing
        production of approximately 1,050 boe per day and 365 days.

    The booked reserves are entirely associated with existing wells. No
reserves (proved undeveloped or probable) associated with defined drilling
locations are booked.

                       Summary of Oil and Gas Reserves
                           as of December 31, 2008
                          Forecast Prices and Costs

                                        Oil and Gas Reserves
                      Light and                                    Oil
                      Medium Oil     Heavy Oil    Natural Gas   Equivalent
                     Gross   Net   Gross   Net   Gross   Net   Gross   Net
    Reserves          (1)    (2)    (1)    (2)    (1)    (2)    (1)    (2)
     Category       (Mbbls)(Mbbls)(Mbbls)(Mbbls) (MMcf) (MMcf) (Mboe) (Mboe)

    Proved
      Developed
       Producing       150    126    148    141  11,119  9,006  2,151  1,767
      Developed
       Non-
       Producing         -      -      -      -   1,480  1,205    247    201
      Undeveloped        -      -      -      -       -      -      -      -
                     ------ ------ ------ ------ ------ ------ ------ ------
    Total Proved       150    126    148    141  12,599 10,210  2,397  1,968
    Probable            74     63    133    123   4,882  3,942  1,021    843
                     ------ ------ ------ ------ ------ ------ ------ ------
    Total Proved
     Plus Probable     224    188    281    264  17,481 14,152  3,418  2,811
                     ------ ------ ------ ------ ------ ------ ------ ------
                     ------ ------ ------ ------ ------ ------ ------ ------

    (1) In relation to the above table, "Gross" reserves means, in relation
        to our interest in 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 reserves, our interest (operating and non-operating)
        after deduction of royalty obligations, plus our royalty interest in
        such 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     60,480    47,826    39,589    33,849    29,640
      Developed Non-Producing  6,008     5,043     4,296     3,705     3,229
      Undeveloped                  -         -         -         -         -
                             --------  --------  --------  --------  --------
    Total Proved              66,488    52,869    43,884    37,553    32,868
    Probable                  35,365    22,105    15,154    11,097     8,531
                             --------  --------  --------  --------  --------
    Total Proved Plus
     Probable                101,853    74,974    59,038    48,651    41,399
                             --------  --------  --------  --------  --------
                             --------  --------  --------  --------  --------


            GLJ Summary of Pricing and Inflation Rate Assumptions
             Forecast Prices and Costs Effective January 1, 2009

                              Bow River   NYMEX    NATURAL             EX-
             WTI     Edmonton   Crude    NATURAL  GAS AECO    INFLA-  CHANGE
            Cushing  Par Price   Oil       GAS    Gas Price    TION    RATE
           Oklahoma   ($Cdn/    ($Cdn/    (US$/     ($Cdn/     RATES   ($US/
    Year   ($US/Bbl)   Bbl)      Bbl)     MMBtu)    MMBtu)   (%/Year)  $Cdn)
    -----  --------- --------- --------- --------- --------- -------- -------
    2009      57.50     68.61     51.44      7.00      7.58      2.0   0.825
    2010      68.00     78.94     59.21      7.50      7.94      2.0   0.850
    2011      74.00     83.54     63.49      8.00      8.34      2.0   0.875
    2012      85.00     90.92     69.10      8.75      8.70      2.0   0.925
    2013      92.01     95.91     72.89      9.20      8.95      2.0   0.950
    2014      93.85     97.84     74.36      9.38      9.14      2.0   0.950
    2015      95.73     99.82     75.86      9.57      9.34      2.0   0.950
    2016      97.64    101.83     77.39      9.78      9.54      2.0   0.950
    2017      99.59    103.89     78.96      9.96      9.75      2.0   0.950
    2018     101.59    105.99     80.55     10.16      9.95      2.0   0.950
    2019+  +2.0%/yr  +2.0%/yr  +2.0%/yr  +2.0%/yr  +2.0%/yr      2.0   0.950


    Estimated Net Asset Value ("NAV")
    ---------------------------------

                                     ----------------------------------------
                                       GLJ January 1, 2009 Forecast Pricing

                                                                       Total
                                       Proved           Total    Proved plus
    (in millions)                     Producing        Proved       Probable

    Reserve Value(1)                   $  39.6        $  43.9        $  59.0

    Land(2)                            $   9.7        $   9.7        $   9.7

    Inventory(3)                       $   0.8        $   0.8        $   0.8

    Year End Net Debt Estimate(4)      $ (12.2)       $ (12.2)       $ (12.2)

                                     ----------------------------------------
    Total                              $  37.9        $  42.2        $  57.3
                                     ----------------------------------------

    Common shares outstanding             13.4           13.4           13.4

                                     ----------------------------------------
    NAV per common share               $  2.83        $  3.15        $  4.28
                                     ----------------------------------------

    Share Price Feb 16, 2009 close     $  0.45        $  0.45        $  0.45

    Share Price / NAV per share            16%            14%            11%
                                     ----------------------------------------

    (1) Reserve values are based upon before tax present value using a
        discount rate of 10%
    (2) Seaton-Jordan & Associates Ltd. independent land valuation effective
        December 31, 2008.
    (3) Compressor held in inventory at book value.
    (4) December 31, 2008 estimated net debt, unaudited.


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

    Despite challenging economic conditions, Trafalgar is in solid financial
shape. Trafalgar has an $18 million credit facility and net debt of
approximately $12 million at year end. The Company has quality assets and
continues to generate positive cash flow to fund its activities. Current
production is in the range of 1,025 to 1,125 boe per day. Base production has
low, predictable decline, and low operating cost. Trafalgar intends to spend
within its cash flow in 2009.
    December 31, 2008 proved plus probable net asset value (GLJ January 1,
2009 forecast pricing) was $4.28 per share. Reserve additions were highlighted
by major increases at our House Mountain (light oil) and Mackay (natural gas)
properties.
    With the recent successful well at House Mountain, Alberta, which is
currently producing 120 bbls per day of oil, Trafalgar has added three low
risk, 100% working interest, development locations to inventory. These drill
ready locations are accessible all year. Trafalgar is planning to initiate a
development program at House Mountain in mid 2009, contingent on commodity
price and cash flow.
    At Mackay/Saleski, Alberta, year end proved plus probable reserves showed
a significant year over year increase and as an indication of the quality of
the Mackay asset proved producing reserves increased 113% over 2009. Due to
the decrease in commodity prices Trafalgar has deferred its previously planned
6 to 10 well shallow gas development drilling program and bitumen delineation
activity to next winter. Current natural gas production at Mackay is in the
range of 450 to 500 boe per day.
    In the near term, Trafalgar has significant upside associated with a
4,300 meter Montney horizontal well currently drilling at Cypress, B.C. The
well, farmed out to a major shale gas player with no capital cost to
Trafalgar, is expected to have preliminary results in the second quarter of
2009. Trafalgar owns the bulk of the infrastructure in the area, and prior to
earning, owns 16,200 net acres of undeveloped Montney rights at Cypress.
    Looking forward, the Company has established 100% working interest
positions on several high impact exploration plays in both Alberta and
Saskatchewan. These projects have the potential to develop into new core
producing properties. Our exploration program is focused on identifying
shallow to mid depth resource style plays, those that a junior can afford to
develop.
    Consolidation of the junior producers is gathering steam. The challenges
of lower commodity prices, reduced cash flows, restricted access to capital
and Alberta's new royalty framework is forcing companies to reevaluate go
forward strategies. Trafalgar is actively pursuing opportunities to increase
the production base of the Company, decrease the cost structure and high grade
the overall inventory. In addition, with land prices dropping Trafalgar
continues to selectively build land positions on high impact projects at a
fraction of the cost of previous years.
    Trafalgar with its experienced, proven team will strive to position the
Company to take advantage of the opportunities that 2009 provides.

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

    Reserves Disclosures - BOE's 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.

    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 estimates of reserves and future net revenue for individual
properties may not reflect the same confidence level as estimates of reserves
and future net revenue for all properties due to the effects of aggregation.

    Forward-Looking Statements - This press release contains certain
forward-looking statements and forward-looking information (collectively
referred to herein as "forward-looking statements") within the meaning of
applicable Canadian securities laws. All statements other than statements of
present or historical fact are forward-looking statements. Forward-looking
information is often, but not always, identified by the use of words such as
"anticipate", "believe", "plan", "intend", "objective", "continuous",
"ongoing", "estimate", "expect", "may", "will", "project", "should", or
similar words suggesting future outcomes. In particular, this press release
contains forward-looking statements relating to: Trafalgar's business
strategy; future development and growth opportunities; Trafalgar's asset base
and future prospects and potential; Trafalgar's exploration, development,
drilling and delineation plans, the timing thereof and anticipated results
therefrom; Trafalgar's planned capital spending and the timing and sources of
funding Trafalgar's capital program.
    In addition, statements relating to "reserves" or "resources" are deemed
to be forward looking statements, as they involve the implied assessment,
based on certain estimates and assumptions, that the resources and reserves
described can be profitably produced in the future. Forward-looking statements
regarding Trafalgar are based on certain key expectations and assumptions of
Trafalgar concerning anticipated financial performance, business prospects,
strategies, regulatory developments, current and future commodity prices and
exchange rates, applicable royalty rates, tax laws, future well production
rates and reserve volumes, future operating costs, the performance of existing
wells, the success of its exploration and development activities, the
sufficiency and timing of budgeted capital expenditures in carrying out
planned activities, the availability and cost of labor and services, the
impact of increasing competition, conditions in general economic and financial
markets, availability of drilling and related equipment, effects of regulation
by governmental agencies, the ability to obtain financing on acceptable terms
which are subject to change based on commodity prices, market conditions,
drilling success and potential timing delays.
    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; volatility in market prices for crude
oil and natural gas; industry conditions; currency fluctuation; imprecision of
reserve estimates; liabilities inherent in crude oil and natural gas
operations; environmental risks; incorrect assessments of the value of
acquisitions and exploration and development programs; competition from other
producers; the lack of availability of qualified personnel or management;
changes in income tax laws or changes in royalty rates and incentive programs
relating to the oil and gas industry; hazards such as fire, explosion,
blowouts, cratering, and spills, each of which could result in substantial
damage to wells, production facilities, other property and the environment or
in personal injury; stock market volatility; and ability to access sufficient
capital from internal and external sources.
    Management has included the above summary of assumptions and risks
related to forward-looking information provided in this press release in order
to provide readers with a more complete perspective on Trafalgar's future
operations and such information may not be appropriate for other purposes.
    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 there from.
Readers are cautioned that the foregoing lists of factors are not exhaustive.
These forward-looking statements are made as of the date of this press release
and Trafalgar disclaims any intent or obligation to update publicly any
forward-looking statements, whether as a result of new information, future
events or results or otherwise, other than as required by applicable
securities laws. However, in the event that subsequent events are reasonably
likely to cause actual results to differ materially from material
forward-looking information previously disclosed by Trafalgar for a period
that is not yet complete, Trafalgar will provide disclosure on such events and
the anticipated impact of such events.

    %SEDAR: 00024297E




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 Chief
Financial Officer, Telephone (403) 216-2707, Email dbelot@trafalgarenergy.ca,
Or visit www.trafalgarenergy.ca

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TRAFALGAR ENERGY LTD.

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