COSTA releases 2007 second quarter results

    CALGARY, Aug. 27 /CNW/ - COSTA Energy Inc. ("COSTA" or the
"Company")(TSX Venture Exchange: COE) has released its financial and operating
results for the three and six months ended June 30, 2007.


    Three months ended June 30, 2007

    Production and Prices
    Natural gas sales (mcf/d)                                            459
    Oil and NGL sales (bbls/d)                                            22
    Average daily sales 6:1 (boe/d)                                       98
    Average natural gas price ($/mcf)                            $      7.52
    Average oil and NGL price ($/bbl)                            $     65.29

    Financial ($)
    Oil and gas revenue ($000's)                                 $       445
    Net loss ($000's)                                            $      (640)
    Per share, basic and diluted                                 $     (0.02)

    Weighted average basic and diluted                            26,753,742
    Outstanding at period end                                     26,753,742


    COSTA had a net loss of $1.99 million for the six months ended June 30,
2007, including a ceiling test impairment of $1.35 million. The impairment was
primarily due to a lack of economic production at Macoun and also reduced gas
prices in the July 1, 2007 price deck used to value reserves at June 30, 2007.
COSTA had a deficit of $8.76 million and a working capital deficiency of
$2.37 million (including $883,000 principal amount of subordinated debentures)
at the end of the second quarter of 2007.
    The Company sold its Boundary Lake properties effective May 1, 2007 for
net proceeds of $640,010. Second quarter capital was restricted to $113,000.
The Company's credit facility was renegotiated and at June 30, 2007, consists
of a $900,000 revolving line and a $490,000 term loan.
    In July 2007, COSTA closed a private placement of 16,506,993 units at
$0.11 per unit consisting of one common share and one warrant which entitles
the holder thereof to purchase one common share at a price of $0.16 per share
until March 31, 2008. Net proceeds from the financing were $1.76 million.
    COSTA has reduced its G&A, restricted its capital program and is looking
at a combination of property sales and/or other financings to continue to work
on its financial position.


    For the remainder of 2007, the Company has planned a cautious capital
program of drilling and recompletions. Three infill shallow gas wells at
Alderson and a shallow Colony gas well north of Edmonton are planned for the
third quarter. The Company will evaluate the sale of fully developed
properties; and the sale or farm-out of properties that are not consistent
with the Company's current conservative risk profile.

    About COSTA

    The 2007 second quarter report, which includes management's discussion
and analysis and financial statements, is available on and on
the Company's website at
    COSTA Energy Inc. is a Calgary based junior oil and gas company, which
explores for, develops, produces, and sells crude oil, natural gas liquids and
natural gas in Alberta and Saskatchewan.

    Forward-Looking Statements

    Certain information in this press release contains forward-looking
statements, including, without limitation, drilling plans, expected results
and certain expected expenses and costs in subsequent periods. These
forward-looking statements involve inherent risks and uncertainties, some of
which are beyond the Company's control, including but not limited to the
impact of general economic conditions, industry conditions, commodity price
volatility, currency fluctuations, environmental risks, competition, reserve
estimates, ability to access sufficient capital from internal and external
sources and industry regulation. The assumptions used in the preparation of
such information, although considered reasonable by COSTA at the time of
preparation, may prove to be incorrect and actual results may differ
materially from those expressed in or implied by these forward-looking
statements. The Company disclaims any intention or obligation to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise, except as otherwise required by applicable
securities laws.

    Oil Equivalent Conversion

    Barrel of oil equivalent ("boe") amounts have been calculated using a
conversion rate of six thousand cubic feet of natural gas to one barrel of oil
and natural gas liquids equivalent. This ratio is based on an energy
equivalency conversion method primarily applicable at the burner tip and does
not represent a value equivalency at the wellhead or point of sale. Barrel of
oil equivalents may be misleading, particularly if used in isolation.

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

For further information:

For further information: Requests for information should be directed to:
Mr. Terry D. Brooker, President and Chief Executive Officer, COSTA Energy
Inc., (403) 206-3430, Email:

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