Regal Energy Ltd. announces second quarter 2009 results


    (TSX Venture Exchange: "REG")

    CALGARY, May 29 /CNW/ - Regal Energy Ltd. ("Regal" or the "Company")
announces that it has filed its unaudited interim financial statements and
management discussion and analysis as at and for the three and six months
ended March 31, 2009.
    On March 31, 2009, the last day of the most recently completed quarter,
the Company successfully completed a private placement financing consisting of
277,500,000 units at $0.05 per unit for gross proceeds of $13,875,000. Under
the terms of the financing, each unit consisted of one common share and one
share purchase warrant, with each warrant entitling the holder to acquire an
additional common share at a price of $0.075, subject to adjustment in certain
circumstances. The Company has applied a portion of the net proceeds from the
financing to repay its bank debt and a majority of its accounts payable,
thereby reducing certain liquidity concerns which would have restrained the
Company's future growth.
    In conjunction with the March 31, 2009 private placement, Hugh G. Ross
and Michael H. Halvorson were appointed to the Company's board of directors,
while Hugh Mogensen and Jake Pronk resigned. Mr. Ross also replaced Curtis A.
Hartzler as President and CEO; Ketan Panchmatia was appointed VP Finance and
CFO; Greg Groten was appointed VP Exploration; and Jack Lane was appointed VP
Operations. Subsequent to March 31, 2009, Julian Din was appointed VP Business
    A summary of financial and operational results for the three and six
month periods ended March 31, 2009, along with the comparative periods, are
outlined in the following table:

                                       Three months ended   Six months ended
                                             March 31            March 31
                                          2009      2008      2009      2008
    Financial (000s, except per
     share amounts)
    Revenue                           $    911  $    798  $  2,163  $  1,490
    Funds flow from (used in)
     operations                         (1,379)       10    (1,661)      (52)
      per share - basic and diluted      (0.01)     0.00     (0.01)    (0.00)
    Net loss                             9,147       416    10,508       914
      per share - basic and diluted       0.06      0.01      0.07      0.02
    Capital expenditures, net              220       (40)    1,600     1,350
    Working capital (deficit)            6,298    (3,787)    6,298    (3,787)
    Weighted average shares
     outstanding                       153,134    48,138   151,575    48,138

                                       Three months ended   Six months ended
                                             March 31            March 31
                                          2009      2008      2009      2008
    Oil & liquids (bbls/d)                  75        33        83        36
    Gas (mcf/d)                          1,385       840     1,371       845
    Oil equivalent (boe/d)                 306       173       311       176

    Average realized prices
    Oil & liquids ($/bbl)                39.72     80.39     45.38     75.39
    Gas ($/mcf)                           5.14      7.29      5.93      6.45
    Oil equivalent ($/boe)               33.05     50.73     38.18     46.14

    The financial results for the three and six months ended March 31, 2009
were impacted to a large degree by a $7 million ceiling test impairment
provision; $575 thousand in severance expenses associated with the management
change; and a $200 thousand write-down of accounts receivable.
    Going forward, the new management team plans on using the Company's
significantly improved financial position, which includes positive working
capital of $6.3 million and a $3.5 million unutilized credit facility, to
capitalize on accretive corporate and asset acquisitions. Regal's corporate
plan is to focus the majority of its efforts in the near term on acquiring
production and reserves at attractive valuations; consolidating areas of
interest; and exploiting lower risk, shallower depth reservoirs. The new
management team believes that the Company is now in a position to
strategically capitalize on the significant opportunities for growth currently
present in the junior oil and gas sector. With no debt and positive working
capital, the Company believes that it is better positioned than ever to pursue
transactions expected to result in accretive and profitable growth.
    The full text of the March 31, 2009 interim financial statements and
associated MD&A can be found on the Company's website at
and on SEDAR at


    Included in this press release are references to certain financial
measures commonly used in the oil and gas industry, such as funds flow from
operations and operating netbacks. These measures have no standardized
meanings, are not defined by Canadian generally accepted accounting measures
("GAAP"), and accordingly are referred to as non-GAAP measures. These
supplemental measures are used by management to assess operating results
between periods and between peer companies as they provide an indication of
the results generated by the Company's principal business activities before
the consideration of how these activities are financed or how the results are
    Regal determines funds flow from operations as cash provided by operating
activities prior to changes in non-cash working capital items. Funds flow from
operations has been presented for information purposes only and should not be
considered an alternative to, or more meaningful than, cash flow from
operating activities as determined in accordance with GAAP. The Company
considers funds flow from operations to be a key measure as it demonstrates
the Company's ability to generate the cash necessary to repay debt and to fund
future growth through capital investment. The determination of Regal's funds
flow from operations may not be comparable to similarly titled measures
reported by other companies.
    Operating netbacks are calculated by taking production revenue and
deducting royalty and operating expenses. Regal's reported amounts may not be
comparable to similarly titled measures reported by other companies. These
terms should not be considered an alternative to, or more meaningful than,
cash provided by operating, investing and financing activities or net income
as determined by Canadian GAAP as an indicator of the Company's performance or


    Reported production represents Regal's ownership share of sales before
the deduction of royalties. Where amounts are expressed on a barrel of
equivalent ("boe") basis, natural gas has been converted at a ratio of six
thousand cubic feet to one boe. 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. Boe's may be misleading,
particularly if used in isolation. References to natural gas liquids
("liquids") include condensate, propane, butane and ethane and one barrel of
liquids is considered to be equivalent to one boe.


    Certain disclosures set forth in this press release constitute
forward-looking statements. Any statements contained herein that are not
statements of historical facts may be deemed to be forward-looking statements.
Forward-looking statements are often, but not always, identified by the use of
words such as "anticipate", "believes", "budget", "continue", "could",
"estimate", "forecast", "intends", "may", "plan", "predicts", "projects",
should", "will" and other similar expressions. All estimates and statements
that describe the Company's future, goals, or objectives, including
Management's assessment of future plans and operations, may constitute
forward-looking information under securities laws. Forward-looking statements
involve known and unknown risks and uncertainties which include, but are not
limited to: exploration, development and production risks; assessments of
acquisitions; reserve measurements; availability of drilling equipment; access
restrictions; permits and licenses; aboriginal claims; title defects;
commodity prices; commodity markets, transportation and marketing of crude
oil, liquids and natural gas; reliance on operators and key personnel;
competition; corporate matters; funding requirements; access to credit and
capital markets; market volatility; cost inflation; foreign exchanges rates;
general economic and industry conditions; environmental risks; Kyoto protocol;
and government regulation and taxation.
    Forward-looking statements relate to future events and/or performance and
although considered reasonable by Regal at the time of preparation, may prove
to be incorrect and actual results may differ materially from those
anticipated in the statements made. Regal does not undertake any obligation to
publicly update forward-looking information except as required by applicable
securities law.

    Neither the TSX Venture Exchange nor its Regulation Services Provider (as
    that term is defined in the policies of the TSX Venture Exchange) accepts
    responsibility for the adequacy or accuracy of this release.

For further information:

For further information: Hugh G. Ross, President and CEO, Telephone:
(403) 263-4310, Fax: (403) 263-4368; Ketan Panchmatia, VP Finance and CFO,
Telephone: (403) 263-4310, Fax: (403) 263-4368

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