TRIOIL ANNOUNCES SECOND QUARTER 2010 OPERATIONAL AND FINANCIAL RESULTS

CALGARY, Aug. 25 /CNW/ - TriOil Resources Ltd. ("TriOil" or the "Company" - TSXV:TOL) is pleased to announce that it has filed its unaudited financial statements and related Management's Discussion and Analysis ("MD&A") for the three and six months ended June 30, 2010 on SEDAR. Selected financial and operational information is outlined below and should be read in conjunction with TriOil's unaudited financial statements and related MD&A, which are available for review at href="www.trioilresources.com">www.trioilresources.com and href="www.sedar.com">www.sedar.com.

Q2 2010 Highlights:

  • On April 12, 2010, TriOil closed the acquisition of Canext Energy Inc. ("Canext") for consideration of 8.8 million shares. The assets acquired materially increased TriOil's production base with high quality netback production by approximately 1,000 boe/d.
  • On April 30, 2010, closed a Cardium focused acquisition at Lochend, adding 17 net (23 gross) sections of undeveloped land and approximately 50 boe/d of production for a total consideration of $14.3 million ($7.5 million cash and 1.3 million shares).
  • Increased average production by 238 percent to 1,439 boe/d in the second quarter of 2010 from 426 boe/d in the first quarter of 2010.
  • Increased operating netback per boe to $21.28 in the second quarter of 2010 from $14.34 in the first quarter of 2010.
  • Increased funds from operations to $1.6 million in the second quarter of 2010 from ($0.8) million in the first quarter of 2010.
  • Reduced operating expenses per boe by 51 percent to $15.38 in the second quarter of 2010 from $31.53 in the first quarter of 2010. A combination of improved operating efficiencies and the addition of higher quality Canext production base was responsible for the significant operating expense reductions.
  • Reduced G&A expenses per boe by 51 percent to $7.93 in the second quarter of 2010 from $15.83 in the first quarter of 2010.

Subsequent Events:

  • On July 8, 2010, completed a bought deal private placement of 3.125 million flow-through shares at $4.80 per share for gross proceeds of $15 million.
  • On August 16, 2010, announced an agreement to purchase Cardium focused assets at Lochend for $8 million. The assets consist of 14 net sections of undeveloped land, a 99 percent working interest gas plant, operated pipeline infrastructure and approximately 100 boe/d of Cardium production. Upon closing in late August, TriOil will own 80 (58 net) sections in the Cardium light oil resource trend



Financial and Operating Results(1)



  Three months ended June 30, Six months ended June 30,
  2010 2009 % Change 2010 2009 % Change
($, except share numbers)            
Financial            
Total revenue 5,456,250 1,908,943 186 7,427,735 4,034,153 84
Funds from (used in operations)(2) 1,606,378 (355,174) - 849,952 (749,293) -
     Per share - diluted 0.08 (0.12) - 0.08 (0.26) -
Net (loss) (2,372,262) (2,393,708) (1) (4,376,101) (4,017,163) 9
     Per share - basic and diluted (0.11) (0.84) (86) (0.40) (1.41) (72)
Working capital (net debt) (8,050,303) (6,861,095) 17 (8,050,303) (6,861,095) 17
Total assets 142,006,700 49,270,981 188 142,006,700 49,270,981 188
Capital expenditures(3) 20,624,194 221,260 9,221 31,240,637 2,226,344 1,303
Weighted average shares outstanding (#)(4)            
Basic 20,762,195 2,855,336 627 10,644,561 2,854,852 273
Diluted 20,845,916 2,857,041 630 10,930,703 2,857,202 283
 
Operating            
Average daily production            
Crude oil and NGLs (bbls/d) 607 179 239 407 160 154
Natural gas (mcf/d) 4,993 2,951 69 3,173 3,212 (1)
Total (boe/d) 1,439 671 115 936 695 35
Average sales prices            
Crude oil and NGLs ($/bbl) 65.08 54.69 1 9 66.79 48.73 37
Natural gas ($/mcf) 4.10 3.59 14 4.37 4.40 (1)
Total ($/boe) 41.66 31.27 33 43.86 32.04 37
Wells drilled - gross (net)            
Exploration 2(0.6) - - 3(1.2) 2(1.0) -
Development - - - 4(1.2) - -
Total 2(0.6) - - 7(2.4) 2(1.0) -
Drilling success rate (%) 100 - - 88 50 -
Operating netback ($/boe)            
Oil and natural gas sales 41.66 31.27 33 43.86 32.04 37
Royalties (4.15) (1.12) 270 (4.11) (3.61) 14
Operating costs (15.38) (22.63) (32) (19.04) (21.52) (12)
Transportation (0.85) (1.20) (29) (1.00) (1.19) (16)
Operating netback 21.28 6.32 237 19.71 5.72 245
Notes:    
  (1) Results include Canext from the closing date of April 12, 2010.
  (2) Funds used in operations is calculated as cash flow from operating activities before the change in non-cash working capital and abandonment expenditures.
  (3) Capital expenditures include property acquisitions and are presented net of proceeds of disposals, but exclude corporate acquisitions. (4) On April 7, 2010, TriOil Resources Ltd. consolidated its outstanding class A common shares on a 20 to 1 basis as approved by shareholders. Comparative figures have been presented as if this share consolidation occurred on January 1, 2009.

Operations Update

TriOil commenced operations in January, 2010 through a recapitalization transaction with One Exploration Inc. and on April 12, 2010 closed the acquisition of Canext, adding higher quality producing assets and providing the Company with increased critical mass. As a result of the Canext transaction, the Company's financial and operational performance improved significantly in its second quarter of operations.

From the outset, TriOil has pursued a light oil resource play growth strategy in an effort to refocus the Company's asset base and to secure a significant growth platform. We have assembled material land positions through a series of asset transactions and land acquisitions on emerging light oil resource plays at Lochend in Southern Alberta and Tableland in Southeast Saskatchewan and are at the early stage of development drilling on both projects.

Lochend: TriOil has assembled a strong undeveloped land position, horizontal drilling inventory and operational presence in the very active Lochend Cardium trend in southern Alberta. Upon closing of the Company's most recent acquisition in late August (see Press Release dated August 16, 2010) TriOil will have over 80 gross (58 net) sections on the Cardium trend at Lochend, an inventory of 150 net horizontal locations prospective for Cardium light oil and operatorship of strategic production facilities and connected pipeline infrastructure.

Industry activity has increased significantly at Lochend with 7 horizontal wells drilled in the past few months. TriOil has budgeted 2.65 net Cardium horizontal wells at Lochend in the second half. The Company's first horizontal Cardium well (55% working interest) finished drilling in August and is waiting on completion. TriOil is currently drilling a 60% working interest Cardium horizontal well and expects to drill 2 more wells utilizing the same rig by mid October. Additional budgeted locations are currently in the planning stages.

Tableland: The Company's Tableland property covers a 75 section contiguous land block that is prospective for light oil in both the Sanish and Middle Bakken. The southern portion of the property is non-operated with TriOil owning 30% - 50% interests in 52 (17 net) sections. TriOil operates the North Tableland area and either owns, or has the right to earn, 50% - 60% interests in approximately 24 sections of land in this area.

In the first half of the year TriOil, together with the operator, has primarily focused on extending the North Dakota Sanish light oil resource play into the shallower Sanish section in the South Tableland area. TriOil participated as to its 30% working interest in 5 (1.5 net) Sanish horizontal wells in the first half. Four wells have been completed with 22 to 28 multi-stage 10 ton fracture stimulations. Results on 2 of these wells were above our forecast type curves with IP30 rates of 204 and 186 bopd and IP60 rates of 166 and 148 bopd, but have experienced higher declines in the ensuing 2 to 3 months and are currently producing at 80 and 44 bopd, respectively. Results on the remaining 2 Sanish horizontal wells were below our forecast type curves with IP30 rates of 72 and 44 bopd, respectively. A fifth well is currently being put on production.

We are now planning to utilize the higher volume 20 to 40 ton fracture stimulations more common in the adjacent North Dakota Sanish completions in order to improve the effectiveness of the completions. We are at a very early point on the learning curve in this emerging light oil play and have been successful in establishing production from the tighter Sanish sands over a relatively large area of land. TriOil plans to participate in 3 (1.1 net) Sanish horizontal wells by the fall, all utilizing higher volume multi-frac completions.

In addition to the Sanish light oil play, Tableland is also well situated in the middle of the emerging Middle Bakken light oil trend that stretches from Taylorton through Tableland to Flat Lake. Over 40 horizontal wells have been licensed/drilled by industry for the middle Bakken on this trend in 2010 to date. TriOil is currently operating the drilling of its first horizontal well at North Tableland to evaluate the Middle Bakken. This farmin well earns a 60% interest in a 9 section contiguous block of crown land.

Outlook

TriOil has made significant strides in its initial six months of operations. A number of corporate, asset and land acquisitions have been completed in 2010 to provide the Company with the requisite critical mass and asset base to pursue a light oil resource play growth strategy. During the second quarter, the Company posted improved operating efficiencies and stronger per share financial performance. We expect this trend to continue as production additions from our drilling program increase the Company's oil weighting.

By far, the most important steps for TriOil to date are the numerous transactions completed on the emerging Cardium light oil resource play at Lochend in southern Alberta. TriOil has made a large capital investment at Lochend and is well positioned with a strong operational presence, undeveloped land base and a multi-year development drilling inventory on this high netback light oil resource play. Our horizontal drilling program is underway at Lochend and we are looking forward to reporting on our progress over the next months.

TriOil is a publicly traded junior oil resource player in Western Canada. Substantial land positions have been acquired on early stage light oil resource opportunities to capitalize on improvements in horizontal drilling and multi-stage fracture stimulation technologies, specifically targeting opportunities in the emerging Cardium oil trends in Alberta and the Bakken and Sanish oil trends in southeast Saskatchewan. TriOil has successfully executed its business plan thus far, rapidly growing its production, reserves and undeveloped land base over the early part of 2010 to position the Corporation for substantial future increases in production, reserves and shareholder value through exposure in these high quality resource plays.

TriOil trades on the TSX Venture Exchange under the symbol "TOL". As of August 24, 2010, there were approximately 25.4 million shares issued and outstanding (27.0 million fully diluted).

Forward Looking Statements

This news release contains forward-looking information and forward-looking statements within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "believe", "plans", "intends", "confident", "may", "objective", "ongoing", "will", "should", "project" and similar expressions are intended to identify forward-looking information. More particularly, this document contains forward looking statements which include, but are not limited to, expected future drilling and completion plans, expected production and reserves growth and the future operations of TriOil.

The forward-looking statements contained in this document are based on certain key expectations and assumptions made by TriOil, including with respect to the anticipated exploration and development opportunities and the outlook for the fiscal year ending December 31, 2010, expectations and assumptions concerning the success of future exploration and development activities, production guidance, the performance of new wells, prevailing commodity prices and the availability of additional capital if and when required by the Corporation.

Although TriOil believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because TriOil can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the failure to satisfy the conditions to closing the transaction, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price and exchange rate fluctuations and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Certain of these risks are set out in more detail in TriOil's Annual Information Form which has been filed on SEDAR and can be accessed at www.sedar.com and TriOil's other public disclosure documents which have been filed on SEDAR and can be accessed at www.sedar.com.

The forward-looking statements contained in this press release are made as of the date hereof and TriOil undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Meaning of BOE

The term "boe" may be misleading, particularly if used in isolation. A boe conversion of 6 Mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

SOURCE TriOil Resources Ltd.

For further information: For further information: Russell J. Tripp, President & CEO, TriOil Resources Ltd., Phone: (403) 265-4115

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