Upper Lake Oil and Gas Ltd. earns $429,000 in Q2 2008


    CALGARY, Aug. 14 /CNW/ - Upper Lake Oil and Gas Ltd. ("Upper Lake" or the
"Company") (TSX-UP) today announced its financial and operating results for
the second quarter and first half of 2008. The Company's financial statements
and management's discussion and analysis for the three and six months ended
June 30, 2008 will be available on SEDAR at www.sedar.com and on Upper Lake's
website at www.upperlake.ca.
    Financial and operating highlights for 2008 do not include comparisons to
2007 because Upper Lake did not commence business until October 12, 2007.

    Selected financial and operating information

    Production                        Three months ended  Six months ended
                                         June 30, 2008      June 30, 2008
    Natural gas                          3,455 mcf/day      3,624 mcf/day
    Oil and natural gas liquids           309 bbls/day       325 bbls/day
    Total                                  885 boe/day        929 boe/day

    Financial                           Three months ended  Six months ended
                                           June 30, 2008     June 30, 2008
                                         ($000s)   $/unit  ($000s)   $/unit
    Revenue: oil and NGLs                 2,744  97.46/bbl  5,095  86.04/bbl
    Revenue: natural gas                  3,382  10.76/mcf  6,233   9.45/mcf
    Royalties: oil and liquids             (700) 24.86/bbl (1,290) 21.78/bbl
    Royalties: natural gas                 (845)  2.69/mcf (1,509)  2.29/mcf
    Operating expenses                     (793)  9.85/boe (1,613)  9.54/boe
    Field netback(1)                      3,788  47.01/boe  6,916  40.88/boe

    General and administrative expenses    (492)  6.11/boe (1,016)  6.00/boe
    Interest expense                        (61)  0.76/boe    (92)  0.54/boe
    Funds flow from operations(1)         3,235  39.61/boe  5,808  34.08/boe
    Funds flow per diluted share(1)             0.12/share        0.22/share
    Cash flow from operating activities   3,407  42.29/boe  6,378  37.71/boe

    Net earnings                            429   5.32/boe    241   1.43/boe

    1. "Field netback" and "funds flow from operations" are non-GAAP
       financial measures. Further information is provided below under the
       heading "Non-GAAP Financial Measures."

    Proposed Business Combination

    On July 3, 2008, Upper Lake announced a proposed business combination
with Monterey Exploration Ltd ("Monterey"). The arrangement agreement entered
into between the Company and Monterey contemplates that the business
combination will be undertaken by way of a plan of arrangement (the
"Arrangement") under Section 193 of the Alberta Business Corporations Act and
that Upper Lake shareholders will receive 0.28 of a Monterey share for each
Upper Lake share held upon completion of the Arrangement.
    A Management Information Circular detailing the Arrangement is available
on SEDAR (www.sedar.com) and on the Upper Lake website (www.upperlake.ca). A
special meeting of the shareholders and optionholders of Upper Lake (called to
permit securityholders to consider and to vote on the Arrangement) has been
scheduled for Friday, August 29, 2008.

    Upper Lake is a Calgary-based corporation engaged in the exploration,
development and production of oil and natural gas in western Canada.
Additional information concerning Upper Lake is available on its website at
www.upperlake.ca or on SEDAR at www.sedar.com.

    Non-GAAP Financial Measures

    This news release includes information concerning "field netback" and
"funds flow from operations," which are non-GAAP financial measures that do
not have any standardized meaning prescribed by Canadian Generally Accepted
Accounting Principles ("GAAP") and are therefore unlikely to be comparable to
similar measures presented by other issuers. Management and the directors of
Upper Lake believe that "funds flow from operations" and "field netback"
provide useful information to investors and management since they are an
indicator of the Company's ability to fund future capital expenditures, which
drives growth, and repay debt. Funds flow from continuing operations and funds
flow from operations are calculated before changes in non-cash working
    See the "Funds Flow" section of Upper Lake's Management's Discussion and
Analysis (MD&A) for the period ended June 30, 2008 for a reconciliation of
funds flow from operations (non-GAAP) to cash flow from operating activities
(GAAP). See the "Netback Analysis" section of the same MD&A for a
reconciliation of field netback (non-GAAP) to funds flow from operations
(non-GAAP) to net earnings (GAAP). Other financial data have been prepared in
accordance with GAAP.


    All calculations converting natural gas to a crude oil equivalent have
been made using a ratio of six mcf of natural gas to one barrel of crude oil
equivalent. Boe's may be misleading, particularly if used in isolation. A boe
conversion ratio of six mcf of natural gas to one barrel of crude oil
equivalent is based on an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a value equivalency at the

For further information:

For further information: Kelly J. Ogle, President and Chief Executive
Officer, kogle@upperlake.ca, Upper Lake Oil and Gas Ltd., 1000, 500 - 4 Avenue
SW, Calgary, Alberta, T2P 2V6, Phone: (403) 237-9141, Fax: (403) 237-9140,

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