West Energy announces first quarter 2009 results



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

    CALGARY, May 11 /CNW/ - West Energy Ltd.("West") (TSX: WTL) announces its
financial and operational results for the three months ended March 31, 2009.
West has filed its unaudited Consolidated Financial Statements for the period
ended March 31, 2009 and related Management's Discussion and Analysis
("MD&A"). Copies of West's materials may be obtained on www.sedar.com and on
its website at www.westenergy.ca.
    Certain selected financial and operational information for the three
months ended March 31, 2009 and the 2008 comparatives are set out below and
should be read in conjunction with West's Consolidated Financial Statements
and MD&A.

    
    OPERATING AND FINANCIAL HIGHLIGHTS
                                                          Three months ended
                                                                March 31,
    Units as noted                                         2009         2008
                                                              (unaudited)
    Operating
    Production

      Crude oil (Bbls/d)                                  3,531        3,459
      NGLs (Bbls/d)                                         901        1,226
      Natural gas (Mcf/d)                                 4,692        6,652
      Barrels of oil equivalent (Boe/d @ 6:1)          5,214        5,794

    Prices

      Crude oil (per Bbl)                             $   47.44    $   95.41
      NGLs (per Bbl)                                  $   42.60    $   82.22
      Natural gas (per Mcf)                           $    5.82    $    8.38

    Revenue (per Boe)                                 $   44.90    $   84.10
    Royalties (per Boe)                               $   16.62    $   24.15
    Operating costs (per Boe)                         $    9.61    $   10.03
    Operating netback (per Boe)(1)                    $   18.67    $   49.92
    General and administrative (per Boe)              $    3.57    $    2.00
    Interest expense (per Boe)                        $       -    $    0.24
    Corporate netback (per Boe)(1)                    $   15.10    $   47.68
    Wells drilled - Gross/net
      Oil                                                3/1.37       1/0.04
      Gas                                                1/0.40          -/-
      Service (water source and injection)                  -/-          -/-
      Abandoned                                             -/-       1/0.04
      Total                                              4/1.76       2/0.08
      Drilling success rate (excluding
     service wells)                                   100%/100%      50%/50%

    Financial (000s, except per share amounts)
    Oil and gas revenues                              $  21,069    $  44,339
    Cash flow from operating activities               $   8,396    $  24,251
      Per share - basic                               $    0.10    $    0.31
                - diluted                             $    0.10    $    0.30
    Net loss                                          $  (2,502)   $  (1,682)
      Per share - basic                               $   (0.03)   $   (0.02)
                - diluted                             $   (0.03)   $   (0.02)
    Working capital                                   $  68,925    $   4,264
    Capital expenditures                              $   8,979    $   9,902
    Total assets                                      $ 272,114    $ 275,485
    Common shares
      Outstanding                                        81,676       79,437
      Weighted average - basic                           81,637       72,427
                       - diluted                         81,725       81,834
    

    The above table contains the terms "Operating Netback" and "Corporate
Netback". These terms are non-GAAP measures which the Company believes provide
useful and relevant information, but should not be considered an alternative
to, or more meaningful than "cash flow from operating activities" as
determined in accordance with GAAP as an indicator of the Company's financial
performance.
    The first quarter of 2009 saw the industry enter a much tougher market of
lower commodity prices, stringent capital availability and a new royalty
framework for Alberta. In spite of the adverse economic conditions, the steps
taken by West in 2008 have created a number of opportunities for the company
in the current environment. The Company has a very strong balance sheet,
sufficient cashflow to maintain production and has a capital program that can
generate a return at current commodity prices. During the quarter, West
embarked on a two prong strategy to develop its active projects within
existing cashflow and to utilize its cash on-hand and balance sheet for merger
and acquisition activities in an effort to create an intermediate energy
company.
    Production during the quarter averaged 5,214 BOEPD which was below the Q4
2008 production. In 2008 the company focused on maximizing production from our
reserve base ahead of the new royalty framework and to take advantage of
higher commodity prices. In 2009, the goal is to optimize Nisku reservoir
recoveries for which the company has commenced a number of projects. For
example, Crossfire 9-01-050-6W5 (W.I 67.5%) is currently shut-in awaiting
enhanced oil recovery (EOR) approval for an innovative project that will use
the same wellbore for both production and injection. The Company has reduced
production by approximately 33 percent at Crossfire 13-02-050-6W5 (W.I. 100%)
to optimize the sweep efficiency of the EOR project. In spite of the lower
levels of production, an emphasis on cost control saw operating costs remain
at less than $10.00 per Boe with the average cost for the quarter being $9.61
per BOE. Production in Q2 is forecast to be lower than Q1 due to scheduled
maintenance at third party sour gas processing facilities.
    A strong emphasis on cash preservation with curtailment of the capital
expenditure program saw West spend $9.0 million in the first quarter of 2009
which compares to West's cashflow from operations of $8.4 million. West is
committed to keep capital expenditures on its active projects inline with
cashflow. As a result of this emphasis, West had $74.0 million of cash on hand
and a working capital of $68.9 million at March 31, 2009. During the quarter
the Company was active in the following areas;

    
    -   Drilled two Nisku oil wells:

          -  Drilled and completed Crossfire 3-01-050-06W5 (W.I. (67.5%), a
             new low rate Nisku reef.
          -   Drilled a Nisku discovery well at Crossfire 14-33-050-05W5
              (W.I. 60.0%), a new high-rate Nisku reef.
    -   Crossfire Manville Light Oil Discovery
          -   Tied-in a discovery well at 11-03-050-6W5M (W.I. 100) with a
              restricted MRL of 70 BOEPD.
          -   Expanded land coverage on play fairway.
    -   Monias Non Operated deep gas project
          -   Tied-in Monias 14-9-082-21W6M (W.I. 40% BPO, 26% APO);
              production commenced in April.
          -   Drill, complete and tie-in of Monias 16-24-082-21W6M (W.I. 40%
              BPO, 26% APO); production commenced in April.
    -   Monias Montney gas project
          -   Completed with 6 fracs in a horizontal well at Monias 13-30-81-
              21W6 (W.I. 100%), initial rates 500 mcfd. Completing reservoir
              study and monitoring other operators activities in the area.
    -   Two Rivers Light Oil Discovery - step-out drilling delayed by
        archeology study till late Q2 or early Q3
    

    The challenges facing the industry during the early part of 2009 have
presented West with a number of opportunities to explore potential merger and
acquisition transactions. The company is reviewing a number of possibilities
to add reserves, increase its production and reserve life index, expand the
number of active project areas and strengthen its team. West believes this is
a very attractive time to participate in the consolidation of the junior oil
and gas industry in Canada.

    Reader's Advisory:

    Certain information regarding West Energy Ltd. in this news release
including management's assessment of the future plans and operations and their
timing may constitute forward-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, changes to the proposed royalty
regime prior to implementation and thereafter, 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 exhaustive. 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 of 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.

    %SEDAR: 00018134E




For further information:

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

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WEST ENERGY LTD.

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