Sure Energy announces second quarter 2009 financial and operating results

    CALGARY, Aug. 5 /CNW/ - Sure Energy Inc. ("Sure Energy" or the "Company")
today announced its financial and operating results for the quarter ended June
30, 2009.
    The Company's MD&A and Financial Statements and Notes can be viewed or
downloaded at or
    During the second quarter of 2009, Sure Energy accomplished the

    -   On June 29, 2009 announced the acquisition of a private company that
        upon closing in mid August is expected to add 200 BOE/d of production
        (50% crude oil & liquids), 22,900 net acres of undeveloped land and
        significant upside exposure to an emerging conventional light oil
        resource play in Redwater
    -   Production increased to 653 BOE/d in the second quarter of 2009 from
        628 BOE/d in the first quarter of 2009 despite spending less than
        cash flow for the quarter

    -   Sure Energy continues to maintain a strong financial position with
        $1.68 million in positive working capital and an undrawn $8.5 million
        credit facility

    -   Cost structure for our business in the second quarter of 2009
        continued to decline as production grew and the Company became more
        efficient. These cost reductions will continue to accelerate upon
        closing of the private company acquisition

    HIGHLIGHTS         Three Months Ended June 30,  Six Months Ended June 30,
                                2009         2008          2009         2008
    ($000 except share and per share amounts)


    Petroleum and Natural
     Gas Revenues              1,398        1,883         3,133        3,315
    Funds Flow from
     Operations(1)               372          779           686        1,239
      Per Share, Basic
       and Diluted              0.01         0.03          0.02         0.04
    Loss                      (1,140)         (98)       (1,648)        (497)
      Per Share, Basic
       and Diluted             (0.03)       (0.01)        (0.04)       (0.02)
    Capital Expenditures         307        1,433         1,167        7,043
    Total Assets                                         32,154       27,174
    Working Capital(1)                                    1,678         (592)
    Shareholders' Equity                                 29,254       23,880
    Common Shares
      Basic                                          37,659,208   30,767,210
      Diluted                                        40,806,208   33,482,210
      Fully Diluted with
       Performance Rights                            44,311,208   37,451,210
    Weighted Average
     Common Shares
      Basic and Diluted   37,659,208   30,767,210    37,659,208   30,584,073

    Share Trading
      High                      0.45         1.35          0.45         1.35
      Low                       0.26         0.82          0.24         0.80
      Close                     0.29         1.17          0.29         1.17
    Trading Volume         1,682,845    3,015,556     2,777,345    5,997,041

    HIGHLIGHTS         Three Months Ended June 30,  Six Months Ended June 30,
                                2009         2008          2009         2008
      Natural Gas (Mcf/d)      3,626        1,744         3,531        1,758
      Oil (bbls/d)                21           14            25           13
      NGLs (bbls/d)               27           15            27           17
      BOE/d                      653          319           640          323

    Average Selling Price
      Natural Gas ($/Mcf)       3.56        10.29          4.25         9.01
      Oil ($/bbl)              67.40       128.42         50.42       110.13
      NGLs ($/bbl)             38.56        63.39         38.60        54.23
      BOE ($/BOE)              23.54        64.77         27.03        56.33

    Operating Netback
     ($/BOE)(1)                11.03        39.10         11.64        33.69
    Funds Flow Netback
     ($/BOE)(1)                 6.25        26.78          5.93        21.06
    (1) Please refer to Management's Discussion and Analysis for definition
        of Non-GAAP measures.


       To recognize the foregone tax benefits to the Company for flow-through
shares, share capital is reduced and a future tax liability is recorded when
the tax pools are renounced to investors. A future income tax recovery has
been recorded to the extent that there is an unrecorded future income tax
asset. The first quarter 2009 interim financial statements did not include
these amounts. The Company has recorded a reduction to share capital and
deficit of $750,000 in the balance sheet and an increase to future tax
recovery and reduction in loss and comprehensive loss of $750,000, and loss
per share of$0.02 respectively in the statement of operations.


    Cash expenditures for the period were as follows:

    Capital Program    Three Months Ended June 30,  Six Months Ended June 30,
     Summary                    2009         2008          2009         2008
    Land                          93          126           145          378
    Geological and
     geophysical                 140          239           367          455
    Drilling                     (15)         135            48          305
    Completions                   (1)           6            50           21
    Recompletions and
     workovers                    38          162           271          162
    Production equipment
     and facilities              (40)         658           103          684
     exploration G&A              92           92           183          182
                                 307        1,418         1,167        2,187

    Asset disposition              -            -             -         (158)
    Corporate acquisition
     - Argent                      -            -             -        4,993
    Asset retirement
     obligation                    -           15             -           15
    Other assets                   -            -             -            6
                                 307        1,433         1,167        7,043

    For the three months ended June 30, 2009 Sure Energy did not participate
in any drilling. Capital expenditures in this quarter include the purchase of
undeveloped land, seismic expenses, minor workovers and several reclamation
projects. Recoveries (negative capital) are a result of downward adjustments
to previous period cost estimates.

    Areas of Activity

    Southern Plains (Chinook)

    The Company has had great success exploring for gas in the Southern
Plains of Alberta, specifically at Chinook. In the current quarter Sure Energy
produced 321 BOE/d from four shallow sweet natural gas wells in the Chinook
area, and has one additional location to drill. Using the knowledge gained at
Chinook the Company has mapped the producing reservoir regionally and has
identified two prospects that it is currently developing, one for sweet gas
and one for heavy oil. Sure Energy hopes to drill one of these prospects prior
to year end.

    Peace River Arch

    The Company currently produces 126 BOE/d from the Peace River Arch area
in Northern Alberta. 56 BOE/d, net to Sure Energy is currently being produced
from a Halfway gas pool at Boundary Lake, which is producing from a proved
plus probable reserve base of 4 BCF. The Company owns a 25 percent working
interest in the pool, gas plant and pipeline infrastructure related to this
new pool discovery. At Valhalla the Company produces 70 BOE/d from three
Charlie Lake gassy oil wells and one Charlie Lake gas well.
    Sure Energy has an inventory of six drillable locations on the Peace
River Arch, three of which are new pool prospects. The Company had hoped to
drill one of these, at Gordondale, in the quarter but has been forced to wait
for frozen ground conditions because of the wet nature of the surface lease.
This well should be spudded in December. The Company plans to drill one of the
other exploration opportunities in the first quarter of 2010.


    Although the Company has some minor shallow gas production in the
Redwater area, its focus in the area is on an emerging horizontal light oil
conventional resource play. The Company owns 7 3/4 sections of 100 percent
land on a regionally extensive lower shoreface reservoir sand of the Viking
formation. The sand exhibits low permeability but is distributed over several
townships and is hydrocarbon bearing across the whole area. Vertical wells
typically produce at 8 - 20 BOE/d by third parties in the area, but produce at
very low declines, once stabilized, indicating that they are accessing a large
reserve. Recent horizontal activity by third parties in the area has proven
highly successful at improving production rates, new wells stabilizing between
40 to 80 BOE/d. Although most of the recent activity is ten miles to the
southeast of Sure Energy's acreage a new horizontal well was recently drilled
just a mile away from the Company's land base and initial rates look similar
to those further along the trend, at 70 to 80 BOE/d. The Company's acreage is
definitely oil bearing as proven by vertical wells and older horizontal wells
on the acreage.

    SE Saskatchewan

    The Company owns 2 3/4 sections of land on a prospective light oil
fairway in SE Saskatchewan. The land is prospective for two different,
somewhat mutually exclusive play types, which require 3D seismic to interpret
the complexities of reservoir preservation and trap. Sure Energy is preparing
to shoot a 13 square kilometre 3D program with the hope of finalizing an
exploration (new pool) location, to be drilled prior to year end. Both play
types are targeting light oil.


    The Company currently produces 1.1 MMcf/d (176 BOE/d) of sweet gas from
shallow Cretaceous reservoirs in the Tweedie area, just northeast of Edmonton.
The production is from approximately 35 wells and declines at low rates. Sure
Energy has an inventory of 17 locations at Tweedie, all defined by both
geology and 2D seismic, but only intends to drill a maximum of 2 to 3 wells in
the area per year, to maintain production levels.

    Acquisition of Private Company

    On June 29, 2009 Sure Energy announced that it had agreed to acquire by
plan of arrangement, all issued and outstanding shares of a private oil and
gas company for a total consideration of $8.8 million. Under the terms of the
agreement, Sure Energy will pay $0.26 and issue 0.4 of a Sure Energy common
share for each of the 23,036,889 issued and outstanding common shares of the
private company. The cash portion of the deal will be financed from Sure
Energy's existing working capital surplus and bank line. Concurrent with the
closing, Sure Energy's credit facility will increase to $11.5 million
consisting of a $10 million revolving operating demand loan and a $1.5 million
non-revolving acquisition/development demand loan.
    The private company's assets are high quality oil and gas properties
located in West Central Alberta and Redwater. The Redwater assets are
complementary to Sure Energy's existing assets in the area and significantly
increase the Company's exposure to an emerging conventional light oil resource
play in the area. The private company has four producing horizontal wells in
the play and an inventory of 15 low risk development step-out wells. At
Redwater recent innovations in drilling technology have lead to dramatically
improved initial production rates in a proven but low permeability sand
reservoir. This technology varies from multi-leg horizontal wells, which are
produced open-hole to single leg horizontal wells that are fracture stimulated
multiple times along their length. One year production rates have improved
from 8 - 20 BOE/d to 40 - 80 BOE/d using these techniques making the whole
trend much more attractive economically to develop.
    The private company also has 130 BOE/d of production and 12,160 net acres
of undeveloped land in West Central Alberta. This production is mainly low
decline, liquids rich gas but one well in Pembina is a light oil new pool
discovery which has considerable development upside. The private company also
has three other low risk development opportunities related to its gas
    Strategically this acquisition satisfies Sure Energy's three main
acquisition goals: to obtain a better product balance to crude oil and NGL's,
to lower the Company's cost structure (reduce G&A per BOE/d) and, most
importantly, to add an inventory of low risk development locations upon which
to build the Company. These factors in turn will enhance shareholder value.


    Production for the period by major property is as follows:

                                       Six Months Ended June 30, 2009
                                 Gas          Oil          NGLs        Total
                               Mcf/d       Bbls/d        Bbls/d        BOE/d
    Tweedie                    1,058            -             -          176
    Valhalla                     259           12            17           70
    Chinook                    1,865            -            10          321
    Boundary                     328            -             -           56
    Redwater                      21           13             -           17
    Total                      3,531           25            27          640


    Sure Energy is extremely excited about the outlook for the Company.
Production and reserves per share continue to grow at a reasonable cost. The
Company remains in strong financial shape with positive working capital and an
undrawn credit facility. Cost structure continues to reduce and will
accelerate upon closing the private company acquisition in mid August.
    As a result the Company has increased its capital budget to $14 million
for 2009. Some of our activities in the capital budget for the remainder of
2009 include:

    -   Finalizing the closing of the Private Company Acquisition
    -   Shooting a 13 sq. km 3D seismic program focused on our 100 percent
        working interest acreage in southeast Saskatchewan
    -   Plans to drill a couple of horizontal wells in its conventional light
        oil resource play in Redwater
    -   Drilling of a profile exploration well in Gordondale on the Peace
        River Arch in late 2009; and
    -   Drill an exploration prospect in the Southern Plains.

    Despite the lower natural gas and equity prices management remains very
committed and confident that our Company can continue to effectively grow and
prosper through these difficult times. With lower industry costs, reduced
royalties through government incentives and many struggling junior oil and gas
companies in the market and for sale, management believes that it is the
perfect time to be accelerating our capital spending to take advantage of the
tremendous opportunities.

    Sure Energy Inc. is a publicly traded oil and gas exploration and
development company listed on the Toronto Stock Exchange under the symbol

    Forward-looking Information

    Certain statements contained in this release constitute forward-looking
information. These statements relate to future events or Sure Energy's future
performance. The use of any of the words "could", "expect", "believe", "will",
"projected", "estimated" and similar expressions and statements relating to
matters that are not historical facts are intended to identify forward-looking
information and are based on Sure Energy's current belief or assumptions as to
the outcome and timing of such future events. Actual future results may differ
materially. In particular, Sure Energy's statements with respect to the
acquisition of the private company, the statements in the section "Outlook"
and the Company's stated intentions and expectations for drilling and
production levels on its main producing properties are forward looking
information. Sure Energy's Annual Information Form and other documents filed
with securities regulatory authorities (accessible through the SEDAR website describe the risks, material assumptions and other factors that
could influence actual results and which are incorporated herein by reference.
Sure disclaims any intention or obligation to publicly update or revise any
forward-looking information, whether as a result of new information, future
events or otherwise, except as may be expressly required by applicable
securities laws.

    %SEDAR: 00024118E

For further information:

For further information: please visit our website at or contact: Mr. Jeff Boyce, President and CEO, Mr. Lance
Wirth, Vice President, Finance and CFO, Phone: (403) 410-3100, Fax: (403)
410-3111, Email:

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