Diaz announces first quarter 2009 results

    CALGARY, May 19 /CNW/ - Diaz Resources Ltd. (TSX:DZR) ("Diaz") announces
that it has filed its Interim Report for the three months ended March 31,
    Diaz's revenue and cashflow results for the three months ended March 31,
2009, were lower when compared with Q1 2008, as improved natural gas
production results in Canada were offset by a drop in U.S. production and a
significant decline in oil and natural gas prices both in the U.S. and in
    During the last quarter of 2008, Diaz drilled and completed a significant
oil well at Lloydminster, Alberta, 50% WI. Diaz has been producing this well
and closely monitoring its productivity over the past few months, and is
pleased with recent improvements in oil production due to optimizing the
well's downhole configuration.


    Revenue for the three months ended March 31, 2009, lowered to $2.2
million compared with $3.2 million for Q1 2008. Cash flow from operations
decreased to $614,000 or $0.01 per share compared with $1.6 million or $0.02
per share in Q1 2008. Diaz reported a loss for the three month period of $9.8
million or ($0.15) per share versus a loss of $381,000 or ($0.01) per share in
Q1 2008, as it took an impairment write down against its oil and gas assets of
$11.4 million.
    Capital expenditures for the first quarter of 2009 totaled $949,000
compared with $2.5 million for Q1 2008. Capital expenditures were financed
from cash flow from operations and debt. Diaz completed Q1 2009 with net
current debt of $8.7 million versus $8.5 million at the beginning of the
quarter. Diaz also had convertible debentures outstanding of $7.1 million that
mature on March 26, 2012.


    The Company's production for the three month period ended March 31, 2009,
decreased 3% to 791 BOEd compared with the Q1 2008 average of 816 BOEd. In
Canada, natural gas production rates in the quarter were 31% higher than in
the prior year, averaging 3.0 MMcfd compared with 2.3 MMcfd. The increase in
Canadian gas production was offset by a reduction during the quarter of
Canadian oil production by 28% and U.S. production by 37%.

    Land Acquisition and Property Sale

    During 2009, Diaz has acquired 9,611 acres (6,795 net acres) in Alberta
and Saskatchewan. The Alberta lands were acquired to expand existing holdings
at Big Bend. Diaz's primary exploration focus is in Saskatchewan where the
Company now has acreage on prospective Viking, Shaunavon and Bird Bear oil
    In May 2009, Diaz completed the sale of its interest in a non-operated
oil property in the Carmangay, Alberta area for $1.0 million. Diaz's net
production from the area was 16 Bopd and the sale equated to $62,500 per
flowing barrel. The proceeds from the sale were used to reduce Diaz's bank

    Business Outlook

    A weak natural gas pricing environment has led to a sharp reduction in
the number of rigs drilling for natural gas over the last six months. The drop
of rig activity in Canada and the U.S. should decrease domestic supply as
rates from producing wells decline without new well production replacing the
declines. However, even though natural gas prices have shown signs of
strengthening recently, there is still considerable uncertainty as to when
prices will again rise to above $7.00 Mcf. Because of the uncertainty in the
gas market and the underlying economy Diaz expects that natural gas prices
will stay in the range of $4.00 to $6.00 per Mcf for the remainder of 2009.
    Diaz plans to match capital spending to operating cashflows and has
halted new projects until gas prices improve over current levels. Diaz's
future exploration program will focus on developing its Canadian properties
which can be managed within the Company's capital budget. However, Diaz is
also considering various alternatives to its normal operations such as the
selling of assets, a reduction of overhead costs, and other Corporation
transactions to optimize shareholder value.

                                                          Three Months Ended
    (Thousands, except per share amounts, unaudited)                March 31
                                                        2009           2008
      Revenue                                      $    2,248      $   3,170
      Cash flow from operations                           614          1,643
        per share, diluted                               0.01           0.02
      Loss for the period                              (9,754)          (381)
        per share, diluted                              (0.15)         (0.01)
      Capital additions                                   949          2,479
      Dispositions                                        113              -
      Net current debt                                  8,657          9,404
      Convertible debentures(*)                         6,163          5,896
      Total assets                                     43,264         61,221
      Total shares outstanding at period end           67,178         67,239

        Gas (MMcfd)                                       4.1            4.0
        Oil (Bopd)                                        111            155
        BOEd (6 Mcf = 1 Bbl)                   791            816
      Product Prices
        Gas ($/Mcf)                                     $6.01          $7.82
        Oil ($/Bbl)                                    $35.13         $71.43

    (*) Convertible debentures issued in Q1 2007, have a face value of
        $7.1 million and mature on March 26, 2012. See Note 8, "Convertible
        Debentures", in the notes to the financial statements for the three
        months ended March 31, 2009.

    Diaz is an oil and gas exploration and production company based in
Calgary, Alberta. Diaz's current focus is on gas and oil development and
exploration in Alberta, Saskatchewan and Texas.

    ADVISORY: Certain information regarding the Company in this News Release
including management's assessment of future plans and operations, the use of
proceeds from the offering and the anticipated closing date of the offering,
may constitute forward-looking statements under applicable securities laws and
necessarily involve risks including, without limitation, risks associated with
oil and gas exploration, development, exploitation, production, marketing and
transportation, loss of markets, volatility of commodity prices, currency
fluctuations, imprecision of reserve estimates, environmental risks,
competition from other producers, inability to retain drilling rigs and other
services, capital expenditure costs, including drilling, completion and
facilities costs, unexpected decline rates in wells, wells not performing as
expected, incorrect assessment of the value of acquisitions, failure to
realize the anticipated benefits of acquisitions, delays resulting from or
inability to obtain required regulatory approvals and ability to access
sufficient capital from internal and external sources. As a consequence,
actual results may differ materially from those anticipated in the
forward-looking statements. Readers are cautioned that the foregoing list of
factors is not exhausted. Additional information on these and other factors
that could effect the Company's operations and financial results are included
in reports on file with Canadian securities regulatory authorities and may be
accessed through the SEDAR website (www.sedar.com) and at the Company's
website (www.diazresources.com). Furthermore, the forward-looking statements
contained in this news release are made as at the date of this news release
and the Company does not undertake any obligation to update publicly or to
revise any of the included forward-looking statements, whether as a result of
new information, future events or otherwise, except as may be required by
applicable securities laws.
    Where amounts are expressed on a barrel of oil equivalent (boe) basis,
natural gas volumes have been converted to barrels of oil at six thousand
cubic feet (mcf) per barrel (bbl). Boe figures may be misleading, particularly
if used in isolation. A boe conversion of six thousand cubic feet per barrel
is based on an energy equivalency conversion method primarily applicable at
the burner tip and does not represent a value equivalency at the wellhead.
References to oil in this discussion include crude oil and natural gas liquids


For further information:

For further information: Robert W. Lamond, Chairman, or Donald K. Clark,
Chief Operating Officer, DIAZ RESOURCES LTD., Telephone: (403) 269-9889, Fax:
(403) 269-9890, Website: www.diazresources.com, Email: info@diazresources.com,

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