Synenco Energy releases second quarter results



    (Conference call to be held Tuesday, August 7 at 9:00 a.m. Mountain
    /11:00 a.m. Eastern. Please see details at end of release.)

    CALGARY, Aug. 3 /CNW/ - Synenco Energy Inc. (TSX: SYN) today released its
interim financial results and operating highlights for the second quarter and
six-month period ended June 30, 2007.
    Synenco Energy reported a net loss for the six-month period ended June
30, 2007 of $0.9 million ($0.02 per share) compared with a net income of
$2.9 million ($0.06 per share) for the same period in 2006. The change in net
result is mainly attributable to comparatively higher office and corporate
costs in 2007 as a result of activity growth, and restructuring costs incurred
in the second quarter of 2007 resulting from the reprioritization of Northern
Lights development activities announced on May 1, 2007.
    Synenco Energy reported a second quarter net loss of $0.5 million ($0.01
per share) compared with a net income of $2.7 million ($0.05 per share) for
the same period in 2006. The net loss is mainly attributable to restructuring
costs incurred in the second quarter of 2007.
    Most costs incurred relate to the Northern Lights Partnership (NLP)
project development activities and are capitalized. As a development stage
entity, Synenco Energy expects it will mainly report net losses until project
development activities are complete and operations commence.
    Synenco Energy also reported consolidated capital expenditures of
$35.3 million for the second quarter of 2007. With 60-percent ownership of the
Northern Lights Partnership, Synenco's share of these expenditures amounted to
$21.9 million. Capital expenditures in the quarter mainly comprised
engineering activities, technology and piloting-related costs, personnel costs
and work related to the upstream regulatory application.

    Corporate Developments
    On May 1, Synenco Energy announced its intention to review options to
maximize shareholder value. This announcement came at the same time as Synenco
released revised guidance for the Northern Lights upgrader (with a capital
cost estimate of $6.3 billion). The plan to assess strategic options has a
range of possible outcomes including: restructuring the downstream business to
capture economies of scale by including other partners, alternative downstream
commercial ventures, and other corporate-level options that enhance
shareholder value. Until the strategic options review is complete, work on the
Northern Lights Sturgeon County upgrader has been put on hold. Development
work in support of the Northern Lights upstream (mining and extraction)
project was reprioritized to initiatives that reduce execution and operational
risks.
    In conjunction with initiating the announced options review, Synenco
Energy also updated other previously disclosed guidance. The company revised
its 2007 cash expenditure estimate to approximately $100 million, versus the
previously announced $235 million. Synenco Energy also retracted a previously
announced first oil target of mid-2011.
    On May 10, Synenco Energy announced the results of its annual
shareholders' meeting, where the proposed slate of ten directors were elected
to the Board, including eight independent directors. Shareholders also
approved the adoption of an amended and restated Stock Option Plan and
authorized the transfer of the Corporation's 60-percent interest in the
Northern Lights Partnership to a wholly owned subsidiary of the Corporation.
    On May 30, Synenco Energy announced that, as a result of the
reprioritized Northern Lights development plan, 46 positions were eliminated.
    Also on May 30, Synenco Energy released its first independent estimate of
coal resources on the NLP coal lease application area. There are approximately
62,950 kilotonnes of Indicated coal resources and an additional 78,658
kilotonnes of Inferred coal resources within the lease application area.
    As further described in the second quarter Management's Discussion and
Analysis, Contingent Resources of 1.08 billion barrels were disclosed,
relating to the portion of Northern Lights Discovered Resources that have now
been subjected to an engineering and economic evaluation by Norwest
Corporation, an independent geological engineering firm.

    Selected Financial Information
    A summary of Synenco's consolidated financial results as at, and for the
periods ended, June 30, 2007 and 2006 is included below. The full interim
report can be found on www.synenco.com.

    
    (In thousands except per share data)
    -------------------------------------------------------------------------
                                        Three months ended  Six months ended
                                             June 30,            June 30,
    -------------------------------------------------------------------------
                                          2007      2006      2007      2006
    -------------------------------------------------------------------------
    Interest income                      3,867     4,156     7,967     7,772
    Personnel costs                      1,182     1,095     2,379     2,188
    Restructuring costs                  2,098         -     2,098         -
    Stock-based compensation               352       313       782       672
    Office, corporate and other costs    1,311     1,320     4,096     2,432
    Income tax recovery                   (570)   (1,227)     (452)     (464)
    Net income (loss)                     (506)    2,655      (936)    2,944
    Net income (loss) per share
      Basic and diluted                  (0.01)     0.05     (0.02)     0.06
    Total assets                       688,316   607,045   688,316   607,045
    Shareholders' equity               441,836   436,555   441,836   436,555
    Common shares outstanding           50,406    50,095    50,406    50,095
    -------------------------------------------------------------------------
    

    About Synenco Energy and Northern Lights
    Synenco Energy (TSX: SYN) 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 oil sands project. Synenco, on
behalf of the NLP, holds five coal lease applications in northeastern Alberta.
In addition, Synenco Energy also holds a 100-percent interest in the
McClelland oil sands lease adjacent to Northern Lights project lands.

    SinoCanada Petroleum Corporation, an indirect wholly owned subsidiary of
China-based Sinopec, owns the remaining 40 percent of the Northern Lights
Partnership and project.

    Conference call

    Synenco Energy will host a conference call to discuss second quarter
results and provide a corporate update.

    
        Date:             August 7, 2007
        Time:             9:00 a.m. Mountain (11:00 a.m. Eastern)

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

        Audio web cast:   www.synenco.com
        Toll free:        (800) 732-9307

    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:   www.synenco.com
        Telephone:        (416) 640-1917    Pass code: 21242503 (followed by
                                                       the number sign)
        Toll free:        (877) 289-8525    Pass code: 21242503 (followed by
                                                       the number sign)
    

    Cautionary note regarding forward-looking statements

    This news release contains "forward-looking statements" relating to
Synenco Energy and NLP, which are expressly qualified by this cautionary note.
Forward-looking statements are frequently characterized by words such as
"plan", "expect", "project", "intend", "believe", "estimate" and other similar
words, or statements that certain events or conditions "may" or "will" occur.
Estimates of NLP's bitumen "Discovered Resource" are made as of December 2006
and are forward-looking statements. Estimates of coal mineral resources are
made as of May 8, 2007 and are forward-looking statements. Estimates of NLP's
bitumen "Contingent Resource" are made as of June 2007 and are forward-looking
statements. (The terms "Contingent Resource" and "Discovered Resource" are
defined in the COGE Handbook. The terms "Inferred mineral resources" and
"Indicated mineral resources", as relating to coal, are defined in the CIM
Standards.) Further classification into contingent resources and/or reserves
is dependent on additional feasibility studies, validation through pilot
testing of the planned extraction process, and the issuance by the Government
of Alberta of a mine permit. Resource estimates 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 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 inherent risks involved in the
exploration and development of oil sands properties; the fact that the
Northern Lights Project is in the early stages of engineering and revisions;
enhancements to the project's design, engineering, procurement and
construction plans will occur; the ability to identify and successfully
negotiate a commercially advantageous strategic repositioning transaction;
changes in government policy with respect to the development of coal
resources; the ability to obtain timely regulatory approval for development of
the coal lease application area, if at all; the ability to negotiate
arrangements with holders of other leases or other competing interests on the
lands over which the coal lease applications exist; environmental and other
legislation applicable to development of coal resources; and the outcome of
further technical and economic analysis of the benefits of the coal resources,
if any. For a detailed description of the risks and uncertainties facing
Synenco and its business and affairs, readers should refer to the risk factors
in Synenco's annual information form dated March 9, 2007, which can be found
on SEDAR at www.sedar.com. 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,
scott.ranson@synenco.com; Kelli Stevens, Public Affairs Coordinator,
Telephone: (403) 451-5240, Cellular: (403) 470-5567,
kelli.stevens@synenco.com; Investment community, Idar Eikrem, Executive
Vice-President and Chief Financial Officer, Telephone: (403) 451-4612,
idar.eikrem@synenco.com; Or visit www.synenco.com

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