Iteration Energy announces June 30, 2007 quarter end results



    (All amounts are in Canadian dollars, unless stated otherwise)

    CALGARY, Aug. 9 /CNW/ - Iteration Energy Ltd. (TSX-ITX) ("Iteration" or
the "Company") announced today its financial and operating results as at and
for the three and six months ended June 30, 2007. The financial statements,
together with Management's Discussion and Analysis (MD&A), have been filed on
the Company's SEDAR profile at www.sedar.com. They are also available on the
Company's website at iterationenergy.com.

    
    The major highlights of the three months ended June 30, 2007 include:

      -  Drilled 4.0 net gas wells and 1.0 net oil well with a 100% success
         rate. There was relatively little drilling during the quarter due to
         limited surface access over breakup.

      -  Average production for the quarter of 6,311 boed (94% gas) which
         represents an 8% increase from the previous quarter and a 62%
         increase from the second quarter of 2006.

      -  Funds from operations for the quarter were $14.5 million, which
         represents a 17% increase from the previous quarter and a 111%
         increase from the second quarter of 2006.

      -  Capital program for the quarter of $15.0 million which included a
         $2.0 million acquisition which increased our working interest in one
         of our British Columbia properties.

      -  Production expenses were higher than expected at $8.55 per boe
         reflecting ongoing inflationary pressure.

      -  Issued $39.2 million in equity at $5.60 per common share. Net
         proceeds were applied to reduce bank debt.


    SUMMARY OF RESULTS

    Year over year comparative results are as follows:
    -------------------------------------------------------------------------
                                      Three months ended   Six months ended
                                            June 30,            June 30,
    -------------------------------------------------------------------------
                                          2007      2006      2007      2006
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Production (boed)                    6,311     3,897     6,081     3,852
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Realized commodity price ($/boe)  $  46.68  $  34.91  $  45.92  $  57.31
    -------------------------------------------------------------------------
    Operating netbacks ($/boe)        $  28.65  $  20.94  $  27.67  $  26.12
    -------------------------------------------------------------------------
    Production expense ($/boe)        $   8.55  $   6.37  $   8.26  $   5.93
    -------------------------------------------------------------------------
    G & A expense ($/boe)             $   2.37  $   1.87  $   2.23  $   2.04
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Production revenue before
     royalties ($M)                   $ 26,806  $ 12,394  $ 50,550  $ 29,711
    -------------------------------------------------------------------------
    Funds from operations ($M)(1)     $ 14,464  $  6,854  $ 26,842  $ 16,962
    -------------------------------------------------------------------------
    Funds from operations per basic
     share ($)(2)                     $   0.23  $   0.13  $   0.45  $   0.34
    -------------------------------------------------------------------------
    Funds from operations per
     diluted share ($)(2)             $   0.23  $   0.13  $   0.45  $   0.32
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Stock based compensation
     expense (recovery) included
     in net earnings (loss)           $    708  $   (102) $  5,208  $ (1,682)
    -------------------------------------------------------------------------
    Net earnings (loss) ($M)          $   (639) $ (1,472) $ (4,308) $  1,177
    -------------------------------------------------------------------------
    Earnings (loss) per basic
     and diluted share ($)(2)         $  (0.01) $  (0.03) $  (0.07) $   0.02
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Net undeveloped land ('000 's
     acres)                                230       126       230       126
    -------------------------------------------------------------------------

    (1) Management uses funds from operations and funds from operations per
        share (before changes in non-cash working capital and asset
        retirement expenditures) to analyze operating performance and
        leverage. Funds and funds per share as presented do not have any
        standardized meaning prescribed by Canadian GAAP and therefore they
        may not be comparable with the calculation of similar measures for
        other entities. Funds as presented is not intended to represent
        operating cash flow or operating profits for the period nor should it
        be viewed as an alternative to cash flow from operating activities,
        net earnings or other measures of financial performance calculated in
        accordance with Canadian GAAP. All references to funds and funds per
        share throughout this report are based on cash flow from operating
        activities before changes in non-cash working capital.

    (2) For periods with positive net earnings, per share amounts are based
        on weighted average basic and diluted common shares outstanding for
        the period. For periods with a net loss, per share amounts are based
        on basic common shares outstanding for the period.
    

    Outlook for 2007

    The Company had previously given guidance of 6,400 to 6,500 boed average
production for 2007, based on a capital program of $90 million. Access to
third party facilities for some of our western Alberta gas has been somewhat
more restricted than we had anticipated, so we now expect the 2007 average to
be at the low end of that range. The anticipated capital program has increased
slightly due to an increase in the number of wells from 53 to 60, offset by a
mid year reduction in drilling costs. The Company has also completed a small
acquisition which increased our working interest in one of our British
Columbia properties.
    Based on the July 23, 2007 commodity price strip, the Company now expects
a lower average natural gas price for 2007 of $6.60/GJ and an average 2007
blended price for oil of $65.00/bbl. Using these estimates for commodity
prices and expected results from currently budgeted activities, the revised
guidance for 2007 is as follows:

    
        Average production:        approximately 6,400 boed
        Capital program:           approximately $92 million
        Operating netback:         approximately $24 per boe
        Funds from operations:     approximately $52 million
        Year end net debt:         approximately $34 million
    

    The Company will continue to focus on adding new drilling locations and
prospective lands in order to grow production through an ongoing exploitation
and exploration program. We will continue to evaluate commodity prices and
drilling costs as the year progresses in order to optimize the timing of
drilling for the remainder of the year. The Company is aggressively pursuing
acquisition and farm-in opportunities in its core areas and will continue to
be active at land sales.

    Advisory - Forward-Looking Information

    Natural gas is converted to crude oil equivalent at a ratio of six
thousand cubic feet to one barrel. Boe's may be misleading, particularly if
used in isolation. A boe conversion ratio of 6 mcf:1 bbl is based on an energy
equivalency conversion method primarily applicable at the burner tip and does
not represent a value equivalency at the wellhead.
    This press release was prepared on August 9, 2007 and is management's
assessment of Iteration's historical financial and operating results. The
reader should be aware that historical results are not necessarily indicative
of future performance. This press release contains forward-looking statements
relating to future events or future performance. In some cases,
forward-looking statements can be identified by terminology such as "may",
"will", "should"," expects", "projects", "plans", "anticipates" and similar
expressions. These statements represent management's expectations or beliefs
concerning, among other things, future operating results and various
components thereof affecting the economic performance of Iteration. Undue
reliance should not be placed on these forward-looking statements which are
based upon management's assumptions and are subject to known and unknown risks
and uncertainties, including the business risks discussed below, which may
cause actual performance and financial results in future periods to differ
materially from any projections of future performance or results expressed or
implied by such forward-looking statements. Accordingly, readers are cautioned
that events or circumstances could cause results to differ materially from
those predicted. The Company undertakes no obligation, except as required by
applicable securities legislation, to update publicly or to revise any of the
included forward looking statements, whether as a result of new information,
future events or otherwise.
    The forward looking statements contained herein are expressly qualified
by this cautionary statement. Readers are cautioned that the following list of
risk factors is not exhaustive.
    In particular, this press release contains forward-looking statements and
information pertaining to the following:

    
    -  The quantity and recoverability of our reserves;
    -  The timing and amount of future production;
    -  Prices for natural gas produced;
    -  Operating and other costs;
    -  Business strategies and plans of Management;
    -  Supply and demand of natural gas;
    -  Expectations regarding our ability to raise capital and to add to our
       reserves through acquisitions as well as exploration and development;
    -  The focus of capital expenditures on development activity rather than
       exploration;
    -  The sale, farming in, farming out or development of certain
       exploration properties using third party resources;
    -  The use of development activity and acquisitions to replace and add
       to reserves;
    -  The impact of changes in natural gas prices on cash flow after
       hedging;
    -  Drilling plans;
    -  The existence, operations and strategy of the commodity price risk
       management program;
    -  The approximate and maximum amount of forward sales and hedging to be
       employed;
    -  The Company's acquisition strategy, and the criteria to be considered
       and the benefits to be derived;
    -  The impact of Canadian federal and provincial governmental regulation
       on the Company relative to other issuers of similar size;
    -  Our treatment under governmental regulatory regimes;
    -  The goal to sustain or grow production and reserves through prudent
       management and acquisition;
    -  The emergence of accretive growth opportunities; and
    -  The Company's ability to benefit from the combination of growth
       opportunities and the means to grow through the capital markets.

    Iteration's actual results could differ materially from those anticipated
in our forward-looking statements as a result of the risk factors set forth
below and elsewhere in this press release which include but are not limited
to:

    -  Volatility in market prices for natural gas;
    -  Risks inherent in our operations;
    -  Uncertainties associated with estimating reserves;
    -  Competition for, among other things: capital, acquisitions of
       reserves, undeveloped lands and skilled personnel;
    -  Incorrect assessments of the value of acquisitions;
    -  Geological, technical, drilling and process problems;
    -  General economic conditions including fluctuations in the price of
       natural gas;
    -  Royalties payable in respect of Iteration's production;
    -  Governmental regulation of the oil and gas industry, including
       environmental regulation;
    -  Fluctuation in foreign exchange or interest rates;
    -  Unanticipated operational events that can reduce production or cause
       production to be shut-in or delayed;
    -  Stock market volatility and market valuations; and
    -  The need to obtain required approvals from regulatory authorities.
    

    Many of these risk factors and uncertainties are discussed in further
detail in the Management's Discussion and Analysis and the Annual Information
Form for the year ended December 31, 2006, as well as Management's Discussion
and Analysis for the three months ended March 31, 2007 and three and six
months ended June 30, 2007, which are available through the internet on the
Company's website at www.iterationenergy.com and on the Company's SEDAR
profile at www.sedar.com.

    The TSX has not reviewed this press release and does not accept
    responsibility for the accuracy of any of the data presented here-in.

    Iteration Energy Ltd

    Iteration is an Alberta based corporation engaged in the business of
exploring for and developing oil and natural gas reserves in Western Canada
and acquiring natural resource properties. Iteration's common shares are
listed on the Toronto Stock Exchange under the symbol "ITX".

    For further information, please see the Company website at
www.iterationenergy.com.

    %SEDAR: 00002576E




For further information:

For further information: Company contacts at (403) 261-6883: Mr. Brian
Illing, President and CEO; Mr. Sean Johnson, CFO

Organization Profile

ITERATION ENERGY LTD.

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