Breaker Energy Ltd announces light oil production additions, record production and funds from operations per share

    CALGARY, Aug. 8 /CNW/ - Breaker Energy Ltd. ("Breaker" or "Company")
(TSX: WAV.A and WAV.B) is pleased to announce its financial and operating
results for the three and six month periods ended June 30, 2007.

                                3 Months Ended            6 Months Ended
                          June 30,  June 30,     %  June 30,  June 30,     %
                             2007      2006  Change    2007      2006  Change
    Financials ($000s
     except per share
    Petroleum sales        11,383     5,000    128   21,034     7,928    165
    Natural gas sales      10,396     4,361    138   20,302     9,208    120
    Processing sales          233         -     nm      431         3     nm
    Total petroleum and
     natural gas revenue   22,012     9,361    135   41,767    17,139    144
    Funds from
     operations(1)         11,757     4,715    149   20,967     8,225    155
      Per share basic        0.32      0.21     52     0.57      0.38     50
      Per share diluted      0.32      0.20     60     0.57      0.37     54
    Net earnings            1,523        26     nm    1,336       451    196
      Per share basic        0.04         -     nm     0.04      0.02    100
      Per share diluted      0.04         -     nm     0.04      0.02    100
     expenditures (2)       7,088   105,182    (93)  27,025   112,572    (76)
    Net debt               41,904    24,359     72   41,904    24,359     72
    Operating, General and
     Administrative (G&A)
      Crude oil (bbls/d)    1,806       756    139    1,745       629    177
      Natural gas (mcf/d)  15,881     8,312     91   15,317     7,569    102
      Total (boe/d)         4,453     2,141    108    4,298     1,890    127
    Average realized price
      Crude oil ($ per bbl) 69.26     72.68     (5)   66.60     69.66     (4)
      Natural gas
       ($ per mcf)           7.19      5.77     25     7.32      6.72      9
      Combined average
       (incl. processing
       revenue) ($ per boe) 54.32     48.04     13    53.70     50.09      7
    Netback ($ per boe)
    Petroleum and natural
     gas sales              54.32     48.04     13    53.70     50.09      7
    Royalties               (8.92)    (5.69)    57   (10.17)    (7.52)    35
    Operating expenses      (9.91)   (12.58)   (21)   (9.98)   (12.16)   (18)
     expenses               (1.77)    (1.11)    59    (1.77)    (1.46)    21
    Operating netback       33.72     28.66     18    31.78     28.95     10
    G&A expenses            (2.96)    (3.33)   (11)   (2.86)    (3.32)   (14)
    Interest expense        (1.33)    (0.57)   133    (1.36)    (0.54)   152
    Corporate netback       29.43     24.76     19    27.56     25.09     10
    Common Shares (000s)
    Class A Shares
     outstanding, end of
     period                35,124    34,845      1   35,124    34,845      1
    Weighted average
     Class A shares        35,124    21,202     66   35,054    20,388     72
    Weighted average
     Class B shares           900       900      -      900       900      -
    Conversion of Class B
     shares - weighted
     average(3)             1,449     1,463     (1)   1,449     1,463     (1)
    Weighted average
     basic shares
     outstanding(3)        36,573    22,665     61   36,503    21,851     67
    Stock option dilution
     (treasury method)        489       702    (30)     467       657    (29)
    Weighted average
     diluted shares
     outstanding(3)        37,062    23,367     59   36,970    22,508     64
    (1)  Management uses funds from operations (before changes in non-cash
         working capital) to analyze operating performance and leverage.
         Funds from operations as presented does not have any standardized
         meaning prescribed by Canadian GAAP and therefore it may not be
         comparable with the calculation of similar measures for other
    (2)  Capital expenditures includes: cash additions for the period,
         acquisition additions, capitalized general and administrative
    (3)  For the period ended June 30, 2007 the Class B shares are converted
         at the quarter-end Class A share price of $6.21 and added to the
         Class A shares to calculate basic shares outstanding. For the period
         ended June 30, 2006 the conversion price was $6.15.
    nm   Not meaningful

    -    The second quarter of 2007 marked Breaker's eleventh consecutive
         quarter of per share production growth.

    -    Production per share grew by 29 percent in the second quarter of
         2007 as compared to the same period last year. Production per share
         grew by eight percent in the second quarter of 2007 as compared to
         the first quarter of 2007.

    -    Second quarter production grew by 108 percent to a quarterly record
         of 4,453 boe/d from 2,141 boe/d in 2006.

    -    Breaker achieved record funds from operations per basic share of
         $0.32, an increase of 52 percent from $0.21 per basic share in the
         same period of 2006. Funds from operations grew by 149 percent to
         $11.8 million in the second quarter of 2007 from $4.7 million in the
         second quarter of 2006.

    -    Breaker attained net income of $1.5 million in the second quarter of
         2007 as compared to net income of $26,159 in the second quarter of
         2006. Net income per share increased to $0.04 per basic share in the
         second quarter of 2007 as compared to net income of nil per basic
         share in the second quarter of 2006.

    -    In the second quarter, the company achieved a 100 percent success
         rate drilling five gross (4.5 net) wells. Breaker invested
         $7.1 million concentrating its capital investments on high netback
         light oil projects at Irricana, Girouxville and East Prairie as well
         as continuing to advance its farm-in in the Medicine Hat area.

    -    At quarter-end, Breaker had access to approximately 345,000 net
         acres of land. Breaker's management believes that access to a
         significant land base fuels future growth opportunities.

    -    Breaker continued its focus on reducing operating costs in the
         second quarter resulting in a reduction of 21 percent to $9.91 per
         boe from $12.58 per boe in the same period of 2006 and down two
         percent as compared to the first quarter of 2007.

    -    Breaker's operations in the second quarter of 2007 resulted in an
         average operating netback (defined as revenue; less royalties,
         operating and transportation expenses on a per boe basis) of $33.72
         per boe, an 18 percent increase from the same period last year.

    -    At the end of the second quarter, Breaker's net debt to annualized
         second quarter 2007 cash flow ratio was 0.9. Breaker's bank line is
         $74 million and management forecasts a conservative level of
         leverage at year-end with a net debt to annualized fourth quarter
         2007 cash flow ratio of 0.9.

    Operational update
    Throughout the second and into the third quarter, Breaker has
concentrated its capital investments on its high netback light oil projects at
Irricana, Girouxville and East Prairie. Breaker's results to date include:
encouraging early production rates at its first horizontal light oil well in
Irricana; 100 percent success on 2.5 net exploratory wells at Girouxville,
adding restricted light oil production rates of 250 bbls/d from tested
capacity greater than 500 bbls/d (net) and confirmation of approximately
10 million bbls of original oil in place and substantial reserve adds via
discovery of a new shallow light oil pool at East Prairie. Breaker is also
continuing with selective high-return, low cost gas development projects at
Irricana, Medicine Hat, and Provost.


    After an unusually long four month breakup period due to wet ground
conditions, Breaker's first horizontal light oil infill well at Irricana was
recently placed on production. The well was completed with a multiple fracture
treatment, which included the injection of more than three thousand bbls of
water-based fluid and acid into the formation. Having retrieved most of this
load fluid, the well is currently producing at approximately 400 boe/d.
Breaker recently finished drilling its second horizontal light oil infill well
where similar completion operations have commenced. Later this quarter, the
Company plans to apply this multiple fracturing technique on one of the 25
horizontal wells drilled prior to Breaker acquiring the Irricana asset. If
successful, this operation will yield numerous high rate of return
opportunities on the remaining wellbores.
    A low-cost program of recompleting standing wells for uphole hydrocarbon
zones is continuing at Irricana. The program is ongoing, with initial
recompletion results testing at approximately 300 boe/d (net before payout).
These wells are in close proximity to company-owned infrastructure.


    In its deep light oil exploratory property, Breaker attained a 100
percent success rate this year, with three gross (2.5 net) new wells now on
production from the Granite Wash. Based on initial test rates, new light sweet
oil deliverability net to the company exceeds 500 bbls/d. Total initial
production rate will be limited by EUB regulations at approximately 250 bbls/d
(net). As discovery wells, the majority of the new production will benefit
from a royalty holiday, significantly increasing the already high netback
enjoyed at this property. Two of the three wells also contain apparent pay
behind pipe in uphole zones, including the Beaverhill Lake Sand.
    After one year of production, Breaker's dual zone discovery at 13-15 has
produced approximately 180,000 bbls of oil and continues to produce light
sweet oil at an MRL-limited rate of 600 bbls/d. Apparent pay in the Beaverhill
Lake remains behind pipe in the well. Breaker has three, 100 percent working
interest offset locations remaining to be drilled within one mile of the 13-15
    Light, sweet oil production at Girouxville now exceeds 1,000 bbls/d, a
more than four-fold increase since acquisition in late 2004. With many uphole
zones behind pipe, its five most productive gross wells currently rate-limited
by the EUB, and approximately ten drilling locations in the exploration and
development inventory, Breaker is well positioned to continue growing this
high netback property.

    East Prairie

    After tie-in of the successful first quarter drilling program, East
Prairie produced at record rates in the second quarter, including the first
substantial light oil production from the property since acquisition in early
2005. Due to early drilling success, Breaker obtained a mid-year East Prairie
reserves update from its external evaluator. The new report confirms the
discovery of approximately 10 million bbls (gross) of light original oil in
place (OOIP). Breaker is currently surveying three summer-accessible outpost
locations offsetting this pool which could substantially increase the OOIP and
reserves. This discovery is only one of several oil pools recently discovered
by Breaker at East Prairie, all of which still have significant room to grow
via further delineation drilling.

    Medicine Hat and Provost

    Both areas contain a large number of gas drilling locations that are
still commercially viable under current industry conditions; however the
company has deferred most of these activities in favour of light oil
opportunities which are currently realizing a higher netback.
    At Medicine Hat, the company drilled three farmin wells in the second
quarter, two of which successfully delineated an aerially extensive gas
bearing sand first produced by the company in late 2006. Both wells are now on
production. Breaker continues to cost effectively acquire land and meet its
low-cost area farmin commitments on this sizeable gas trend, significantly
increasing its gas drilling inventory for future growth.
    At Provost, several standing wells will be completed and tied in, adding
production at low cost and providing pilot production information in areas
with substantial tight gas resource but limited production history.

    Breaker's prospects for continued per share growth in reserves,
production and cash flow are excellent. Breaker re-iterates its guidance of
average production of 4,750 boe/d and exit production of 5,250 boe/d in 2007.

    Financial Statements and Management's Discussion and Analysis
    Breaker has filed with Canadian securities regulatory authorities its
unaudited financial statements for the three and six month periods ended
June 30, 2007 and 2006 and the accompanying Management's Discussion and
Analysis. These filings are available for review at
    Breaker Energy Ltd. is a junior oil and gas company focused on creating
shareholder value by growing per share production and reserves through
acquisitions and a focused exploration, development and exploitation plan.
    Breaker has 35,123,674 Class A shares and 900,000 Class B shares
    Breaker Energy trades on the TSX under the symbols WAV.A and WAV.B.

    Forward-Looking Statements
    This press release contains forward-looking statements concerning the
Company's expectations of future production, cash flow, earnings and expansion
of its oil and gas property interests and concerning the Company's exploration
and development drilling, seismic operations, regulatory applications, payout
estimates, capital expenditures, number and drilling locations for 2007,
seismic acquisitions and facility upgrades. These statements are based on
current expectations that involve a number of risks and uncertainties, which
could cause actual results to differ from those anticipated. These risks
include, but are not limited to: the risks associated with the oil and gas
industry (e.g., 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 relating to production, costs and expenses, and
health, safety and environmental risks), acquisitions, commodity price, price
and exchange rate fluctuation and uncertainties resulting from competition
from other producers and ability to access sufficient capital from internal
and external sources. Additional information on these and other risk factors
that could affect the Company's operations and/or financial results are
included in the Company's reports on file with Canadian securities regulatory
    The forward-looking statements or information contained in this news
release are made as of the date hereof and the Company undertakes no
obligation to update publicly or revise any forward-looking statements or
information, whether as a result of new information, future events or
otherwise, unless so required by applicable securities laws.

    Oil and Gas Advisory
    This press release contains disclosure expressed as "Boe/d". Boe means
barrel of oil equivalent and Boe/d means Boe per day. All oil and natural gas
equivalency volumes have been derived using the ratio of 6,000 cubic feet of
natural gas to 1 barrel of oil. Boe equivalency measures may be misleading,
particularly if used in isolation. A conversion ratio of 6,000 cubic feet of
natural gas to 1 barrel of oil is based on an energy equivalency conversion
method primarily applicable at the burner tip and does not represent a value
equivalency at the well head.
    In this press release: (i) mmboe means million boe; (ii) boe/d means boe
per day; (iii) bbls/d means barrels per day; (iv) mcf means thousand cubic
feet; (v) mmcf means million cubic feet; (vi) mcf/d means thousand cubic feet
per day; and (vii) mmcf/d means million cubic feet per day.

    The TSX does not accept responsibility for the adequacy or accuracy of
    this release.

    %SEDAR: 00021180E

For further information:

For further information: Dan O'Neil, President & Chief Executive
Officer, (403) 215-5264; or Max Lof, Vice President, Finance & Chief Financial
Officer, (403) 215-5264,,

Organization Profile


More on this organization

Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890