Trafalgar Energy Ltd. releases year end 2007 results and provides operational update


    CALGARY, March 17 /CNW/ - Trafalgar Energy Ltd. (TSX:TFL) ("Trafalgar" or
the "Company") is pleased to announce the audited financial results for the
year ended December 31, 2007.

                             CORPORATE HIGHLIGHTS

                                     on April 25,      Quarter       Quarter
                        Year Ended       2006 to         ended         ended
                          December      December      December      December
                          31, 2007      31, 2006      31, 2007      31, 2006

    Petroleum and
     natural gas
     revenues ($)       13,035,279     2,717,637     3,463,999     2,532,804

     generated from
     operations ($)      5,888,630       679,500     1,576,622     1,037,294
      Basic and diluted
       per share ($)          0.50          0.11          0.13          0.10

    Net loss ($)          (252,312)   (4,780,158)     (279,384)     (670,975)
      Basic and diluted
       per share ($)         (0.02)        (0.78)        (0.02)        (0.07)

    Working capital
     (deficit) ($)        (348,344)   12,971,751      (348,344)   12,971,751

     expenditures ($)   19,201,895     8,277,085     3,693,975     5,424,221

    Weighted average
     number of shares
      Basic and
       diluted          11,835,883     6,129,799    11,835,883    10,220,039

    Shares outstanding
      Basic             11,835,883    11,835,883    11,835,883    11,835,883
      Diluted           12,957,133    12,730,633    12,957,133    12,730,633

      Light Oil (bbls/d)        44            57            44            63
      Heavy Oil (bbls/d)        53            46            63            40
      Total Oil (bbls/d)        97           103           107           103
      Natural Gas (mcf/d)    5,037         3,329         5,325         3,351
      BOE (boe/d)              936           658           994           662

    Average Realized
      Light Oil ($/bbl)      73.69         57.28         82.41         57.28
      Heavy Oil ($/bbl)      47.33         42.88         54.88         26.69
      Natural Gas ($/mcf)     6.30          6.75          6.18          7.09
      $/boe (6:1)            40.03         42.10         40.22         42.95

    Netback ($/boe)
      Petroleum and
       natural gas
       revenue               40.03         42.10         40.22         42.95
      Royalties               7.65          8.59          6.58          8.86
      Operating expenses      9.08         12.17          9.34         12.18
       expenses               1.87          1.20          2.35          1.31
    Operating Netback        21.43         20.14         21.95         20.60
    (1) Trafalgar commenced oil and natural gas operations on September 21,
        2006. The 2006 production of 658 boe per day is for the period from
        September 21, 2006 to December 31, 2006.
    (2) Average realized prices are before transportation expenses.


    Trafalgar is focused on cost effectively growing production and reserves
in north central Alberta through drilling and acquisitions. In 2007, while
maintaining an excellent balance sheet with no debt at year end, Trafalgar's
strategy delivered significant increases in both production and reserves with
top quartile finding and development costs. Highlights from our first full
year of operations include:

    -   50% increase to exit production to 1,000 boe per day.
    -   Top quartile F&D costs of $12.09 per boe on a proved plus probable
        basis including future development capital.
    -   85% increase in proved plus probable reserves to 2.6 mmboe.
    -   25% decrease in operating costs to $9.08 per boe.
    -   67% increase in net undeveloped land position to 115,000 acres.
    -   14% increase in net asset value per share to $4.50 per share.
    -   Developed a new core area at Mackay, Alberta.
    -   Added five new exploration projects to inventory.
    -   Initiated the Bluesky waterflood project at Grouard.
    -   Finished the year with no outstanding long term debt.
    -   Increased bank term credit facility from $8 million to $15 million.

    Trafalgar's strategy for 2008 remains consistent. Our winter 2008
drilling program focused on the Mackay area with a goal of increasing
production to in excess of 500 boe per day by the end of the winter. We are on
track with eight gas wells and one dry hole. In addition we have an agreement
to acquire one recently drilled competitor well effective April 1, 2008. A
total of six wells are being tied in with individual test rates ranging from
250-700 mcf per day. The remaining gas wells tested at 100-200 mcf per day and
will be re-evaluated next year for tie in. An additional six to eight
locations have been identified through this year's drilling and seismic
programs. These will form the core of next winter's Mackay drilling effort.
    Early indications of the Grouard waterflood are encouraging as decline
from this large oil in place pool has been completely arrested. Historically,
production had declined at 40% per year. Production is expected to slowly grow
in the second quarter as the influence of the waterflood increases. With
further encouraging response we expect to significantly increase water
injection later this summer.
    During 2007, Trafalgar established 100% working interest land positions
on several high impact exploratory prospects in North Central Alberta. These
light oil and natural gas prospects form the foundation of Trafalgar's future
growth. The projects are close to existing infrastructure, located in areas
with available open crown land, have several associated follow up locations
and meet or exceed our risked finding and development targets of $12 per boe
for gas projects and $18 per boe for oil projects. Success on one or more of
these projects will have a material impact on Trafalgar's net asset value,
production and reserves. The majority of these prospects are three season
    The first of these exploratory prospects, a Gilwood light oil exploration
well at Grouard, was spud in late February 2008 targeting a 3D seismic defined
structure. The 13-2 well reached total depth late last week and has been cased
as a potential Gilwood oil well. Completion activity will occur, weather
permitting, later this month. Excluding spring breakup, the 13-2 location is
accessible year round. Pending successful completion of the Gilwood well, two
development wells on 100% interest lands will be added to inventory. We will
also accelerate the acquisition of additional 3D seismic data to firm up
existing leads.
    Competition at land sales for conventional prospects in 2007 decreased
significantly as many juniors had limited capital available to reinvest.
Trafalgar with its strong balance sheet took the opportunity to substantially
expand its land and prospect base at reasonable costs. Additional lands have
been posted for various sales in 2008 as Trafalgar will continue to build its
exploration and development inventory.
    Market conditions have improved dramatically over the past six months
with natural gas prices increasing to over $8 per mcf from approximately $4.50
in the early fall. Gas storage has declined to near five year average levels.
The natural gas market, driven by the LNG trade, is evolving to a world market
and re coupling on an energy equivalent basis with oil prices further
providing price upside.
    With lower industry spending and conventional activity levels in the
field declining, service costs have fallen this winter. This, in conjunction
with higher commodity prices, has improved the economic environment associated
with both oil and natural gas projects. Trafalgar is well positioned to take
advantage of the upturn with our strong balance sheet and deep prospect
    The board of directors has approved an expanded 2008 budget of
$19.2 million which will result in the acceleration of our exploratory
drilling effort this summer on our north central Alberta prospects. We
anticipate averaging 1,225-1,325 boe per day for 2008 and exit the year
between at 1,425-1,525 boe per day.
    The company remains in a strong financial position. We were successful
growing production, reserves, our land base and net asset value in 2007 and
are optimistic for the future with our deep inventory of high quality,
impactful prospects.

    On behalf of the Management, Staff and Board of Directors,


    March 17, 2008

    Rob Wollmann
    President and CEO

    Trafalgar has filed with Canadian securities regulatory authorities its
financial statements for the year ended December 31, 2007 and the accompanying
Management's Discussion and Analysis. These filings are available under
Trafalgar's SEDAR profile at starting March 18, 2008. Full pdf
versions of our year end 2007 audited financial statements and the
accompanying Management's Discussion and Analysis are available on our website


    Trafalgar is a Calgary, Alberta based oil and natural gas exploration,
production and development company, with operations in the Canadian provinces
of Alberta and British Columbia. Trafalgar trades on the Toronto Stock
Exchange ("TSX") under the symbol TFL.


    In conformity with National Instrument 51-101, Standards for Disclosure
of Oil and Gas Activities ("NI 51-101"), natural gas volumes have been
converted to barrels of oil equivalent ("boe") using a conversion rate of six
thousand cubic feet of natural gas to one barrel of oil. This ratio is based
on an energy equivalency conversion method primarily applicable at the burner
tip and does not represent a value equivalency at the wellhead. Readers are
cautioned that the term "boe" may be misleading, particularly if used in
isolation. Full NI 51-101 disclosures respecting net asset value and finding
and development costs are contained in the Management's Discussion and
Analysis filed on SEDAR.


    This discussion and analysis contains forward-looking statements related
to future events or future performance. Certain statements regarding Trafalgar
include management's assessment of future plans and operations and may
constitute forward-looking statements under applicable securities laws and
necessarily involve known and unknown risks and uncertainties, most of which
are beyond Trafalgar's control. These risks may cause actual financial and
operating results, performance, levels of activity and achievements to differ
materially from those expressed in, or implied by, such forward-looking
    Such factors include, but are not limited to: the impact of general
economic conditions in Canada and the United States; industry conditions
including changes in laws and regulations including adoption of new
environmental laws and regulations, and changes in how they are interpreted
and enforced; competition from other producers, the lack of availability of
drilling rigs and other field services, the lack of availability of qualified
personnel; fluctuations in commodity prices, the results of exploration and
development drilling related activities; imprecision in reserve estimates; the
production and growth potential of Trafalgar's various assets; fluctuations in
foreign exchange or interest rates; the ability to access sufficient capital
from internal and external sources; and obtaining required approvals of
regulatory authorities.
    Accordingly, Trafalgar gives no assurance and makes no representations or
warranty that the expectations conveyed by the forward-looking statements will
prove to be correct and actual results may differ materially from those
anticipated in the forward-looking statements. Readers should not place undue
reliance on any such forward-looking statements, which speak only as of the
date they were made. Trafalgar disclaims any intention or obligation to update
or revise any forward-looking statements, whether as a result of new
information, future events or otherwise except as required by law.
    Additional information regarding Trafalgar is available under the
Company's profile on SEDAR at or on the Company's website at


    Trafalgar uses the following terms for measurement that do not have
standardized prescribed meaning under GAAP and these measurements may not be
comparable with the calculation of similar measurements of other entities.
    "Funds from operations" and "Funds from operations per share" are terms
utilized by Trafalgar to evaluate operating performance and assess leverage.
Trafalgar considers funds from operations to be an important measure of
Trafalgar's ability to generate the funds necessary to finance capital
expenditures and repay debt. Funds from operations does not represent net
income and should not be viewed as an alternative to net income or other
measures of financial performance calculated in accordance with GAAP. All
references to funds from operations throughout the MD&A are based on cash
provided by operating activities before change in non-cash working capital.
    A reconciliation of cash provided by operating activities to funds from
operations is as follows:

                                     on April 25,      Quarter       Quarter
                        Year Ended       2006 to         ended         ended
                          December      December      December      December
                          31, 2007      31, 2006      31, 2007      31, 2006
    Cash provided by
     activities          5,182,814      (373,027)    1,404,449       287,825
    Change in non-cash
     operating working
     capital               705,816     1,052,527       172,173       749,469
    Funds from
     Operations          5,888,630       679,500     1,576,622     1,037,294

    Trafalgar also uses "operating netbacks" as a key performance indicator.
Operating netbacks do not have a standardized meaning prescribed by GAAP and
therefore may not be comparable with the calculation of similar measures by
other companies. Operating netbacks are determined by deducting royalties,
operating expenses, processing fees and transportation from petroleum and
natural gas sales revenue.
    Funds from operations and operating netbacks are not intended to
represent operating profits, nor should they be viewed as an alternative to
cash flows provided by operating activities, net income or other measures of
financial performance calculated in accordance with GAAP.

    %SEDAR: 00024297E

For further information:

For further information: TRAFALGAR ENERGY LTD., Robert Wollmann,
President and CEO, Telephone (403) 216-2706, Email; Daniel Belot, Vice President Finance and CFO,
Telephone (403) 216-2707, Email; or visit, Toll-free: 1-877-216-2705; Investor Relations,

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