Spry announces third quarter financial and operating results

CALGARY, May 28 /CNW/ - Spry Energy Ltd. ("Spry") is pleased to announce our financial and operating results for the three and nine months ended March 31, 2010.

    
    HIGHLIGHTS

    -  During the quarter we drilled seven (4.9 net) East Pembina oil wells
       and one (0.7 net) oil well at Wordsworth, Saskatchewan with a 100
       percent success rate. Three of the East Pembina wells and the
       Wordsworth well were on-stream prior the end of the quarter. The four
       remaining East Pembina wells were placed on-stream in April and May.

    -  For the three months ended March 31, 2010, our cash based capital
       expenditures increased to $20.4 million from $0.3 million for the same
       period last year. Last year we deferred the majority of our capital
       budget and we did not drill any wells between November 2008 and May
       2009. Essentially all of the current quarter capital expenditures were
       associated with operations at our Pembina core area.

    -  Production rates for the quarter averaged 1,541 boes per day, a
       decrease of ten percent over the average production rates of 1,717
       boes per day for the same quarter ended in 2009. The majority of the
       decrease was attributed to our response to the economic downturn in
       late 2008. We shut-in production due to low commodity prices and we
       continue to have 870 mcf per day (145 boes per day) of higher
       operating cost natural gas production shut-in. We also experienced a
       112 boe per day decrease in heavy oil production due to the watering
       out of three Marwayne wells. The decreases in natural gas and heavy
       oil production was partially offset by a 55 percent increase in light
       oil production as our new Pembina core area averaged 357 boes per day
       for the quarter.

    -  Funds from operations during the quarter decreased eight percent to
       $3,469,000 from $3,785,000 during the same period last year due mainly
       to the decrease in realized gains from our hedging activities. Higher
       petroleum and natural gas revenues due to higher commodity prices and
       lower cash based expenses offset the majority of the decrease in the
       hedging activities.

    -  Net loss for the quarter was $330,000 versus a net loss of $479,000
       for the same period in 2009. Lower revenue generated from financial
       instruments and higher royalties were offset by higher petroleum and
       natural gas revenues and lower expenses.

    -  On February 11, 2010 we closed a non-brokered private placement
       issuing 1,670,000 common shares at $6.00 per share for proceeds of $10
       million.

    -  Net debt was $26.4 million which equated to 1.9 times annualized
       second quarter cash flow. In April 2010 our credit facility was
       increased to a $32.0 million borrowing limit.


                                      Three months ended   Nine months ended
                                             March 31,           March 31,
                                           2010     2009      2010      2009
    -------------------------------------------------------------------------
    Financial
    ($ thousands except per share
     amounts)
    Petroleum and natural gas revenue     7,426    5,309    18,783    24,274
    Funds from operations                 3,469    3,785     9,613    14,571
      Basic per share                      0.17     0.19      0.47      0.73
      Diluted per share                    0.16     0.19      0.47      0.72
    Net earnings (loss)                    (330)    (479)   (1,194)    6,839
      Basic per share                     (0.02)   (0.02)    (0.06)     0.35
      Diluted per share                   (0.02)   (0.02)    (0.06)     0.34
    Capital expenditure, cash based      20,431      320    34,856    12,494
    Working capital surplus
     (deficit), excluding bank debt     (10,523)   4,066   (10,523)    4,066
    Bank debt                           (15,896)  (9,907)  (15,896)   (9,907)
    Shares outstanding at end of
     period (000s)                       21,741   19,921    21,741    19,921

    Operations
    Production
      Natural gas (mcf/d)                 4,454    6,253     4,042     6,303
      Light/medium oil and NGLs
       (bbls/d)                             669      433       588       447
      Heavy oil (bbls/d)                    130      242       130       271
      Total (boes/d)                      1,541    1,717     1,392     1,769
    Prices
      Natural gas ($/mcf)                  5.11     5.04      4.33      6.59
      Light/medium oil and NGLs
       ($/bbl)                            76.64    44.23     72.90     69.87
      Heavy oil ($/bbl)                   65.06    34.34     62.52     58.12
    Operating netback ($/boe)(1)          33.10    16.60     29.22     27.55
    Realized hedging gains (losses)
     ($/boe)                              (1.88)   18.26      2.82      9.86
    Other expenses affecting funds
     from operations ($/boe)              (6.21)  (10.36)    (6.83)    (7.35)
    Funds from operations ($/boe)         25.01    24.50     25.21     30.06

    (1) Operating netback is petroleum and natural gas revenues less;
        royalties, operating expenses and transportation expenses.
    

A complete copy of the interim report for the three and nine months ended March 31, 2010 along with the CEO and CFO certifications of interim filings can be found on the SEDAR website at www.sedar.com. Information regarding Spry can also be found at Spry's website at www.spryenergy.ca.

For further information: Kenneth J. Bowie, President & CEO, [phone]