Synenco Energy releases 2006 results

    (Conference call Monday, March 12 at 9:00 a.m. Mountain/
    11:00 a.m. Eastern
    Please see details at end of release and note start of daylight savings
    time on March 11.)

    CALGARY, March 9 /CNW/ - Synenco Energy Inc. (TSX: SYN) today released
financial results and operating highlights for the year ended December 31,
    Synenco reported net income for the year ended December 31, 2006 of
$3.9 million ($0.07 per diluted share) compared to a net loss of $5.9 million
($0.22 per share) in 2005. Net income was higher in 2006 as a result of
increased interest income due to the larger cash investment balance maintained
throughout the year. The higher 2006 interest income was partially offset by
increased office and corporate costs related to Synenco's corporate build-out
    Most costs incurred relate to the Northern Lights Partnership (NLP)
project development activities and are capitalized. As a development stage
entity, Synenco expects it will report net losses in most periods until
project development activities are complete and operations commence.
    Synenco also reported consolidated capital expenditures of $109.6 million
for the year ended December 31, 2006. The consolidated capital expenditures
include amounts incurred by the Northern Lights Partnership, in which
Synenco's equity participation is 60%. Synenco's net ownership interest in
consolidated capital expenditures was $71.1 million. Capital expenditures in
the year are mainly comprised of drilling activities, engineering-related
activities, technology-licensing costs, work on the Environmental Impact
Assessments to support the regulatory applications for the Northern Lights
project and capitalized corporate and personnel costs.
    Cash expenditures in 2006 amounted to $78 million compared to the
announced 2006 budget of $118 million, in both cases net to Synenco's
ownership interest in NLP. At the end of 2006, Synenco's consolidated cash and
cash equivalents were $406.8 million including NLP funds. Synenco's share of
the total consolidated cash and cash equivalents available to meet its future
obligations was $342.7 million. Synenco also reported positive consolidated
working capital of $386.4 million at December 31, 2006. Synenco's share of
total consolidated working capital available at December 31, 2006 was
$329.3 million.
    A summary of Synenco's consolidated financial results as at and for the
years ended December 31, 2006 and 2005 is included below:

    Selected Financial Information
    (In thousands except per share data)
    For the years ended December 31,                      2006          2005
    Interest income                                     16,503         3,324
    Personnel costs, net of amounts capitalized          4,454         4,401
    Stock-based compensation                             1,338         1,714
    Financing costs                                          -           817
    Office, corporate and other costs                    6,469         3,045
    Income tax expense (recovery)                          342          (781)
    Net income (loss)                                    3,900        (5,872)
    Net income (loss) per share
      Basic                                               0.08         (0.22)
      Diluted                                             0.07         (0.22)
    Total assets                                       670,346       577,986
    Shareholders' equity                               439,437       424,843
    Common shares outstanding                           50,251        48,013

    2006 operating highlights

    In the fourth quarter, the company received updated independent resource
estimates for the Northern Lights oil sands leases; that reflected an increase
in the best estimate of discovered resource of 12 percent to 1.673 billion
barrels (Synenco share 60 percent).
    During 2006, engineering and development work advanced in respect of both
upstream and downstream.

    -   In December, Synenco announced an updated capital cost estimate and
        its overseas construction strategy for Northern Lights upstream
        (mining and extraction). The capital cost was estimated in 2006
        dollars at $4.4 billion (Synenco share: $2.6 billion) in relation to
        production of 114,500 barrels per day of bitumen for 30 years. The
        capital cost estimate reflects anticipated savings from the announced
        construction strategy of $1.2 billion (Synenco share: $0.7 billion).
        Synenco announced that new downstream guidance would be available in

    -   In November, Synenco completed the sequenced filing with the Alberta
        Energy and Utilities Board and Alberta Environment for the upstream
        regulatory application, which included the final environmental
        effects assessments on behalf of NLP. On January 10, 2007, Alberta
        Environment advised that the application was deemed administratively

    -   In September, Synenco Energy filed an application with the Alberta
        Energy and Utilities Board and Alberta Environment to construct and
        operate an upgrader in Sturgeon County, Alberta on behalf of NLP. On
        October 12, 2006, Alberta Environment advised that the application
        was deemed administratively complete.

    -   In August, Synenco Energy announced the conversion of NLP's northern
        permit to a primary oil sands lease with a 15-year term.

    -   In July, Synenco Energy signed a Memorandum of Understanding with
        Agrium for the supply of hydrogen, nitrogen, sulphur and carbon
        dioxide from the upgrader to Agrium's neighbouring Redwater nitrogen
        fertilizer operations on behalf of NLP.

    -   In July, Synenco Energy signed two significant technology licensing
        agreements on behalf of NLP:

        -  An agreement with UOP Management Services Inc. to use its
           Unicracking(TM) and RCD Unionfining(TM) technologies. Using these
           technologies, the Northern Lights upgrader will be able to produce
           a high quality synthetic crude oil or a lighter diluent product
           for use in the transportation of bitumen.

        -  An agreement with Kellogg Brown & Root International Inc. to use
           its ROSE(TM) solvent de-asphalting technology that removes
           asphaltenes from bitumen during the upgrading process. In the
           Northern Lights configuration, the asphaltenes will be converted
           to hydrogen in a separately licensed gasification process.

    -   In June, Synenco Energy announced a licensing agreement with
        GE Energy to use GE's gasification technology with the NLP upgrader.
        The gasification of asphaltenes uses materials that would otherwise
        be a waste product (requiring on-site storage and disposal) and is
        anticipated to reduce the downstream project's reliance on external
        energy purchases.

    -   Also in June, Synenco Energy filed on behalf of NLP the first portion
        of the sequenced upstream regulatory application with the Alberta
        Energy and Utilities Board and Alberta Environment.

    -   Earlier in June, Synenco Energy announced that NLP had retained
        Citibank as the partnership's debt capitalization advisor to explore
        global sources of project financing, evaluate various structures and
        plan for debt capitalization that properly leverage both partners'

    -   In May, Synenco announced the signing of a contract with
        Jacobs Canada Inc. for NLP engineering services for the upgrader.

    -   In April, Synenco announced an agreement with the joint venture of
        Colt Engineering Corporation and AMEC Americas Limited for
        engineering services related to NLP bitumen production. Under this
        contract, Colt and AMEC developed the overall diagrams and plans
        related to the bitumen extraction and froth treatment components of
        the upstream project.

    -   In March, Synenco announced contracts with: Jacobs Canada Inc. to
        provide owner's engineering services; UMA Engineering Ltd. to provide
        owner's engineering for on-lease and off-lease infrastructure; UMA to
        complete the infrastructure DBM for the Northern Lights project; and
        the consortium of UMA and Black & Veatch Canada Company, in respect
        of the utilities and offsites DBM work.

    About Synenco Energy

    Synenco Energy is a Calgary-based oil sands company, which, with a
60-percent interest, is the managing partner of the Northern Lights
Partnership and operator of the Northern Lights project. (SinoCanada Petroleum
Corporation, an indirect wholly owned subsidiary of China-based Sinopec, owns
the remaining 40% of the partnership and project.) Synenco Energy also holds a
100-percent interest in the McClelland oil sands lease adjacent to the
Northern Lights project lands. Visit Synenco's Web site at

    About Northern Lights

    The Northern Lights project consists of a planned oil sands mining and
bitumen extraction project about 100 kilometres northeast of Fort McMurray,
Alberta, and a planned heavy oil upgrader project in Sturgeon County near
Edmonton. The project is designed to produce 100,000 barrels per day of
synthetic crude oil for an estimated 30 years. Separate regulatory
applications for each segment of the project were filed with the Alberta
Energy and Utilities Board and Alberta Environment during 2006. The Northern
Lights Partnership also holds extensive coal lease applications in the
Athabasca region in northeastern Alberta.

    Conference call

    Synenco Energy will host a conference call to discuss 2006 results and
provide a brief corporate update.

    Date:     March 12, 2007
    Time:     9:00 a.m. Mountain (11:00 a.m. Eastern) Note: Daylight savings
              time begins March 11.

    Participants are invited to attend by connecting 10 minutes prior to the
call to one of the following:

              Audio web cast:
              Toll free: (800) 731-6941

    Media are invited to participate in listen-only mode. The company will be
available to address media questions following the call.
    A re-broadcast of the conference call may be accessed by:

              Audio web cast:
              Telephone: (416) 640-1917 Pass code: 21222242 (followed by the
              number sign)
              Toll free: (877) 289-8525 Pass code: 21222242 (followed by the
              number sign)

    Visit for the complete interim report

    Cautionary note regarding forward-looking statements

    This news release contains "forward-looking statements" relating to
Synenco Energy and the Northern Lights Partnership (NLP), which are expressly
qualified by this cautionary note. Estimates of NLP's in-place bitumen
"Discovered Resources" are made as of December 2006 and are forward-looking
statements. (The term "Discovered Resources" is defined in the COGE Handbook
and in CSA Staff Notice 51-321.) Further classification into contingent
resources or reserves is not expected to be possible until a feasibility study
has been completed. Resource estimates are inherently uncertain and are
generally considered more uncertain than estimates of reserves. The estimated
and actual resources recoverable will differ and may differ materially from
the estimate of NLP's in-place bitumen discovered resources. All statements
about the project's intended design, modularization, construction,
transportation and execution strategy, number of employees and environmental
impacts and capital cost estimates are forward-looking statements. All other
statements suggesting future plans and outcomes are forward-looking
statements. Readers are strongly cautioned that forward-looking statements are
inherently uncertain and based on a number of estimates and assumptions and
subject to numerous known and unknown risks and uncertainties. Undue reliance
must not be placed on them. Actual results will differ, and in some cases will
differ materially. Factors which could cause actual results to differ
materially from those expressed or implied include but are not limited to: the
fact that the Northern Lights Project is in the early stages of engineering
and revisions, and enhancements to the Project's design, engineering,
procurement and construction plans will occur; the ability of Synenco Energy
and NLP to obtain sufficient financing for development of the Project when
required; availability and price of energy commodities and water; competitive
factors in the oil sands and energy industries; market and labour conditions;
operating conditions and costs; exchange rate and interest rate fluctuations;
credit risks; ability to enter into economically advantageous strategic and
commercial alliances; costs of construction materials, labour and
transportation and escalating capital costs; transportation logistics
including ability to transport modules as contemplated and ability to secure
adequate product and diluent transportation; changes in law or government
policy, such as changes in environmental and land and water use, regulation
and changes in the oil sands royalty regime; the regulatory environment and
ability to obtain all necessary regulatory and governmental approvals and
licenses in a timely basis or at all. (Refer also to the risk factors in
Synenco's annual information form and to Synenco's annual and interim
financial statements.) Forward-looking statements are made as at the date of
this news release and are not guarantees of future performance. Synenco Energy
expressly disclaims any obligation to update publicly or revise any of the
forward-looking statements except as required by law.

For further information:

For further information: Media: Scott Ranson, General Manager, Public
Affairs, Telephone: (403) 451-5212, Cellular: (403) 619-5038,; Investment community: Idar Eikrem, Executive
Vice-President and Chief Financial Officer, Telephone: (403) 451-4612,
Cellular: (403) 473-3284,

Organization Profile


More on this organization

Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890