West Announces Year End Financial Results



    /NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR DISSEMINATION
    IN THE UNITED STATES/

    CALGARY, March 20 /CNW/ - West Energy Ltd. ("West" or "Company",
TSX: "WTL")
    West today announces the release of its fourth quarter and year ended
December 31, 2006 financial information. Audited financial statements, notes
and MD&A for the year ended December 31, 2006 will be filed on SEDAR on or
before March 30, 2006.

    
    2006 Achievements
        1. Completed and commissioned our Paddy Creek battery complex.
        2. Drilled a total of 26 (16.45 net) wells resulting in 8 (2.06 net)
           gas wells, 8 (6.40 net) oil wells, 5 (4.41 net) water source and
           injection wells and 5 (3.58 net) abandonments; the 26 gross wells
           for 2006 included 18 (14.64 net) were Pembina Nisku wells
           resulting in 1 (0.33 net) gas well, 8 (6.40 net) oil wells,
           5 (4.41 net) water source and injection wells and 4 (3.50 net)
           abandonments.
        3. Discovered 1 new gas pool and 5 new oil pool in the Pembina Nisku
           fairway.
        4. A 119% increase in production from 2005 levels.
        5. A 120% increase in funds from operations.
        6. An 86% increase in net income.
        7. Received approvals for two enhanced oil recovery schemes, which
           were initiated in December, 2006.
        8. Total gross proven reserves of 5.5 MMboe and proven plus probable
           of 8.6 MMboe as at December 31, 2006, based on escalating price
           forecast.
        9. Completed a flow-through share equity financing in November for
           $30 million.


    2006 Financial Information

    Operating and Financial Highlights

                                    Three months ended            Year ended
                                           December 31,          December 31,
                                       2006       2005       2006       2005
    -------------------------------------------------------------------------
                                 (unaudited)(unaudited)
    Operating

    Production
      Natural gas (Mcf/d)             2,908      1,651      3,216      1,447
      Crude oil and NGLs (Bbls/d)     2,306      1,605      2,218      1,015
      Barrels of oil equivalent
       (Boe/d @ 6:1)               2,791      1,880      2,754      1,256

    Prices
      Natural gas (per Mcf)       $    7.57  $   12.45  $    7.54  $    9.54
      Crude oil and NGLs
       (per Bbl)                  $   58.84  $   66.83  $   69.85  $   64.15

    Revenue (per Boe)             $   56.50  $   67.98  $   65.06  $   62.82
    Royalties (per Boe)           $   16.72  $   18.33  $   15.33  $   15.15
    Operating costs (per Boe)     $   12.72  $   11.10  $   12.42  $    8.87
                                  ---------- ---------- ---------- ----------

    Operating netback (per Boe)   $   23.06  $   38.55  $   37.31  $   38.80
    General and administrative
     (per Boe)                    $    2.97  $    3.10  $    2.84  $    3.48
    Interest expense (per Boe)    $    1.07  $    2.19  $    0.85  $    1.36
                                  ---------- ---------- ---------- ----------

    Corporate netback (per Boe)   $   23.02  $   33.26  $   33.62  $   33.96
                                  ---------- ---------- ---------- ----------
                                  ---------- ---------- ---------- ----------

    Gross Company Reserves (Mboe)
      Proven                          5,534      4,070      5,534      4,070
      Proven plus probable            8,628      6,786      8,628      6,786

    Wells drilled - Gross (net)
      Oil                           1/(0.15)   1/(1.00)   8/(2.06)   7/(5.65)
      Gas                           2/(0.56)   2/(0.17)   8/(6.40)   6/(0.29)
      Service (water source and
       injection)                   4/(3.40)      - /-    5/(4.41)   2/(0.32)
      Abandoned                         -/-    1/(1.00)   5/(1.58)   2/(2.00)
      Total                         7/(4.11)   4/(2.17) 26/(16.45)  17/(8.26)
      Drilling success rate        43%/(17%)  75%/(54%)  62%/(51%)  76%/(72%)


    Financial (000s, except per
     share amounts)

    Oil and gas revenues          $  14,730  $  11,960  $  66,929  $  29,464
    Funds from operations         $   6,058  $   5,797  $  35,178  $  15,993
      Per share - basic           $    0.10  $    0.11  $    0.58  $    0.32
                - diluted         $    0.09  $    0.10  $    0.55  $    0.29

    Cash flow from operating
     activities                   $   5,095  $   7,586  $  29,438  $  17,858
      Per share - basic           $    0.08  $    0.15  $    0.49  $    0.36
                - diluted         $    0.08  $    0.13  $    0.46  $    0.32

    Net income (loss)             $      (6) $   1,098  $   6,244  $   3,357
      Per share - basic           $   (0.00) $    0.02  $    0.10  $    0.07
              - diluted           $   (0.00) $    0.02  $    0.10  $    0.06

    Working capital (deficiency)  $ (18,524) $ (11,574) $ (18,524) $ (11,574)
    Capital expenditures
     (including acquisitions)     $  22,098  $  36,274  $  82,414  $  91,870

    Total assets                  $ 233,191  $ 180,809  $ 233,191  $ 180,809

    Common shares
      Outstanding                    64,212     58,661     64,212     58,661
      Weighted average - basic       62,184     51,976     60,228     50,288
                       - diluted     66,194     57,456     64,394     55,107


    Consolidated Balance Sheets
                                                         December   December
    (000s)                                               31, 2006   31, 2005
    -------------------------------------------------------------------------

    ASSETS

    Current assets
      Cash and cash equivalents                         $       -  $   5,486
      Accounts receivable                                  20,037      7,488
      Prepaid expenses and deposits                         1,305      1,026
                                                        ---------------------

                                                           21,342     14,000

    Property, plant and equipment                         197,166    152,126
    Goodwill                                               14,683     14,683
                                                        ---------------------

                                                        $ 233,191  $ 180,809
                                                        ---------------------
                                                        ---------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Current liabilities
      Bank indebtedness                                 $  13,599  $       -
      Accounts payable and accrued liabilities             26,267     25,574
                                                        ---------------------
                                                           39,866     25,574

    Asset retirement obligation                             3,438      2,441

    Future income taxes                                    12,251     10,558
                                                        ---------------------

                                                           55,555     38,573
                                                        ---------------------

    Shareholders' equity
      Share capital                                       165,497    138,221
      Contributed surplus                                   3,938      2,058
      Retained earnings                                     8,201      1,957
                                                        ---------------------

                                                          177,636    142,236
                                                        ---------------------

                                                        $ 233,191  $ 180,809
                                                        ---------------------
                                                        ---------------------

    Consolidated Statements of Income and Retained Earnings

                                                     Years ended December 31,
    (000s, except per share amounts)                         2006       2005
    -------------------------------------------------------------------------

    Revenue
      Oil and gas revenues                              $  66,929  $  29,464
      Royalties                                           (15,410)    (6,946)
                                                        ---------------------
                                                           51,519     22,518
      Interest and other income                                 -        114
                                                        ---------------------
                                                           51,519     22,632
                                                        ---------------------

    Expenses
      Operating                                            12,478      4,068
      General and administrative                            2,849      1,597
      Interest on bank loans                                  866        622
      Stock based compensation expense                      1,515      1,161
      Depletion, depreciation and accretion                28,946     10,293
                                                        ---------------------

                                                           46,654     17,741
                                                        ---------------------
    Income before income taxes                              4,865      4,891
                                                        ---------------------
    Income taxes
      Current                                                   -        197
      Future                                               (1,379)     1,337
                                                        ---------------------

                                                           (1,379)     1,534
                                                        ---------------------

    Net income for the year                                 6,244      3,357
    Retained earnings (deficit), beginning of year          1,957     (1,400)
                                                        ---------------------

    Retained earnings, end of year                      $   8,201  $   1,957
                                                        ---------------------
                                                        ---------------------
    Net income per share:
      Basic                                             $    0.10  $    0.07
                                                        ---------------------
                                                        ---------------------
      Diluted                                           $    0.10  $    0.06
                                                        ---------------------
                                                        ---------------------

    Weighted average common shares outstanding             60,228     50,288
    Diluted shares outstanding                             64,394     55,107


    Consolidated Statements of Cash Flows

                                                     Years ended December 31,
    (000s)                                                   2006       2005
    -------------------------------------------------------------------------

    Operating activities
      Net income for the year                           $   6,244  $   3,357
      Items not affecting cash:
        Depletion, depreciation and
         accretion                                         28,946     10,293
        Stock based compensation expense                    1,515      1,161
        Future income taxes                                (1,379)     1,337
        Gain on sale of investment                              -        (98)
      Asset retirement costs incurred                        (148)       (57)
                                                        ---------------------

                                                           35,178     15,993
      Change in non-cash working
       capital                                             (5,740)     1,865
                                                        ---------------------

                                                           29,438     17,858
                                                        ---------------------

    Financing activities
      Issue of share capital, net of issue costs           29,970     63,449
      Proceeds from bank loan                              13,599     37,145
      Repayment of bank loan from proceeds
       from share issue                                         -    (37,145)
      Change in non-cash working
       capital                                                (73)        13
                                                        ---------------------
                                                           43,496     63,462
                                                        ---------------------

    Investing activities
      Property, plant and equipment                       (82,414)   (91,870)
      Proceeds from property dispositions                  10,316        308
      Proceeds from disposition of investment                   -         98
      Change in non-cash working
       capital                                             (6,322)     5,994
                                                        ---------------------

                                                          (78,420)   (85,470)
                                                        ---------------------

    Decrease in cash and cash equivalents                  (5,486)    (4,150)

    Cash and cash equivalents,
     beginning of year                                      5,486      9,636
                                                        ---------------------
    Cash and cash equivalents,
     end of year                                        $       -  $   5,486
                                                        ---------------------
                                                        ---------------------
    

    Financial Results

    West recorded net income of $6.2 million ($0.10 per share) for the year
ended December 31, 2006, compared to net income of $3.4 million ($0.07 per
share) for the year ended December 31, 2005. Funds from operations for 2006
were $35.2 million ($0.58 per share) versus $16.0 million ($0.32 per share)
for 2005. Cash flow from operating activities, as determined in accordance
with GAAP was $29.4 million ($0.49 per share) for 2005 and $17.9 million
($0.36 per share) for 2005. Per share amounts are based on the weighted
average number of shares outstanding of 60,227,886 for 2006 and 50,287,679 for
2005.
    In the fourth quarter of 2006, West recorded a loss of six thousand
dollars ($0.00 per share) compared to net income of $1.1 million ($0.02 per
share) for the corresponding period in 2005. For the three months ended
December 31, 2006, funds from operations were $6.1 million ($0.10 per share)
and for the fourth quarter of 2005 were $5.8 million ($0.11 per share). Cash
flow from operating activities, as determined in accordance with GAAP was $5.1
 million ($0.08 per share) for 2006 and $7.6 million ($0.15 per share) for
2005. The above per share amounts are based on the weighted average number of
shares outstanding of 62,184,465 for Q4 2006 and 51,976,188 for the
corresponding period in 2005.

    Revenues, Production and Prices

    For the year ended December 31, 2006, oil and gas revenues were
$66.9 million from average daily production of 2,754 Boe/d (gas converted at
6 Mcf to 1 barrel of oil equivalent) consisting of 2,218 Bbls of oil and NGLs
and 3,216 Mcf of gas and based on average prices of $69.85 per Bbl of oil and
NGLs and $7.54 per Mcf of natural gas. West's production for the year
consisted of approximately 81% oil and liquids and 19% natural gas. For the
year ended December 31, 2005 oil and gas revenues were $29.5 million
representative of average daily production of 1,256 Boe/d (1,015 Bbls of oil
and NGLs and 1,447 Mcf of natural gas) and average prices of $64.15 per Bbl of
oil and NGLs and $9.54 per Mcf of natural gas. Production in 2005 was
approximately 81% oil and liquids and 19% natural gas.
    Oil and gas revenues for the fourth quarter of 2006, were $14.7 million
compared to $12.0 million for the corresponding period in 2005. Average daily
production volumes for Q4, 2006 were 2,791 Boe/d (2,306 Bbls of oil and NGLs
and 2,908 Mcf of natural gas) compared to 1,880 Boe/d (1,605 Bbls of oil and
NGLs and 1,651 Mcf of natural gas) in the fourth quarter of 2005. Production
decreased in Q4, 2006 from Q3, 2006 levels due to reservoir pressure declines
below minimum operating pressure resulting in certain production being
shut-in. This issue was resolved late in the fourth quarter of 2006 and early
2007 and production has been re-established. In addition, West converted its
oil well at Lodgepole 01-06-48-09W5 to a water injection well to expedite
reservoir pressure increases. The Company received average prices of
$58.84 per Bbl of oil and NGLs and $7.57 per Mcf of natural gas during the
quarter ended December 31, 2006 versus $66.83 and $12.45 respectively, during
the quarter ended December 31, 2005.
    At the end of 2006, West had shut-in production at Crossfire and in the
Lodgepole, Violet Grove, Paddy Creek and Pembina East areas where it was
waiting on increased reservoir pressure from the implementation of enhanced
oil recovery (EOR) schemes. At Lodgepole, West commenced water injection into
the TT pool on December 22, 2006. To expedite the water injection process and
increase reservoir pressure, West converted its oil producing well at
01-06-48-09W5 to a water injection well to allow its 14-32-47-09W5 well to be
placed back on production in late January, 2007 at approximately 600 Boe/d.
Production is expected to increase as reservoir pressures improve. The
Company's well at 16-32-47-09W5, which produced 1,936 Boe/d in November, 2006
is expected to be placed on stream late in the first quarter of 2007 upon
approval of a good production practice (GPP) application. At Violet Grove
water injection for the SS pool commenced December 15, 2006 and allowed West
to recommence production from its 16-28-48-08W5 and 14-27-48-08W5 wells, which
on a combined basis averaged 1,450 Boe/d to West in January, 2007. In
addition, water injection commenced at the Violet Grove WW pool and West's
100% well at 05-35-48-08W5 was brought on stream in February, 2007 at
1,200 Boe/d. On January 31, 2007, West received EOR approval for its Paddy
Creek water injection project which will support production voidage created by
the Nisku KK pool (two wells 1-32 and 11-32-48-9W5 W.I. 50%) and the Nisku V
pool (6-28-48-9W5M W.I. 25%). In the GG pool at Pembina East, the EOR project
commenced in January, 2007 and allowed 240 Boe/d of production to be placed on
stream. Production at Crossfire will commence upon installation of facilities
late in Q2, 2007.
    Additional production increases are dependent upon future drilling
successes in the Pembina area and diversification into new prospect areas. The
Company has no control over commodity prices and currency exchange rates and
therefore we cannot predict the prices it will receive for its production. The
Company does not have any plans to hedge product prices in 2007.

    
    The following table provides details of revenues for the fourth quarters
and the years ended 2006 and 2005:

                                    Three months ended            Year ended
                                           December 31,          December 31,
        ($000)                         2006       2005       2006       2005
                                  -------------------------------------------
        Oil and NGLs              $  12,481  $   9,871  $  56,543  $  23,764
        Natural gas                   2,024      1,890      8,846      5,037
        Gross overrides,
         processing and salt
         water disposal                 225        199      1,540        663
                                  -------------------------------------------

        Total                     $  14,730  $  11,960  $  66,929  $  29,494
                                  -------------------------------------------
                                  -------------------------------------------
    

    Royalties

    For the year ended December 31, 2006, royalties averaged $15.33 per Boe
or 23.6% of oil and gas revenues compared to royalties of $15.15 per Boe or
24.1% of revenues in 2005. Royalties in the fourth quarter of 2006 were
$16.72 per Boe compared $18.33 per Boe in 2005. The Company was eligible for
and benefited from royalty tax credits and royalty holidays with the discovery
of new hydrocarbon pools. West will continue to be eligible for royalty
holidays.

    Operating Expenses

    For 2006 operating costs were $12.5 million or $12.42 per Boe compared to
$4.1 million or $8.87 per Boe for 2005. Cost increases in 2006 resulted from
human resource shortages and supply and demand issues experienced by the
Company and oil and gas industry as a whole. Operating expenses for the last
quarter of 2006 were $4.3 million or $12.72 per Boe compared to $1.9 million
or $11.10 per Boe.
    A large component of West's operating costs at the Paddy Creek battery
are fixed costs and as additional production is brought on stream the cost per
Boe is expected to decline.

    General and Administrative

    For the year ended December 31, 2006, general and administrative
expenses, net of capitalized costs, were $2.8 million ($2.84 per Boe) compared
to $1.6 million ($3.48 per Boe) for 2005. Increased costs are primarily due to
additional staff requirements and increased insurance coverage. Capitalized
general and administrative costs for the year ended December 31, 2006 were
$0.8 million and $0.9 million for 2005.
    For the fourth quarter of 2006 general and administrative expenses, net
of capitalized costs, were $0.8 million ($2.97 per Boe) and $0.5 million
($3.10 per Boe) for Q4, 2005. Capitalized general and administrative costs
related to exploration and development activities for the three months end
December 31, 2006 were $0.2 million and $0.4 million for the corresponding
period in 2005.
    Expected increases in drilling activity and production in 2007 will
require additional human resources, and together with inflationary pressures
will increase future general and administrative costs. As additional
production comes on stream throughout 2007, general and administrative costs
on a per Boe basis, are expected to decline from those realized in 2006.

    Interest Expense

    West incurred interest expense of $0.9 million in 2006 and $0.6 million
in 2005 as the Company utilized its borrowing facilities to finance certain
aspects of its capital expenditure program, primarily expenditures related to
land and facility acquisitions. For the quarters ended December 31, 2006 and
2005, interest expense was $0.3 million and $0.4 million respectively.
    West expects to incur interest expense in 2007 and the amount of interest
will be dictated by draw downs on its credit facilities to fund future capital
expenditures, interest rates, and repayments of indebtedness from funds from
operations.

    Depletion, Depreciation and Accretion

    For the year ended December 31, 2006, depletion, depreciation and
accretion expense was $28.9 million ($28.80 per Boe) compared to $10.3 million
($22.45 per Boe) for the year ended 2005. Depletion, depreciation and
accretion expense in Q4, 2006 was $8.4 million ($32.73 per Boe) versus
$4.5 million ($25.99 per Boe) in Q4, 2005. The increase in the per Boe rate in
the fourth quarter of 2006 relates to the application of differences between
in-house reserve evaluations and the evaluation of West's independent
reservoir engineers. The effect on depletion and depreciation for differences
in reserve estimates in the first three quarters of 2006 is included in the
fourth quarter depletion and depreciation provision. Facilities and
infrastructure accounted for 50% of the Company's capital expenditures in 2006
for which there were no attributable reserve additions but necessary to
produce discovered reserves. As a result the depletion and depreciation rate
per Boe has increased in 2006 from previous periods.
    Drilling activity, the construction of the Paddy Creek battery and
infrastructure have contributed to the amount of the asset retirement
obligation. Accretion expense relating to the asset retirement obligation was
$214,000 in 2006 and $93,000 for 2005 and has been included in depletion,
depreciation and accretion expense.

    Income Taxes

    For the year ended 2006 the Company recorded a tax recovery of
$1.4 million resulting from accounting for the unrecognized $6.4 million
non-capital loss carry forward acquired on the reverse take over of Rio Alto
International.

    Reader's Advisory:
    Certain information regarding West Energy Ltd. in this news release may
constitute forwarding-looking statements under applicable securities laws and
necessarily involve risks including, without limitation, risks associated with
oil and gas exploration, development, exploitation, production, marketing and
transportation, loss of markets, volatility of commodity prices, currency
fluctuations, imprecision of reserve estimates, environmental risks,
competition from other producers, inability to retain drilling rigs and other
services, incorrect assessment of the value of acquisitions, failure to
realize the anticipated benefits of acquisitions, delays resulting from or
inability to obtain required regulatory approvals and ability to access
sufficient capital from internal and external sources. As a consequence,
actual results may differ materially from those anticipated in the
forward-looking statements. Readers are cautioned that the foregoing list of
factors is not exhausted. Additional information on these and other factors
that were applied in drawing a conclusion or making a forecast or projection
as reflected in the forward-looking information and that could cause actual
results to differ materially from those anticipated in the forward-looking
statements are included in reports on file with Canadian securities regulatory
authorities and may be accessed through the SEDAR website (www.sedar.com) or
at the Corporation's website (www.westenergy.ca). Furthermore, the
forward-looking statements contained in this news release are made as the date
of this news release and the Corporation does not undertake any obligation to
update publicly or to revise any of the included forward-looking statements,
whether as a result of new information, future events or otherwise, except as
may be required by applicable securities laws.
    BOE's may be misleading, particularly if used in isolation. In accordance
with NI-51-101, a BOE conversion ratio for natural gas of 6 Mcf: 1 Bbl has
been used which is based on an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a value equivalence at the
wellhead.

    %SEDAR: 00018134E




For further information:

For further information: Ken McCagherty, President and Chief Executive
Officer, Email: mccagherty@westenergy.ca, Direct Phone: (403) 716-3458; Rick
Jaggard, Vice-President Finance and Chief Financial Officer, Email:
rjaggard@westenergy.ca, Direct Phone: (403) 716-3457

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WEST ENERGY LTD.

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