Action Energy Inc. (AEC - TSX Venture Exchange) Announces Second Quarter 2007 Financial and Operating Results


    CALGARY, Aug. 29 /CNW/ - Action Energy Inc. ("Action" or the "Company")
is pleased to announce its operating results and the filing of its unaudited
interim consolidated financial statements and related management discussion
and analysis ("MD&A") for the three and six months ending June 30, 2007.
Select operational and financial results are outlined below and should be read
in conjunction with the Company's unaudited interim consolidated financial
statements and related MD&A which can be found on the Company's website at or on SEDAR at

    FINANCIAL            Three     Three               Six       Six
    ($ 000s,            months    months            months    months
    except per           ended     ended             ended     ended
    share              June 30,  June 30,      %   June 30,  June 30,      %
    amounts)              2007      2006  Change      2007      2006  Change
    Petroleum and
     natural gas
     sales            $  5,103  $    272   1,778  $  8,963  $    671   1,236
    Funds from
     operations(1)         953      (174)   (646)    1,266      (465)   (124)
      Per share
       - basic            0.03      0.00       -      0.05     (0.02)   (350)
      Per share
       - diluted          0.02      0.00       -      0.04     (0.02)   (350)
    Net loss            (2,389)     (529)    352    (3,785)   (2,050)     85
      Per share -
       basic and
       diluted           (0.09)    (0.02)    350     (0.14)    (0.11)     27
    Working capital
     (net debt)
     (end of period)   (10,258)   23,326    (144)  (10,258)   23,326    (144)
     net              $  4,910  $  2,947      67  $ 21,516  $  4,715     356

    Common shares
     outstanding at
     end of period
     - basic (000s)(2)  29,883    21,279      40    29,883    21,279      40
    Common shares
     at end of period
     - fully diluted
     (000s)             34,575    22,985      50    34,575    22,985      50



      Natural gas
       (mcf per day)     2,141       540     296     2,411       590     309
      Light oil
       (bbls per day)      172         -       -       196         -       -
      Heavy oil
       (bbls per day)      765         -       -       510         -       -
       (bbls per day)       10         -       -        16         -       -
      Total (boe per
       day @ 6:1)     1,305        90   1,350     1,124        98   1,047

    Realized average
     price ($ per boe
     @ 6:1)           43.01     33.18      30     44.06     37.74      17
    Royalties ($ per
     boe @ 6:1)       10.64      3.44     209     10.20      3.64     180
    Operating costs
     ($ per boe @
     6:1)                13.82     21.99     (37)    15.44     27.74     (44)
    Corporate netback
     ($ per boe @
     6:1)(1)             18.55      7.75     139     18.42      6.36     190

    Action's second quarter activities and results included an increase in
production of 1,350 percent from the second quarter of 2006 and 29 percent
from the first quarter of 2007 resulting in cash flow of $952,668 ($0.02 per
common share diluted), representing growth of 646 percent from the second
quarter of 2006 and 112 percent from the first quarter of 2007. Action also
achieved reductions in its operating costs per unit of production for both the
three-month and six-month periods ended June 30, 2007 from the comparable
periods in 2006. These reductions resulted from the Company's increased
production and realized efficiencies in its operating cost structure.
Management achieved operating cost decreases through the completion of certain
optimization projects that were identified as part of the due diligence
process when the Company completed the acquisition of High Plains Energy Inc.
These improvements are evidenced through the 37 percent reduction in operating
costs from the three months ended June 30, 2006 and the 22 percent reduction
in operating costs on a per boe basis from the three months ended March 31,
2007. Management is pleased with the operational results and is looking
forward to the anticipated additional accretive effects associated with its
announced acquisition of Rolling Thunder Exploration Ltd.

    Capital expenditures in the quarter included:

    -   the commencement of the drilling of two high-impact exploratory wells
        at Puskwaskau Beaverhill Lake/Granite Wash light oil prospect and the
        Sylvan Lake 11-24 Leduc light oil prospect. Subsequent to the end of
        the quarter, Action's Puskwaskau well encountered only negligible oil
        and gas shows in the deeper primary targets, and was therefore non-
        commercial. As of late July it was being completed as a natural gas
        well in the uphole Belloy Formation. The Sylvan Lake well, however,
        appears to be more encouraging. The well reached total depth in late
        June, encountering 9 metres of net pay out of 20 metres of gross oil
        column in the primary Leduc target. Action is proceeding with the
        tie-in of the well and the installation of artificial lift equipment
        with production expected by the end of September;

    -   the completion of a successful five-well shallow natural gas drilling
        program at Shackleton in Action's Southwest Saskatchewan area.
        Subsequent to the end of the quarter, the first of three wells of the
        six-well shallow natural gas program at Shackleton were tied-in early
        in the third quarter, at initial test rates of approximately 250 mcf
        per day each. Tie-in of the remaining three wells is planned for
        later in the third quarter;

    -   the signing of a farm-in and 24-month lease agreement providing
        access to 23.75 sections in the Jensen Area of Southern Alberta.
        Action can earn a 100 percent working interest on the mineral rights
        below the Bow Island Formation in return for drilling two
        Mississippian test wells by October 15, with any successful new
        production subject to a 20 percent lessor royalty; and

    -   the rationalization of non-core assets by selling all of Action's
        production in Montana, and improved the Company's balance sheet by
        settling an outstanding receivable and legal claim through an asset

    Action completed a $15 million bought-deal financing of 3,950,000
"flow-through" common shares at an issue price of $3.80 per share, which
closed May 17. In early June, Action increased its 2007 capital budget from
$21 million to $36 million, to be funded by a combination of cash flow, debt
and the equity financing. Action also revised its guidance for 2007,
increasing the estimated exit production from 1,400 boe per day to 1,700 boe
per day, excluding production to be acquired pursuant to the acquisition of
Rolling Thunder Exploration Ltd. In late June, the Company announced the
planned acquisition of Rolling Thunder Exploration Ltd., which was approved by
shareholders on August 28, 2007 and is expected to close on August 30, 2007.
Pursuant to the acquisition, Action will acquire approximately 1,000 boe per
day of light oil and natural gas production plus approximately 50,000 acres of
undeveloped lands in a transaction valued at approximately $54 million.

    Action maintained strong growth momentum throughout the second quarter of
2007. The Company continued to implement its business model driven by an
operating strategy with three key elements:

    -   Near-term production maintenance and volume growth through
        optimization and exploitation/development drilling of low-risk heavy
        oil and shallow natural gas assets;

    -   Exploration drilling of high-impact prospects offering opportunity
        for material upside and long-life reserves; and

    -   Carefully selected "buy-and-build" acquisitions that complement
        Action's operations, balance the asset portfolio and/or offer new
        long-term growth opportunities.

    The Company continues to execute the growth strategy previously
articulated in its public guidance.

    Action Energy Inc. is a Calgary-based junior resource company engaged in
the exploration, development and production of natural gas and oil in Alberta
and Saskatchewan. Action's Common Shares trade on the TSX Venture Exchange
under the symbol "AEC".

    (1)    The terms "funds from operations" and "netback", both of which
           have widespread use in the oil and natural gas industry in Canada,
           but are non-GAAP terms. Funds from operations should not be
           considered an alternative to, or more meaningful than, funds from
           operations as presented in the financial statements and determined
           in accordance with GAAP. Funds from operations or funds from
           operations per share (basic and diluted) may not be comparable to
           similar terms reported by other companies. The reconciliation
           between net income and funds from operations is set out in the
           statement of cash flows in the Company's unaudited interim
           consolidated financial statements. The presentation of funds from
           operations per share (basic and diluted) is calculated using the
           same methodology as net income per share. The calculation of
           netback is equal to total revenue less transportation costs,
           royalties (including Crown royalties, gross overriding royalties
           and freehold royalties) and operating costs, calculated on a
           barrel of oil equivalent basis.

    (2)    All common share figures included herein are on a post-
           consolidation basis. Effective November 20, 2006, pursuant to the
           Arrangement Agreement (the "Arrangement") dated September 6, 2006,
           a wholly-owned subsidiary of High Plains Energy Inc. ("High
           Plains") was amalgamated with Action to form Amalco. Each issued
           and outstanding share of Action was exchanged for 2.5 common
           shares of High Plains and each outstanding unexercised stock
           option of Action was exchanged for an option to purchase 2.5
           common shares of High Plains. The issued and outstanding shares,
           options and warrants of High Plains were then consolidated on the
           basis of one common share, warrant or stock option of High Plains
           for each five outstanding common shares, warrants or stock


    Barrels of oil equivalent (boe) may be misleading, particularly if used
in isolation. A boe conversion ratio of six thousand cubic feet (mcf) of
natural gas to one barrel (bbl) of oil is based on an energy conversion method
primarily applicable at the burner tip and is not intended to represent a
value equivalency at the wellhead. All boe conversions in this press release
are derived by converting natural gas to oil in the ratio of six thousand
cubic feet of natural gas to one barrel of oil. Certain financial amounts are
presented on a per boe basis, such measurements may not be consistent with
those used by other companies.


    Certain information regarding the Company set forth in this document,
including management's assessment of future plans and operations, may
constitute forward-looking statements under applicable securities law.
Assessments of future plans and operations involve risks associated with oil
and natural gas exploration, production, marketing and transportation such as
loss of market, volatility of commodity prices, currency fluctuations,
imprecision of reserve estimates, environmental risks, competition from other
producers, and the ability to access sufficient capital from internal and
external sources. Statements relating to "reserves" are deemed to be
forward-looking statements as they involve the implied assessment based on
certain estimates and assumptions that the reserves described can be
profitably produced in the future. Actual results may differ materially from
those anticipated in forward-looking statements. The reader is therefore
cautioned not to place undue reliance on such forward-looking statements. All
subsequent forward-looking statements, whether written or oral, attributable
to the Company or persons acting on its behalf are expressly qualified in
their entirety by these cautionary statements. The Company assumes no
obligation to update forward-looking statements should circumstances or
management's estimates or opinions change.


    The TSX Venture Exchange has not reviewed and does not accept
    responsibility for the adequacy or accuracy of this release.

For further information:

For further information: Roger Tang, Chairman and CEO, Action Energy
Inc., Telephone: (403) 264-1112, Facsimile: (403) 264-1116, Website:; R.D. (Bob) Bowman, President & COO, Action Energy Inc.,
Telephone: (403) 264-1112, Facsimile: (403) 264-1116, Website:

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