Silverwing Energy Inc. announces financial and operating results for the year and quarter ended December 31, 2006


    CALGARY, March 14 /CNW/ - Silverwing Energy Inc. (TSX: SVW) ("Silverwing"
or the "Company") is pleased to announce its financial and operating results
for the three and twelve month periods ended December 31, 2006.

    -   In 2006, Silverwing successfully obtained a listing on the Toronto
        Stock Exchange through the raising of over $30 million. The common
        shares of the Company trade under the symbol SVW and its warrants
        trade under the symbol SVW.WT.
    -   Production for the fourth quarter of 2006 averaged 997 boepd,
        compared to 406 boepd in the same period in 2005. Production for
        fiscal 2006 averaged 728 boepd, compared to 254 boepd in 2005. The
        increases in both periods resulted primarily from additional
        production brought on at Sirius, supported by field facilities
        installed in the area. Sirius is a sub project within Silverwing's
        core area of Prespatou, northeast BC. The Company's exit production
        rate at year-end was approximately 1,150 boepd.
    -   Capital expenditures totaled $18.6 million for the fourth quarter of
        2006. For fiscal 2006, Silverwing reported total exploration and
        development expenditures of $63.1 million. This included:
        -  $5.8 million spent on land, seismic and other,
        -  $26.3 million spent on drilling 38 gross (17 net) wells
           with an 87% success rate,
        -  $15.8 million (net of sales) spent on facility infrastructure and
        -  $15.2 million spent on acquisitions.
    -   The infrastructure referred to above included the commissioning of a
        number of facilities in Prespatou, increasing throughput capacity
        from 2 mmcfpd at January to over 15 mmcfpd by year-end. This
        additional facility capacity provides Silverwing with a substantial
        platform from which to grow.
    -   Funds from operations for the fourth quarter increased to
        $1.7 million, compared to $1.4 million over the same period in 2005.
        Although production increased 146% on a quarter over quarter basis,
        the impact was offset by a 66% decrease in natural gas prices
        realized in the period. In fiscal 2006 funds from operations
        increased to $3.4 million from $2.5 million in 2005 due to increased
        production period over period.
    -   At December 31, 2006, the estimated undiscounted future cash flows
        from proved reserves were less than the carrying values of producing
        petroleum and natural gas properties. As a consequence, Silverwing
        recognized a ceiling test impairment of $13.7 million.
    -   A net loss of $10.6 million was recorded in the fourth quarter of
        2006 and a loss for the year of $12.2 million.
    -   In 2006, the Company secured a farm-in on over 80 sections of
        freehold mineral leases in the Tomahawk area, bringing to Silverwing
        a new core area with substantial multi-zone oil and gas
        opportunities. To date, seven wells have been drilled and cased in
        the area.
    -   In the fourth quarter of 2006, the Company increased its revolving
        line of credit to $18.0 million with an optional $2.0 million
        facility available for acquisitions and development needs.
    -   As at December 31, 2006, the Company was in breach of a covenant that
        required the Company to maintain a positive working capital ratio of
        1:1 for the revolving reducing demand loan facility. Silverwing is
        currently exploring strategic alternatives, including a corporate
        restructuring, the disposition of a number of non-operated properties
        and obtaining a partner in its core exploration area to rectify the
        breach. As at March 6, 2007, Silverwing has outstanding bank debt of
        $12.8 million and a working capital deficit of approximately
        $23.8 million.

    Oleh Wowkodaw, Silverwing's President and CEO commented, "By all
accounts, 2006 was a challenging year for the Company and one of significant
change. We entered the year as a small private oil and gas exploration company
operating one core area with a production base that was 70% non-operated and
producing only 405 boepd. We ended 2006 as a publicly traded company,
operating in two core areas, producing about 1,150 boepd, primarily from
operated projects, with a robust prospect inventory and a platform for future
    "However, continued weak commodity prices and other business factors
adversely affected most junior oil and gas exploration companies, including
Silverwing. For us, this has directly led to lower than expected overall
financial results and difficulty in raising capital efficiently to fund our
program despite strong operational performance in 2006. Consequently, we made
the decision early in 2007 to pause our capital program in order to evaluate
strategic options to address concerns on access to capital and to consider
other options to strengthen our Company.
    "We are confident that we will implement changes that are necessary given
the current fiscal landscape in order to ensure that we successfully meet the
challenges in our immediate future and demonstrate value growth for our


    Years Ended December 31,                        2006      2005    Change
    (000s, except per share amounts)                  ($)       ($)       (%)
    Petroleum and natural gas sales               11,169     5,692        96
    Cash flow from operations(1)                   3,355     2,498        34
      Per share - basic and diluted                 0.18      0.31       (42)
    Net income (loss)                            (12,216)      (56)  (21,714)
      Per share - basic and diluted                (0.65)    (0.01)   (6,400)
    Capital expenditures (net)                    63,125    17,135       268
    Working capital (deficiency) and bank debt   (19,817)    3,478      (670)
    Shareholders' equity                          46,811    25,298        85
    (000s)                                          (No.)     (No.)       (%)
    Share Data
    Total shares outstanding
      Basic                                       33,826    13,434       152
      Diluted                                     33,826    16,747       102
    Weighted average shares outstanding
      Basic                                       18,792     8,105       132
      Diluted                                     18,792     8,203       129
    Average daily production
      Natural gas (mcf/d)                          4,134     1,412       193
      Crude oil and NGLs (bbls/d)                     39        19       105
      Total (boe/d)                                  728       254       187
    Average selling prices
      Natural gas ($/mcf)                           6.81     10.26       (34)
      Crude oil and NGLs ($/bbl)                   63.71     59.90         6
    Total ($/boe)                                  42.05     61.41       (32)
    Wells drilled - gross (net) (No.)
      Gas                                        26 (8.1)  24 (9.7)    8 (16)
      Oil                                         -   (-)   2 (1.0)    -  (-)
      Standing/untested                           8 (7.5)   -   (-)    -  (-)
      Dry and abandoned                           4 (1.4)   2 (0.2)  100(600)
      Total                                      38(17.0)  28(10.9)   36 (56)
      Drilling success rate (%)                  87  (85)  93  (98)    6 (13)
    (1)  Cash flow from operations is defined as cash provided by operations
         before changes in non-cash operating working capital.


    Silverwing's 2006 Audited Annual Financial Statements and Management's
Discussion and Analysis, including the Operations Review, and Reserves Report
that are part of the Annual Report can be assessed on the Canadian Securities
Administrators' System for Electronic Document Analysis and Retrieval.


    Silverwing Energy Inc. is engaged in the exploration, development and
production of petroleum and natural gas in Western Canada.


    This news release contains disclosure expressed as "boepd" and "mboe".
All oil and natural gas equivalency volumes have been derived using the ratio
of six thousand cubic feet of natural gas to one barrel of oil. Equivalency
measures may be misleading, particularly if used in isolation. A conversion
ratio of six thousand cubic feet of natural gas to one barrel of oil is based
on an energy equivalency conversion method primarily applicable at the burner
tip and does not represent a value equivalency at the wellhead.

    Except for historical information contained herein, this news release
contains forward-looking statements. Forward-looking statements such as the
references to Silverwing's exploration program and drilling program and
capital expenditures relating to, and timing of, such programs are based on
the opinions and estimates of management at the date the statements are made,
and are subject to a variety of risks and uncertainties and other factors that
could cause actual events or results to differ materially from those
anticipated in the forward-looking statements. There are uncertainties
inherent in forward-looking information, including factors beyond Silverwing's
control, and no assurance can be given that the programs will be completed on
time, on budget or at all. Silverwing undertakes no obligation to update
forward-looking information if circumstances or management's estimates or
opinions should change except as required by law. The reader is cautioned not
to place undue reliance on forward-looking statements.

    The TSX has not reviewed and does not accept responsibility for the
    adequacy or accuracy of this news release.

    %SEDAR: 00023786E

For further information:

For further information: Oleh Wowkodaw, President and Chief Executive
Officer; Terry O'Connor, Senior Vice President, Business Development; Martin
D. Rude, Vice President, Finance and CFO, Silverwing Energy Inc., 1250, 635 -
8th Avenue SW, Calgary, Alberta, T2P 3M3, Phone: (403) 263-5555, Fax: (403)

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