Diaz announces second quarter 2009 results

    CALGARY, Aug. 17 /CNW/ - Diaz Resources Ltd. (TSX:DZR) ("Diaz") announces
that it has filed its Interim Report for the six months ended June 30, 2009.
    Diaz's revenue and cashflow results for the six months ended June 30,
2009, were significantly lower when compared with the prior year six month
period, as production declines in Canada and in the U.S. combined with lower
oil and natural gas prices.
    During the second quarter of 2009, Diaz recompleted a significant oil
well at Lloydminster, Alberta. As a result of the improved performance in oil
production from this well, Diaz has licenced an offset location and plans to
commence drilling in early September. This will be the first of a multi-well
program in the area. Diaz is the operator and holds a 50% working interest.


    Revenue for the six month period ended June 30, 2009, decreased to $4.4
million compared with $9.4 million for the prior year. Revenue for the second
quarter reduced to $1.8 million compared with $5.6 million in the prior year
quarter. Cash flow from operations for the first six months of 2009 decreased
to $1.4 million or $0.02 per share compared with $4.4 million or $0.07 per
share for the prior year. Cash flow for the second quarter of $822,000 was
down compared with $2.7 million for the prior year quarter. Diaz reported a
loss for the six month period of $10.4 million or ($0.15) per share versus a
loss of $249,000 or nil per share in the prior year six month period, as it
took an impairment write down against its oil and gas assets of $11.4 million
during Q1 2009. For the second quarter, Diaz reported a loss of $619,000
compared with earnings of $132,000 in the prior year quarter.
    Capital expenditures for the six month period ended June 30, 2009,
totalled $1.8 million compared with $4.2 million in the prior year. Capital
expenditures were financed from cash flow from operations and the sale of an
oil and gas property. At June 30, 2009, Diaz had net current debt of $7.7
million versus $8.5 million at the beginning of the year. Diaz also had
convertible debentures outstanding of $7.1 million that mature on March 26,


    The Company's production for the six month period ended June 30, 2009,
decreased 17% to 733 BOEd compared with the prior year average of 887 BOEd.
For the second quarter, production rates declined 29% to 675 BOEd compared
with 955 BOEd in the prior year quarter. The steep production declines in the
second quarter resulted in Canada from the shut-in of production at the Big
Bend field which will be put back on production in late fall, and in the U.S.
resulting from the shut-in of production at the Black Owl field combined with
declining production rates at the Provident City, Hound Dog and Allen Ranch

    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 it's interest in a non-operated
oil property in the Carmangay, Alberta area for $1.0 million. The proceeds
from the sale were used to reduce Diaz's bank debt.

    Business Outlook

    The continued weak natural gas pricing environment has led to a sharp
reduction in the number of rigs drilling for natural gas over the last eight
months. The drop of rig activity in Canada and the U.S. should decrease
domestic supply as production rates from existing wells decline without
offsetting new production. However, 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 $3.50 to $5.50 per Mcf for the remainder of
    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.

                                                          Six Months Ended
    (Thousands, except per share amounts, unaudited)          June 30
                                                          2009        2008
      Revenue                                          $   4,180   $   7,746
        Cash flow from operations                          1,436       4,382
          per share, diluted                                0.02        0.07
        Loss for the period                              (10,373)       (249)
          per share, diluted                               (0.15)       0.00
        Capital additions                                  1,753       4,232
        Dispositions                                       1,107          18
        Net current debt                                   7,695       8,481
        Convertible debentures(*)                          6,233       5,961
        Total assets                                      39,826      61,114
        Total shares outstanding at period end            67,178      67,218

        Gas (MMcfd)                                          3.8         4.4
        Oil (Bopd)                                           104         155
        BOEd (6 Mcf equals 1 Bbl)                            733         887
      Product Prices
        Gas ($/Mcf)                                        $5.09       $8.69
        Oil ($/Bbl)                                       $49.05      $87.50

    (*) 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 six
        months ended June 30, 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 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, TSX: DZR

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