Winstar Resources Q1 2009 Results Consistent with Q4 2008



    CALGARY, May 13 /CNW/ - Winstar Resources Ltd. ("Winstar" or "the
Company") (TSX: WIX) releases its operating and financial results for Q1 2009.
    Winstar's Q1 2009 operational results are an extension of Q4 2008. During
the Q1 2009, the Company produced and sold 1,581 boepd (290 boepd in Canada,
75 boepd in Hungary and 1,216 boepd in Tunisia), which is comparable to Q4
2008 when Winstar produced and sold 1,550 boepd. Current production is 1,750
boepd, which will hopefully increase further depending upon ongoing field work
in Tunisia.
    Q1 2009 funds from operations were $2.6 million, as compared to $5.3
million for the preceding quarter. Lower funds from operations during the
period ended March 31, 2009, is attributable to: a $0.9 million decrease in
oil and gas revenue (as the average sales price dropped to $54 per boe during
Q1 2009, compared with $60 per boe during Q4 2008); and a $1.8 million
increase in current tax expense (as Q1 2009 taxes are estimated at $0.2
million versus the recorded credit, in Q4 2008, of $1.6 million). If commodity
prices remain in the range currently observed,, Winstar would sell its crude
oil during Q2 2009 for a significant premium over Q1 2009.
    The following table illustrates the quarter over quarter variances in
production, revenue and expenses:

    
    -------------------------------------------------------------------------
                                                                 Variance
                                 Q1 2009          Q4 2008     Q1/09 vs Q4/08
    -------------------------------------------------------------------------
    Production and Sales       1,581 boepd      1,550 boepd         31 boepd
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                $ 000s Cdn       $ 000s Cdn
    -------------------------------------------------------------------------
    Oil and Gas Revenue              7,661            8,536             (875)
    -------------------------------------------------------------------------
      Net Royalty                     (772)            (937)             165
    -------------------------------------------------------------------------
      Net Operating                 (2,728)          (2,737)               9
    -------------------------------------------------------------------------
    General and Administrative
     (excluding non-cash
     stock based compensation)      (1,345)          (1,255)             (90)
    -------------------------------------------------------------------------
    Cash Income Tax                   (221)           1,669           (1,890)
    -------------------------------------------------------------------------
    Other                               16              (19)              35
    -------------------------------------------------------------------------
    Funds from Operations            2,579            5,257           (2,646)
    -------------------------------------------------------------------------
    

    The Company reported a loss of $1.0 million in Q1 2009, as compared to a
loss of $3.8 million for Q4 2008, which included $3.9 million of expenses
related to the expiry of undeveloped land. As of March 31, 2009, the Company
recorded a negative working capital of $6.2 million, versus a positive working
capital of $2.0 million as at December 31, 2008.
    During Q1 2009, the Company spent $10.4 million on capital expenditures
(all in Tunisia) as compared to $19.5 million (all in Tunisia) in Q4 2008.
Additional capital expenditures are dependent on internally generated funds
from operations or the successful farming out of a select number of 100%
assets, whereby third party capital is spent on Winstar's land base.

    
    Operating and Financial Summary:
    --------------------------------

    -------------------------------------------------------------------------
                                 Three Months Ended
    Highlights                        March 31,           Q1      Q4
                              -----------------------------------------------
                                                %                       %
    (CDN $ thousands)           2009    2008  Change    2009    2008  Change
    -------------------------------------------------------------------------
    Sales and Prices
    -------------------------------------------------------------------------
    Natural gas sales (Mcf/d)  1,978   3,489     (43)  1,978   1,553      27
    -------------------------------------------------------------------------
    Oil and NGL sales (boepd)  1,251   1,312      (5)  1,251   1,291      (3)
    -------------------------------------------------------------------------
    Average daily sales 6:1
     (boepd)                   1,581   1,893     (16)  1,581   1,550       2
    -------------------------------------------------------------------------
    Average natural gas
     price ($/Mcf)              8.70    8.40       4    8.70   10.84      (2)
    -------------------------------------------------------------------------
    Average oil and
     NGL price($/bbl)          54.27   97.55     (44)  54.27   58.83      (8)
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Financial ($)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Oil and gas revenue        7,661  12,064     (36)  7,661   8,536     (10)
    -------------------------------------------------------------------------
    Funds from operations      2,579   7,292     (65)  2,579   5,257     (51)
    -------------------------------------------------------------------------
    Per share - basic           0.08    0.21     (64)   0.08    0.15     (50)
    -------------------------------------------------------------------------
                Diluted         0.08    0.21     (64)   0.08    0.15     (50)
    -------------------------------------------------------------------------
    Net (loss)/income         (1,033)  1,368    (176) (1,033) (3,810)    (73)
    -------------------------------------------------------------------------
    Per share - basic          (0.03)   0.04    (175)  (0.03)  (0.11)    (73)
    -------------------------------------------------------------------------
                Diluted        (0.03)   0.04    (175)  (0.03)  (0.11)    (73)
    -------------------------------------------------------------------------
    Working capital at
     period end               (6,175) 22,223    (128) (6,175)  1,992    (410)
    -------------------------------------------------------------------------
    Long term debt
     at period end                 -       -       -       -       -       -
    -------------------------------------------------------------------------
    Shareholders' equity
     at period end            93,254  95,430      (2) 93,254  92,187       1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Common Shares (thousands)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Weighted average during
     the period
      - Basic                 34,223  34,022       1  34,223  34,223       -
                             ------------------------------------------------
      - Diluted               34,223  34,749      (2) 34,223  34,223       -
    -------------------------------------------------------------------------
    Outstanding at
     period end               34,223  34,064       0  34,223  34,223       -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Production
    ----------

    Production, as expected, during Q1 2009 was consistent with the Q4 2008.
Additional production is expected in Q2 with the commissioning of the gas
sales line from Chouech Essaida to El Borma and with successful results of the
current recompletions at Chouech Essaida.

    -------------------------------------------------------------------------
                                      Q1 2009                 Q4 2008
    -------------------------------------------------------------------------
                             Oil and                 Oil and
                              Liquid     Gas   Total  Liquid     Gas   Total
                              (bbl/d) (mcf/d) (boepd) (bbl/d) (mcf/d) (boepd)
    -------------------------------------------------------------------------
    Canada                       109   1,084     290     115   1,318     335
    -------------------------------------------------------------------------
    Hungary                        -     453      75       -       -       -
    -------------------------------------------------------------------------
    Tunisia
      Chouech Essaida/
       Ech Chouech               827       -     827     814       -     814
      Sabria                     209     441     283     244     537     333
      Zinnia/Sanrhar             106       -     106     110       -     110
    -------------------------------------------------------------------------
    Tunisia Total              1,142     441   1,216   1,168     537   1,317
    -------------------------------------------------------------------------
    Total                      1,251   1,978   1,581   1,291   1,554   1,550
    -------------------------------------------------------------------------

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

    Tunisia
    

    During Q1 2009, Winstar's capital investment program continued to focus
on the re-entry of the Sabria N3H well and the construction of the Chouech
Essaida sales pipeline and related compression facilities. The re-entry
operation at Sabria N3H consisted of drilling two new horizontal laterals from
the existing wellbore. The Sabria N3H well is currently producing in a
relatively stable condition at the rate of 160 - 170 boepd (gross). Winstar,
with its 45% net working interest, is the operator of the Sabria concession
with its 55% working interest partner, l'Entreprise Tunisienne d'Activitiés
Petrolières (ETAP).
    The Chouech Essaida gas sales pipeline and the associated compression and
sales measurement facilities were completed and commissioned at the end of
March, 2009. Gas started to flow in early April. The gas line has a current
capacity of 400,000 m3/d (14 mmscf/d) of gas and the two compressors have a
combined capacity of 170,000 m3/d (6.0 mmscf/d). Current production is limited
to 35,000 m3/d (1.2 mmscf/d) due to technical issues and the associated
reduced take-away capacity in the main gas sales pipeline operated by the
Tunisian national utility company, STEG. These issues are being addressed by
STEG and it is anticipated that gas sales from Chouech will gradually increase
through the year as more capacity becomes available.
    The interpretation of the 400 square kilometers of new, high quality 3D
seismic acquired over Winstar's 100% working interest Chouech Essaida and Ech
Chouech concessions has continued. The Company is pleased and optimistic about
the growing inventory of drilling opportunities that the new seismic has
identified. Numerous opportunities exist in four main horizons: the Triassic,
Devonian, Silurian and the Ordovician geologic horizons are all presenting
strong leads and prospects.

    Canada

    Production from Winstar's properties in Alberta during the Q1 2009
averaged 290 boepd, compared to 336 boepd in the Q1 2008 and 297 boepd in Q4
2008. Production was impacted by natural declines in the various producing
wells and some wells being temporarily shut in due to cold weather.
    Investment in the Company's Canadian assets during 2009 will be limited
to minor activities that are required to maintain existing production.

    Hungary

    Production during Q1 2009 averaged 75 boepd compared to none in the Q4
2008. The propane gas enrichment system installed early in early Q1 2009
continued to function well. Production is expected to continue to the end of
May and then will be shut-in during the summer months with the expectation of
re-starting by Q4 2009 if gas prices recover. Significant exploration upside
has been identified in the Company's exploration permit and Winstar is
actively searching for a farm-in partner to evaluate this potential.

    Romania

    There were no field operations in the Satu Mare Exploration Permit during
Q1 2009. The Company is actively pursuing the accumulation and interpretation
of available technical data with the intent to be ready for seismic and
drilling operations in 2010.

    
    Plans and Perspectives for 2009
    -------------------------------
    

    For the balance of 2009, under a commodity price forecast of $45-$50 US
per barrel Brent, the Company expects to limit further capital investment and
will instead focus available funds to the repayment of its existing line of
credit, the ramping up of gas sales from Chouech Essaida, re-establishing
production from suspended wells at Chouech Essaida and Ech Chouech and
improving individual well reliability and performance. If additional funds
become available, they may be directed to the repair of the well CS No. 8 and
the drilling and testing of new well locations at Chouech Essaida and Ech
Chouech.

    BOE

    References herein to boe mean barrels of oil equivalent derived by
converting gas to oil in the ratio of six thousand cubic feet (Mcf) of gas to
one barrel (bbl) of oil. Boe may be misleading, particularly if used in
isolation. A boe conversion ratio of 6 Mcf:1 bbl is based upon an energy
conversion method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead.

    Non-GAAP Measures

    The Company uses the terms "funds from operations," "funds from
operations per share" and "netbacks" which are not recognized measures under
Canadian generally accepted accounting principles. The Company uses these
measures to help evaluate its performance. Management considers netbacks an
important measure as it demonstrates the Company's profitability relative to
current commodity prices. Netbacks are calculated as revenue plus
international royalty income net of royalties, operating, transportation,
general and administrative and current tax expenses. Management uses funds
from operations to analyze performance and considers it a key measure as it
demonstrates the Company's ability to generate the cash necessary to fund
future capital investments and to repay debt. Funds from operations have been
defined by the Company as cash flow from operating activities excluding the
change in non-cash working capital related to operating activities, geological
and geophysical expenses and expenditures on asset retirement obligations and
reclamation. The Company also presents funds from operations per share whereby
amounts per share are calculated using weighted average common shares
outstanding consistent with the calculation of earnings per share. Winstar's
determination of funds from operations may not be comparable to that reported
by other companies nor should it be viewed as an alternative to cash flow from
operating activities, net earnings or other measures of financial performance
calculated in accordance with Canadian GAAP.

    Sales and Seasonality

    Oil and natural gas production is not necessarily equal to sales.
Tunisian oil is transported or pipelined to a terminal for periodic offloading
onto oil tankers. Revenue from tanker sales is recognized only when the sale
occurs. Production during the period is carried in inventory until sold.
Hungarian natural gas is sold on a monthly basis into the local market.
Monthly sales are subject to local market product demand which increases
during the heating seasons of fall and winter and curtails over the warmer
spring and summer seasons.

    Forward-Looking Statements

    This press release contains forward-looking statements. These statements
relate to future events or future performance of Winstar. When used in this
press release, the words "may", "would", "could", "will", "intend", "plan",
"anticipate", "believe", "estimate", "predict", "seek", "propose", "expect",
"potential", "continue", and similar expressions, are intended to identify
forward-looking statements. These statements involve known and unknown risks,
uncertainties, and other factors that may cause actual results or events to
differ materially from those anticipated in such forward-looking statements.
Such statements reflect the Company's current views with respect to certain
events, and are subject to certain risks, uncertainties and assumptions. Many
factors could cause the Company's actual results, performance, or achievements
to materially differ from those described in this press release. Should one or
more of these risks or uncertainties materialize, or should assumptions
underlying forward-looking statements prove incorrect, actual results may vary
materially from those described in this press release as intended, planned,
anticipated, believed, estimated, or expected. Specific forward-looking
statements in this press release include, among others, statements pertaining
to the following: factors upon which Winstar will decide whether or not to
undertake a specific course of action; and estimated volumes and timing of
future production; business plans for drilling, exploration and development;
and other expectations, beliefs, plans, goal, objectives, assumptions,
information and statements about possible future events, conditions, results
of operations or performance. The risks to which Winstar is subject include
those of the oil and gas industry in general including operational risks in
exploring for, developing and producing crude oil and natural gas; risks and
uncertainties involving geology of oil and gas deposits; volatility in global
market prices for oil and natural gas; general economic conditions;
competition; liabilities and risks, including environmental liability and
risks, inherent in oil and gas operations; uncertainties as to the
availability and cost of financing and changes in capital markets;
alternatives to and changing demand for petroleum products; and changes in
legislation and the regulatory environment, including uncertainties with
respect to the Kyoto Protocol. Furthermore, 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 produced profitably in the future. The
forward-looking statements contained in this press release are expressly
qualified in their entirety by this cautionary statement. These statements
speak only as of the date of this press release. The Company does not intend
and does not assume any obligation, to update these forward-looking statements
to reflect new information, subsequent events or otherwise, expect as required
by law.

    Winstar Resources Ltd. is Calgary-based junior oil and gas company, which
explores for, develops, produces, and sells crude oil, natural gas liquids and
natural gas in Tunisia, Canada, Hungary and Romania. Winstar's common shares
trade on the Toronto Stock Exchange under the symbol WIX.





For further information:

For further information: Mr. David Monachello, President, Phone (403)
513-4200, Email dmonachello@winstar.ca; or Mr. Charles de Mestral, Chief
Executive Officer, Phone: Toll-free (Canada and USA) 1-800-875-1217, (Note:
Mr. de Mestral is based in Europe, in a time zone eight hours ahead of Calgary
time), Email: cdemestral@winstar-resources.ch

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Winstar Resources Ltd.

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