West Energy announces third quarter 2009 results

    
    /NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR DISSEMINATION
    IN THE UNITED STATES./
    

CALGARY, Nov. 10 /CNW/ - West Energy Ltd.("West") (TSX: WTL) announces its financial and operational results for the three and nine months ended September 30, 2009. West has filed its unaudited Consolidated Financial Statements for the period ended September 30, 2009 and related Management's Discussion and Analysis ("MD&A") on SEDAR. Copies of West's materials may be obtained on www.sedar.com and on its website at www.westenergy.ca.

Certain selected financial and operational information for the three and nine months ended September 30, 2009 and the 2008 comparatives are set out below and should be read in conjunction with West's Consolidated Financial Statements and MD&A.

    
    OPERATING AND FINANCIAL HIGHLIGHTS

                                    Three months ended     Nine months ended
                                        September 30,         September 30,
                                      2009       2008       2009        2008
                                        (unaudited)           (unaudited)
    Operating Units as noted
    Production
      Crude oil (Bbls/d)             2,368      3,639      2,773       3,564
      NGLs (Bbls/d)                    661      1,048        754       1,166
      Natural gas (Mcf/d)            4,438      6,284      4,953       6,941
      Barrels of oil equivalent
       (Boe/d @ 6:1)              3,769      5,735      4,353       5,887
    Prices
      Crude oil (per Bbl)        $   70.63  $  118.99  $   59.31   $  113.14
      NGLs (per Bbl)             $   60.85  $  113.04  $   51.01   $   96.78
      Natural gas (per Mcf)      $    2.49  $    8.62  $    3.95   $    9.70
    Revenue (per Boe)            $   58.20  $  106.49  $   51.58   $   99.97
    Royalties (per Boe)          $   22.86  $   32.44  $   15.27   $   27.63
    Operating costs (per Boe)    $    7.91  $    7.96  $    9.57   $    9.02
    Operating netback
     (per Boe)(1)                $   27.43  $   66.09  $   26.74   $   63.32
    General and administrative
     (per Boe)                   $    3.98  $    2.81  $    3.86   $    2.27
    Interest expense (per Boe)   $    0.26  $   (0.40) $       -   $   (0.02)
    Corporate netback
     (per Boe)(1)                $   23.19  $   63.68  $   22.88   $   61.07
    Wells drilled - gross/net
      Oil                           3/2.37     4/3.18     7/4.73      7/3.92
      Gas                           1/0.50     2/1.16     3/1.30      2/1.16
      Service (water source and
       injection)                   1/1.00        -/-     1/1.00         -/-
      Abandoned                        -/-        -/-        -/-      1/0.04
      Total                         5/3.87     6/4.34    11/7.03     10/5.12
      Drilling success rate
       (excluding service wells) 100%/100%  100%/100%  100%/100%     90%/99%
    Financial (000s, except
     per share amounts)
    Oil and gas revenues         $  20,179  $  56,186  $  61,295   $ 161,264
    Funds from operations(1)     $   8,172  $  33,487  $  27,091   $  98,429
      Per share - basic          $    0.10  $    0.42  $    0.33   $    1.24
                - diluted        $    0.10  $    0.41  $    0.33   $    1.20
    Cash flow from operating
     activities                  $  10,940  $  38,884  $  22,810   $ 105,424
      Per share - basic          $    0.13  $    0.49  $    0.28   $    1.33
                - diluted        $    0.13  $    0.47  $    0.28   $    1.28
    Net income (loss)            $  (4,386) $   4,548  $  (6,284)  $  11,575
      Per share - basic          $   (0.05) $    0.06  $   (0.08)  $    0.15
                - diluted        $   (0.05) $    0.06  $   (0.08)  $    0.14
    Working capital              $  73,238  $  60,117  $  73,238   $  60,117
    Capital expenditures         $  10,767  $  15,012  $  26,262   $  32,407
    Total assets                 $ 267,735  $ 287,138  $ 267,735   $ 287,138
    Common shares - Outstanding     82,271     79,457     82,271      79,457
      Weighted average - basic      82,270     79,451     81,907      79,439
                       - diluted    82,474     82,278     82,034      82,177

    (1) Non-GAAP Measures
    

The above table contains the terms "Operating Netback" and "Corporate Netback" and "Funds from operations". These terms are non-GAAP measures which the Company believes provide useful and relevant information, but should not be considered an alternative to, or more meaningful than "cash flow from operating activities" as determined in accordance with GAAP as an indicator of the Company's financial performance.

During the third quarter of 2009, West Energy Ltd. (West or the Company) laid the foundations for profitable growth for 2010 and beyond. The Company secured a large drilling inventory in the Cardium light oil play at Pembina and an acquisition which will greatly expand and diversify its drilling inventory and long term prospects. West is in an enviable position of having a large portfolio of light oil projects that are economic at current commodity prices and now has the ability and asset base to significantly grow the Company's reserves and production from cash flow. West is unique amongst the peer group in that over 77% of the Company's pro-forma production base of 5,000 BOEPD is light oil.

For the first three quarters of 2009, West restrained capital expenditures to match cashflows. For the year to September 30, the Company incurred $26.3 million of capital expenditures and generated $27.2 million of funds from operations. Capital expenditures of $10.8 million were incurred during the quarter undertaking the following activities:

    
    -   West secured interests in 6,800 gross acres (6,100 net acres) of
        Cardium lands in the greater Pembina area The Company now has over 80
        undrilled Cardium horizontal locations (avg. W.I. 75%).
    -   The Crossfire 9-1-50-6W5 well (W.I. 67.5%) received EOR approval and
        has been brought back on restricted production at 500 Boe per day to
        maximize oil recovery.
    -   West drilled three wells in its recently announced Mannville light
        oil pool discovery. The oil well at Crossfire 15-3-50-6W5 (W.I. 100%)
        was tied in and is producing to the Company's facilities at Crossfire
        13-2-50-6W5. Additional lands with Crossfire Mannville light oil
        potential were acquired.
    -   The Company completed a successful Kiskatinaw well at Economy Creek
        16-33-69-2W6 (W.I. 50%) which was tested at 3.7 MMCFD, and 75 barrels
        of liquids per day at a flowing pressure of 2,200psi.
    -   The Company equipped and recompleted a vertical Montney light oil
        well (W.I. 100%) at Two Rivers. The well is currently shut-in for
        pressure testing.
    

West has increased its Q4 capital budget to $25 million and will accelerate its capital program on its Cardium light oil resource play, drilling up to eight horizontal wells by year end and establish its Montney light oil project at Two Rivers in NEBC where it will spud its first horizontal well.

To date in Q4, the Company has drilled four Cardium horizontal wells along the Pembina trend. The first well (W.I. 36.7%) has recently come on stream at over 230 BOPD. The other three wells will be completed in Q4. In November, West drilled a successful Nisku well at Crossfire 3-3-50-6W5 (W.I. 100%). To date the company has drilled 7 successful Nisku wells out of 8 attempts at Crossfire and has a large inventory of Nisku prospects. The 3-3 well is being completed and the Company anticipates having the well on stream before year end at an expected rate of 1,000 BOPD. The 3-3 well is similar to two other Nisku oil wells (W.I. 60%) that the Company will tie-in to the Crossfire battery in the first quarter of 2010.

Subsequent to the end of the third quarter, West entered into an agreement to acquire a significant light oil property in the Warburg area of Alberta. Warburg is approximately 15 miles from West's existing Crossfire lands and in the area that West acquired Cardium lands during the quarter. The Warburg acquisition leverages the Company into a long reserve life and high netback light oil reserve base with significant development upside. This asset, with its large oil resource base, provides numerous opportunities to reinvest the Company's cash flow to achieve high recycle ratios. While the Cardium resource play is currently receiving significant attention, there are numerous other potentially suitable oil zones such as the Viking, Belly River and deeper formations. The Warburg property has seen little capital investment over the past 10 years and will substantially benefit from recent advances in drilling, completion, stimulation and production technologies. This acquisition places West with a large land position and infrastructure in the heart of the Cardium oil resource play while also providing significant up-side potential in other productive zones. The acquisition is expected to close on December 15, 2009.

West remains in a strong financial position at the end of the third quarter with almost $75 million of cash on hand which, along with its credit facilities, will be deployed to fund the Warburg acquisition. West has commenced discussions with its bankers to create a syndicated and expanded credit facility which, after funding the acquisition, will result in unused credit facilities of $50 million.

The Company anticipates a 2010 exploration and development program on existing properties of approximately $60 million. The 2010 program will encompass 24 Cardium horizontal oil wells, three Pembina Mannville oil wells and any Pembina Nisku wells as and when licenses are obtained. With the Two Rivers drilling results in Q4, 2009, the Company has plans for further Montney horizontal drilling activity in 2010.

West has been a technology driven company and this will continue with the optimization of the Warburg acquisition. Post closing activity will centre on the Cardium horizontal drilling program and optimization of the existing Belly River production. The Company is very confident that its detailed reservoir studies of the Belly River and Cardium waterfloods will identify additional exploitation opportunities around and within the existing pools. Diversification away from the Company's historical Nisku play with its licensing timeline challenges will provide consistent and predictable activity with resulting production growth. Recently the Alberta regulator implemented a moratorium on the granting of any drilling and facility licenses for wells containing sour gas. The industry expects the regulator to quickly resolve the licensing issue to ensure continued development of this very important resource to the province.

West continues to be a light oil focused company with a significantly larger and more diversified drilling portfolio which can be exploited from its existing cash flow. West will seek additional acquisitions that compliment its light oil program and the talents of the West team. Tom Collins, who has consulted to West since January on the development of the Cardium play, has accepted the position of Vice President, Exploration. This is an exciting time for the Company and we thank our shareholders and employees who have helped to make this happen.

Reader's Advisory:

Certain information regarding West Energy Ltd. in this news release including management's assessment of the future plans and operations and their timing may constitute forward-looking statements under applicable securities laws and necessarily involve risks including, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, changes to the proposed royalty regime prior to implementation and thereafter, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, incorrect assessment of the value of acquisitions, failure to realize the anticipated benefits of acquisitions, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information and that could cause actual results to differ materially from those anticipated in the forward-looking statements are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com) or at the Corporation's website (www.westenergy.ca). Furthermore, the forward-looking statements contained in this news release are made as of the date of this news release and the Corporation does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

Disclosure provided herein in respect of barrel(s) of oil equivalent (Boe) may be misleading, particularly if used in isolation. A Boe conversion ratio of 6 mcf:1 barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

SOURCE WEST ENERGY LTD.

For further information: For further information: Ken McCagherty, President and Chief Executive Officer, Email: mccagherty@westenergy.ca, Direct Phone: (403) 716-3458; Scott Bridge, Vice President Finance and Chief Financial Officer, Email: sbridge@westenergy.ca, Direct Phone: (403) 716-3457

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