Arawak announces record results for 2007


    ANGUILLA, British West Indies, March 31 /CNW/ - Arawak Energy
Corporation, the independent oil and gas company with exploration, development
and production in Kazakhstan, Russia and Azerbaijan, today announces its
results for the year ended December 31, 2007.

    (In US dollars unless otherwise stated)

    -   Net income up 151% to $31.3 million, (2006: $12.4 million), with
        record fourth quarter net income of $21.9 million
    -   Record annual sales revenues of $202.7 million, up 55% (2006:
        $130.5 million)
    -   Earnings per share (basic and diluted) more than doubled to $0.18
        (2006: $0.07)
    -   Funds from operations of $64.5 million, up 60% (2006: $40.3 million)
        exceeded total capital expenditure (excluding acquisitions) of
        $55.4 million, up 7% (2006: $51.7 million)
    -   Annual average production was 10,332 boepd, up 31% (2006: 7,905
        boepd), with average December production of 11,832 boepd
    -   Extensive drilling programme with 46 net wells drilled in 2007 with
        over 75% success rate
    -   Total proved reserves of 38.4 million boe, up 45% from 2006
    -   Significant progress across all company-operated assets:
        -  Kazakhstan: proved reserves of 9.1 million bbls added in 2007
           through ongoing aggressive drilling campaign on Akzhar and
           Besbolek producing blocks and the newly acquired Alimbai block,
           representing an increase in Kazakhstan proved reserves of 83%
           allowing for 2007 production
        -  Russia: substantial movement of reserves from probable to proved,
           with net proved reserves of 12.3 million bbls at December 2007,
           compared to 9.1 million bbls at December 2006, or a 52% increase
           allowing for 2007 production
        -  Acquisition of the very prospective South Sotchemyu exploration
           and production licence, located between and on trend with the
           Company-operated Sotchemyu -Talyu and North Irael licences
    -   Net present values of the Company's year end 2007 proved and probable
        reserve base, as reported by the independent evaluators, have grown
        to a total of $544 million at 10% discount rate, or US $3.13 per
        basic share. For the first time, the evaluators have also been asked
        to provide an evaluation of possible reserves to determine the
        potential upside in Kazakhstan and Azerbaijan. Proved plus probable
        plus possible reserves total 86.9 million boe, with a net present
        value at 10% discount of $771 million, or US$ 4.43 per basic share.

    Commenting on the results, President and Chief Executive Officer,
Alastair D. McBain said:
    "We ended 2007 on a high note with record production level, which in
today's high oil price environment have led to a record quarterly result and a
record year. We are very pleased with the results of our 2007 drilling
campaign, particularly in Kazakhstan, where we have been able to strengthen
substantially our proved reserves base and where we are confident we will be
able to continue to augment both production and reserves.
    With average production of over 10,000 bopd for the first time and total
revenue of over $200 million we have passed some important milestones in our
growth story. We shall build on our successes, seeking out larger acquisitions
to increase the pace of our growth as a leading independent oil and gas
producer in the region and to create shareholder value through a judicious mix
of production, development and exploration."


    (In thousands, except per share amounts)
    For the year ended December 31                2007       2006       2005
    Crude oil sales                           $202,653   $130,455    $75,073
    Net income                                 $31,260    $12,439     $8,498
      Per share - basic                          $0.18      $0.07      $0.05
      Per share - diluted                        $0.18      $0.07      $0.05
    Funds from operations(*)                   $64,486    $40,259    $20,534
      Per share - basic                          $0.37      $0.23      $0.12
      Per share - diluted                        $0.37      $0.23      $0.12

    Capital expenditure (excluding
     acquisitions)                             $55,417    $51,660    $31,418
    Capital expenditure (acquisitions)               -    $25,033    $42,302
    Shareholders' equity                      $164,521   $128,052   $109,222
    Shares outstanding - basic                 173,892    173,392    173,025
    Shares outstanding - diluted               174,702    174,226    173,300
    Weighted average shares - basic            173,549    173,240    165,625
    Weighted average shares - diluted          174,689    174,074    165,900

    (*) Funds from operations is a non-GAAP measure that represents cash
    generated from operating activities before changes in non-cash working


    For the year ended December 31                           2007       2006
    Production - barrels                                3,771,346  2,885,359
    Average daily production - barrels                     10,332      7,905
    Sales - barrels                                     3,714,282  2,846,338

    Revenue and expenses per barrel sold
    Crude oil and gas sales                                $54.56     $45.83
    Interest and other income                               $0.94      $0.46
    Royalties and taxes                                   ($11.61)   ($10.61)
    Production costs                                       ($5.07)    ($3.96)
    Transportation and selling expenses                    ($5.47)    ($5.05)
    Net operating income                                   $33.35     $26.67

    REVIEW OF 2007

    In 2007, Arawak Energy Corporation ("Arawak" or the "Company") enjoyed a
strong year of growth with increased proved reserves and production levels
exceeding 10,000 barrels of oil per day ("bopd") for the first time. Record
sales in a high oil price environment resulted in net income increasing by
151% and a more than doubling of earnings per share.
    Arawak reached record activity levels in the year with up to eight
simultaneously active drilling rigs in Kazakhstan and Russia. A total of 46
net wells were drilled by Arawak in the period with an overall success rate of
over 75%.
    Of these, 39 wells were completed in Kazakhstan, where the Company is
focused on four producing and one exploration block in the Aktyubinsk and
Atyrau regions of the prolific Pre-Caspian Basin in Western Kazakhstan.
    The aggressive drilling program in Kazakhstan, which has been largely
self-financed, resulted in the discovery of new oil pools and additional
structural extensions. Production was established for the first time in the
newly acquired Alimbai block. A field development plan is being prepared by
the Company for the Akzhar and Besbolek blocks, as required by contract when
these blocks move from the exploration to the development phase in third
quarter 2008.
    In June 2007, Arawak signed a Memorandum of Understanding with Vitol BV,
to acquire Saigak Investments BV, a company which has a 40% participating
interest in the Saigak block in Kazakhstan, where gross production has
averaged over 2,890 bopd in 2007. The deal, closing which remains subject to
government approvals, would be effective January 1, 2007. Saigak is produced
under the terms of a PSA, originally signed in 1992, which allows for a 50:50
profit split between the government and the producer after deduction of a
12.5% royalty and recovery of costs.
    In Russia, the Company's focus of attention remains the Timan-Pechora
basin, in the Komi Republic. The North Irael block, acquired in June 2006, is
in the early stage of development with average production in 2007 of 1,721
bopd (861 net to Arawak). A 3D seismic program has been shot over the winter
of 2007/2008 and this is to be followed by an intensive drilling campaign in
the second part of the year. The prospective South Sotchemyu block, was also
acquired contiguous to the Company's other producing blocks and with
continuation of the productive geological trends apparent on seismic. The
Company has a 100% interest in the South Sotchemyu block.
    In Azerbaijan, South West Gobustan production activities were limited as
the operator paused drilling and focused on an $8 million investment in an
extensive 3D and 2D seismic in order to develop a more complete understanding
of this highly prospective but geologically challenging area onshore
    Group-wide production rose strongly with average daily production
increasing 31% to 10,332 barrels of oil equivalent per day ("boepd") in 2007
compared with 7,905 boepd in 2006, with the strongest growth in Kazakhstan. At
year end, Kazakhstan production accounted for 61% of the group total, compared
to 52% at the start of the year. This has had a beneficial effect on total
profits, as production from our current Kazakhstan blocks is on tax-stabilized
terms which are sensitive to changes in oil price and accordingly have
performed very well in the current high oil price environment
    Year end proved reserves, prepared by independent reserves evaluators,
increased by 27% to 38.4 million barrels ("bbls"). Of this, 6.9 million bbls
of new proved reserves were booked in Kazakhstan, representing an overall 83%
growth in an area providing the Company with the highest netback in the
current high price environment. Total proved and probable reserves at year end
stood at 61.1 million barrels, with the growth in Kazakhstan being offset by a
reduction in Azerbaijan caused by increased exploration uncertainty and a
reduction in the share of production allocated to the PSA holder in a higher
oil price environment. The after tax, net present values of the proved plus
probable reserves assessed by the independent auditors stood at $544 million,
discounted at 10%, or US $3.13 per basic share compared to $368 million for
the previous year.
    For the first time, the evaluators have also been asked to provide
evaluation of possible reserves to determine the potential upside in
Kazakhstan and Azerbaijan. Proved plus probable plus possible reserves total
86.9 million barrels of oil equivalent ("boe"), with a net present value at
10% discount of $771 million, or US 4.43 per basic share.
    Crude oil sales reached record levels of $202.7 million in 2007 compared
with $130.5 million in 2006 as a result of an increase of 30% in sales volumes
to 3.714 million barrels and an increase in the average sales price of 19% to
$54.56 per barrel.
    Net income increased by 151% to $31.3 million, from $12.4 million in
2006. Net income per barrel rose to $8.41 per bbl in 2007 from $4.38 per bbl
in the previous year. Earnings per share on both a basic and diluted basis
more than doubled from $0.07 to $0.18 per share
    Funds from operations increased to $64.5 million, up from $40.3 million
in the previous year, reflecting the increase in group production in a
continued high oil price environment. On a per share basis, funds from
operations increased to $0.37 from $0.23 in 2006.
    Capital expenditure for the period was $55.4 million excluding
acquisitions, up from $51.7 million in 2006.
    Strong revenues from increased production and continued capital
expenditure on fixed assets resulted in a stronger balance sheet with
shareholders' equity of $164.5 million, increased from $128.1 million in 2006.
    Arawak also announces that it has filed its 2007 Annual Information Form
("AIF"), including its Statement of Reserves Data and Other Oil & Gas
Information for the year ended December 31, 2007 pursuant to National
Instrument 51-101 Standards of Disclosure for Oil & Gas Activities of the
Canadian Securities Administrators. Arawak's audited consolidated financial
statements and related Management's Discussion and Analysis for the year ended
December 31, 2007, have also been filed. Copies of these documents may be
accessed electronically on the website for the System for Electronic Document
Analysis and Retrieval ("SEDAR") at and Arawak's website at

    Arawak's common shares are listed for trading on the TSX under the symbol
"ABG". The Company is engaged in the exploration, development and production
of oil and natural gas in Kazakhstan, Russia and Azerbaijan. The Company's
four producing fields and one exploration block in Kazakhstan are held through
its 100% wholly-owned subsidiary Altius Energy Corporation ("Altius"). Altius'
main producing field is Akzhar, extended in 2006 from 3.8 to 71.5 sq km, with
smaller fields at Besbolek and Karataikyz. The two exploration blocks, Alimbai
and East Zharkamys III, are also situated in western Kazakhstan. Arawak's
assets in Russia are held through ZAO PechoraNefteGas ("PNG") and LLC NK
Recher-Komi ("Recher-Komi") in which Arawak has a 50% interest with the
remaining interest being held by Lundin Petroleum AB. Also in Russia, Arawak
holds a 100% interest in the Kymbozhyuskaya exploration block and in the South
Sotchemyu appraisal block. In the Azerbaijan Republic, the Company's asset is
its interest in the South West Gobustan Exploration Development and Production
Sharing Agreement (the "EDPSA"). Commonwealth Gobustan Limited ("CGL"), in
which Arawak has a 37.17% interest, holds an 80% interest in the EDPSA with
the remaining 20% owned by SOCAR Oil Affiliate.

    This press release includes "forward looking statements", which are based
on the opinions and estimates of management at the date the statements are
made, and are subject to a variety of risks and uncertainties and other
factors that could cause actual events or results to differ materially from
those projected in the forward looking statements. These risks and
uncertainties include, but are not limited to, risks associated with the oil
and gas industry (including 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 in relation to
production, costs and expenses and health, safety and environmental risks),
the risk of commodity price and foreign exchange rate fluctuations, the
uncertainty associated with commercial negotiations and negotiating with
foreign governments and risks associated with international activity. Although
Arawak believes that its expectations represented by these forward-looking
statements are reasonable, there can be no assurance that such expectations
will prove to be correct. Additionally, the estimates of reserves and future
net revenue for individual properties may not reflect the same confidence
level as estimates of reserves and future net revenue for all properties, due
to the effects of aggregation. A barrel of oil equivalent (boe), derived by
converting gas to oil in the ratio of six thousand cubic feet of gas to one
barrel of oil, may be misleading, particularly if used in isolation. A boe
conversion is based on an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a value equivalency at the
wellhead. Possible reserves are those additional reserves that are less
certain to be recovered than probable reserves. It is unlikely that the actual
quantities recovered will exceed the sum of the estimated proved plus probable
plus possible reserves. Due to the risks, uncertainties and assumptions
inherent in forward-looking statements, prospective investors in the Company's
securities should not place undue reliance on these forward-looking
statements. For a detailed description of the risks and uncertainties facing
Arawak, readers should refer to Arawak's Annual Information Form as filed at

For further information:

For further information: Arawak Energy Corporation: Alastair D. McBain,
President & Chief Executive Officer; Charles R. A. Carter, Chief Financial
Officer, Phone: +44 (0) 20 7973 4285, Fax: +(44) (0) 20 7824 8466,; Brunswick Group LLP, PR Advisers to Arawak:
Patrick Handley, Mark Antelme, Phone: +44 (0) 20 7404 5959

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