Kootenay Energy Inc. Announces Third Quarter Results

    CALGARY, Nov. 29 /CNW/ - Kootenay Energy Inc. ("Kootenay" or the
"Corporation" TSX Venture: KTY) is pleased to report on its un-audited interim
financial and operating results for the three and nine months ended
September 30, 2007.

    Financial Results ($000s, except per share amounts)

                              Three Months Ended     Nine Months Ended
                                    September 30          September 30
                                    2007    2006          2007    2006

    Gross Revenue                  2,638   1,114  137%   7,332   3,389  116%

    Sales Volumes
    Crude oil and liquids
     bbls/d                          360     119  203%     335     150  123%
    Natural gas mcf/d                447     285   57%     443     290   53%
    Average boe/d                    435     200  118%     408     198  106%

    Product Prices
    Crude oil $/bbl                74.69   82.45   -9%   69.58   68.58    1%
    Natural gas liquids $/boe       33.5   45.25  -26%   33.68   37.44  -10%
    Natural gas $/mcf               5.03    6.17  -18%    7.45    6.78   10%

    Netback Analysis ($/boe)
    Oil and gas revenue             64.5   71.08   -9%   64.24   62.20    3%
    Royalties                      11.29    4.84  133%   11.88   13.04   -9%
    Operating Costs                29.94   13.19  127%   17.90   11.45   56%
    Net backs                      23.27   53.05  -56%   34.46   37.71   -9%

    Per Share

    Income (loss) before taxes      (530)     57          (518)   (182)
      Per Share (basic)           $(0.02) $    -        $(0.02) $ 0.01
    Funds flow from operations       386     469         2,230   1,068
      Per Share (basic)           $ 0.01  $ 0.01        $ 0.10  $ 0.02

    Share Data (000s)
    Common Shares
     (weighted average)           22,358  20,056        22,468  20,634
    Options                        2,210   2,010         2,210   2,010

    Additional Information
    Interest Expense                 219     (12)          636      49
    Depletion, depreciation
     and accretion                   784     339         2,388     863
    Capital expenditures           1,803    (583)        4,086   3,163
    Total Assets                                        24,127  12,487

    Working capital (deficiency)                       (13,114) (1,523)
    Asset retirement obligation                            979     471

    During the quarter and the nine month period ending September 30, 2007
the Corporation increased revenues and sales volumes by over 100% for both the
periods. The increases are attributable to drilling success. The Corporation
drilled 4 gross (3.1 net) wells in the third quarter of 2007 resulting in
4 oil wells. Three of the wells are located in the Skaro, Alberta field and
were drilled and cased as Cooking Lake oil wells producing at a combined
stabilized rate of approximately 110 bbls/d. A fourth well, also oil, (10%
W.I.) was drilled in the Elswick field in southeast Saskatchewan and is
producing at a stabilized rate of 90 bbls/d (9 bbls/d net). Kootenay continued
to have greater than 80% of its production from oil producing properties.
    High operating costs in the third quarter ending September 30, 2007 were
a result of one time corrections in underestimating the operating costs
relating to prior periods of non-operated properties acquired in December of
2006. Actual billings for these properties arrived in the third quarter. Other
significant factors include operating single well batteries for newly drilled
oil wells that were brought on production prior to being tied into low cost
central oil battery facilities. As of the fourth quarter, these new wells are
tied into the central facility and a reduction of operating costs will result
as the single well production facilities have been removed. Also contributing
to the high operating costs is the production of natural gas from a well
drilled in the first quarter of 2007 which was producing large amounts of
water. The well has subsequently become uneconomic to operate and costs
attributed to the well have been eliminated. The average operating costs for
the nine month period ending September 30, 2007 are also averaging higher.
Higher oil prices received by the Corporation has allowed previously marginal
wells with higher operating costs to brought back on production with positive
    Subsequent to the quarter, the Corporation has entered into a conditional
offer to purchase letter agreement for the sale of certain oil and natural gas
assets in southeast Saskatchewan. The sale of approximately 85 boe/d of
production for seven million and one hundred thousand dollars ($7,100,000)
effective December 1, 2007 is scheduled to close prior to year end, subject to
normal industry closing adjustments. The proceeds from the sale will be
applied to the reduction of the Corporation's total debt. The sale is subject
to normal industry conditions, including but not without limitation,
regulatory board approval and the approval of the Corporation's secured
    The calculations of barrels of oil equivalent ("boe") are based on a
conversion rate of six thousand cubic feet ("mcf") of natural gas to one
barrel of crude oil. 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.

    The above disclosure contains certain forward-looking statements that
involve substantial known and unknown risks and uncertainties. These
forward-looking statements are subject to numerous risks and uncertainties,
certain of which are beyond the Corporation's control, including: the impact
of general economic conditions in Canada, industry conditions, increased
competition, the lack of available qualified personnel or management,
equipment failures, fluctuations in product prices and in foreign exchange or
interest rates and stock market volatility. The Corporation's actual results,
performance or achievements could differ materially from those expressed in,
or implied by, these forward-looking statements and, accordingly, no
assurances can be given that any of the events anticipated by the
forward-looking statements will transpire or occur, or if any of them do so,
what benefits the Corporation will derive there from.


    %SEDAR: 00020600E

For further information:

For further information: Kootenay Energy Inc. - Jack Marsh, President
and Chief Executive Officer, (403) 355-9800

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