WEST ENERGY LTD. Announces 2007 Fourth Quarter and Yearend Operating and Financial Results


    CALGARY, March 24 /CNW/ - West Energy Ltd. ("West" or the "Company")
(TSX: "WTL") provides a summary of the corporate results for the fourth
quarter and year ended December 31, 2007. A detailed review of the Company's
results is contained in the Annual Information Form (AIF), Consolidated
Financial Statements and Management Discussion and Analysis (MD&A) which will
be filed on SEDAR at www.sedar.com on or before March 31, 2008.
    West Energy Ltd. was created in 2003 to capture and develop high impact
exploration opportunities in western Canada. The Company has now secured
significant positions in three of today's largest conventional oil and gas
plays in western Canada: Pembina Nisku light oil, Puskwaskau Beaverhill Lake
light oil and in the Montney gas fairway.
    In 2007, West achieved the following:

    -   Increased and stabilized production and reached an exit rate of
        5,760 BOE/D a 122 percent increase over 2006.
    -   Daily production for the fourth quarter averaged 4,962 BOEPD
        (4,063 BOPD light oil and 5,397 MCFD of sales gas) a 78% increase
        over 2006.
    -   Worked diligently to resolve competitive, regulatory and operational
        issues in West's Nisku pools.
    -   Constructed the Crossfire battery and related infrastructure and
        commenced production in October
    -   Drilled a successful step out well at Crossfire 11-3-50-6W5 to
        confirm the size of the Nisku OOO pool discovered previously by the
        well 13-2-50-6W5.
    -   Drilled a successful oil well at Crossfire 11-12-51-5W5 which
        significantly extended the known Nisku fairway to the northeast.
    -   Issued 14.6 million shares for net proceeds of $65.6 million to
        eliminate debt and to finance additional exploration and development
    -   Advanced its major exploration initiatives by acquiring:
        -   117 square miles of 3D seismic, 150 miles of 2D seismic and
            23,520 gross acres (net 15,600 acres) in the Puskwaskau area.
        -   80 square miles of 3D seismic and an additional 7,360 gross acres
            (net 4,400 acres) acres of lands in the Crossfire area.
        -   a large land base in the Montney play of northeast British
            Columbia where it drilled its first well.

    West continued its commitment to the Pembina Nisku fairway with a capital
expenditure program of $54.3 million and acquired land, seismic, drilled eight
wells (net 6.6 wells) and constructed facilities. The majority of Nisku
expenditure was in the Crossfire area. The evaluation of 3D seismic data by
West's exploration team has been instrumental in our ability to discover new
hydrocarbon pools in the Pembina Nisku fairway. The Company now has over
20 undrilled Nisku prospects. Initial drilling results in West's new
exploration area at Puskwaskau did not result in a new Beaverhill Lake oil
pool. Uphole gas potential in the wells is very encouraging and further work
will better define the Beaverhill Lake oil prospects.
    During 2007, West was confronted with a number of industry issues which
negatively impact the operations of the Company. These include:

    -   An announcement by the Alberta government of a proposed new royalty
        framework to take effect on January 1, 2009 which potentially doubles
        the royalty burden on West's high productivity light oil wells.
    -   Significant regulatory delays in obtaining drilling licenses in the
        Crossfire area resulting in six planned 2007 wells not being drilled.
    -   Loss of access to $30 million of funds invested in the Asset Backed
        Commercial Paper market which collapsed in August.

    West recorded a net loss of $23.0 million ($0.32 per share) for the year
ended December 31, 2007, compared to net income of $6.2 million ($0.10 per
share) for the year ended December 31, 2006. The loss is primarily
attributable to the write-off of goodwill of $14.7 million and a write-down of
Asset Backed Commercial Paper held by West of $8.0 million. Funds from
operations for 2007 were $47.0 million ($0.65 per share) versus $35.2 million
($0.58 per share) for 2006. Cash flow from operating activities, as determined
in accordance with GAAP, was $45.4 million ($0.63 per share) for 2007 and
$29.4 million ($0.49 per share) for 2006.
    In the fourth quarter of 2007, West recorded a loss of $17.4 million
($0.22 per share) compared to a loss of $6,000 ($0.00 per share) for the
corresponding period in 2006. For the three months ended December 31, 2007,
funds from operations were $21.1 million ($0.27 per share) and for the fourth
quarter of 2006 were $6.1 million ($0.10 per share). Cash flow from operating
activities, as determined in accordance with GAAP, was $19.7 million ($0.25
per share) for 2007 and $5.1 million ($0.08 per share) for 2006.
    Cash generated after all cash expenses including General & Administration
and Interest for the year ended December 31, 2007 were significantly higher in
dollar terms at $47.7 million than the prior period of $35.3 million. The
reason for the improved result was due to higher volumes and higher commodity
prices coupled with lower operating costs. Corporate netbacks (operating
netbacks less general and administrative and interest expense) averaged
$36.88 per Boe in 2007 compared to $33.62 per Boe for 2006. Cash generated
after all cash expenses were significantly higher in the fourth quarter of
2007 with a result of $21.8 million for the three months ended December 31,
2007 compared to $6.1 million in the comparable period in 2006. This was due
to the significantly higher level and upward trend of commodity prices in the
latter months of 2007 compared to a lower level and downward trend in the same
period in 2006.

    Operating and Financial Highlights

                                   Three months ended          Year ended
                                      December 31,            December 31,
                                    2007        2006        2007        2006
                                (unaudited) (unaudited)

      Natural gas (Mcf/d)          5,397       2,908       4,292       3,216
      Crude oil and NGLs
       (Bbls/d)                    4,062       2,306       2,829       2,218
      Barrels of oil equivalent
       (Boe/d at 6:1)              4,962       2,791       3,545       2,754

      Natural gas (per Mcf)   $     6.90  $     7.57  $     7.13  $     7.54
      Crude oil and NGLs
       (per Bbl)              $    82.76  $    58.84  $    74.10  $    69.85

    Revenue (per Boe)         $    75.51  $    56.50  $    67.88  $    65.06
    Royalties (per Boe)       $    19.62  $    16.72  $    17.09  $    15.33
    Operating costs (per Boe) $     4.27  $    12.72  $     9.16  $    12.42
    Operating netback
     (per Boe)                $    51.62  $    27.06  $    41.63  $    37.31

    General and
     administrative (per Boe) $     3.46  $     2.97  $     3.56  $     2.84
    Interest expense
     (per Boe)                $     0.30  $     1.07  $     1.19  $     0.85
                              ----------- ----------- ----------- -----------
    Corporate netback
     (per Boe)                $    47.86  $    23.02  $    36.88  $    33.62
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------
    Gross Company
     Reserves (Mboe)
      Proven                       4,652       5,534       4,652       5,534
      Proven plus probable         7,822       8,628       7,822       8,628

    Wells drilled - Gross (net)
      Gas                        2/(0.61)    1/(0.15)     9/(3.0)    8/(2.06)
      Oil                        6/(3.51)    2/(0.56)   12/(7.20)    8/(6.40)
      Service (water source
       and injection)            0/(0.00)   4 /(3.40)    0/(0.00)    5/(4.41)
      Abandoned                  0/(0.00)    0/(0.00)    1/(1.00)    5/(3.58)
      Total                      8/(4.12)    7/(4.11)  22/(11.20)  26/(16.45)
      Drilling success rate
       (excluding service
       wells)                 100%/(100%) 100%/(100%)   95%/(91%)   80%/(70%)

    Financial (000s, except
     per share amounts)

    Oil and gas revenues      $   34,467  $   14,730  $   87,822  $   66,929

    Funds from operations     $   21,106  $    6,058  $   46,953  $   35,178
      Per share
        - basic               $     0.27  $     0.10  $     0.65  $     0.58
        - diluted             $     0.26  $     0.09  $     0.62  $     0.55

    Cash flow from operating
     activities               $   19,687  $    5,095  $   45,482  $   29,438
      Per share
        - basic               $     0.25  $     0.08  $     0.63  $     0.49
        - diluted             $     0.24  $     0.08  $     0.60  $     0.46

    Net income (loss)         $  (17,431) $       (6) $  (22,954) $    6,244
      Per share
        - basic               $    (0.22) $     0.00  $    (0.32) $     0.10
        - diluted             $    (0.22) $     0.00  $    (0.32) $     0.10

    Working capital
     (deficiency)             $   (7,126) $  (18,524) $   (7,126) $  (18,524)

    Capital expenditures      $   25,378  $   23,050  $   74,874  $   84,089

    Total assets              $  271,193  $  233,191  $  271,193  $  233,191

    Common shares
      Outstanding                 79,417      64,212      79,417      64,212
      Weighted average
        - basic                   79,417      62,184      72,757      60,228
        - diluted                 81,443      66,194      75,426      64,394

    In 2008, West will continue to invest in the Pembina Nisku fairway,
particularly the Crossfire area. The size of West's Nisku drilling program
will depend on the number of ERCB drilling licenses granted. Any new
successful Crossfire Nisku wells can now be tied into the Company's extensive
facility infrastructure completed in 2007. The Company plans to expand its
Montney initiative and in addition continue with its Beaverhill Lake
exploration program in 2008. Significant capital was invested in land and
seismic in 2007, to secure West's Montney prospects in British Columbia and
Alberta which will result in drilling Montney wells over the course of 2008.
Several sections of Montney rights were recently acquired through crown land
sales and farm-in deals. West plans to further increase its land position in
the balance of 2008 to secure a strong presence in this exciting new gas
fairway. Funding for West's 2008 capital program will be provided by cash flow
from increased production.
    On March 12, 2008, West announced it had commenced a process to review
strategic alternatives with the intent of maximizing shareholder value. West
is in a very strong financial position with a healthy balance sheet supported
by strong cash flows through stabilizing its Nisku production. By completing
two key sour oil battery facilities along the Pembina Nisku fairway and by
controlling a large inventory of light oil Nisku prospects, West is
attractively positioned to review strategic initiatives. The Company has
retained CIBC World Markets Inc. and GMP Securities L.P. as financial advisors
with this process.

    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, the effect on West and its cash flow from changes to royalty rates in
Alberta and production estimates 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.

    The news release contains the term cash flow which is commonly used in
the oil and gas industry. This term is not defined by GAAP and should not be
considered an alternative to, or more meaningful than, cash provided by
operating activities as determined in accordance with Canadian GAAP as an
indicator of West's performance. Management believes that cash flow is a
useful financial measurement which assists in demonstrating the Corporation's
ability to fund capital expenditures necessary for future growth or to repay
debt. West's determination of cash flow may not be comparable to that reported
by other companies. All references to cash flow throughout this news release
are based on cash flow from operating activities before changes in non-cash
working capital and abandonment expenditures.

    Disclosure provided herein in respect of barrels of oil equivalent (BOE)
may be misleading, particularly if used in isolation. A BOE conversion ratio
of 6 MCF:1 BBL 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: West Energy Ltd., 600, 333 5th Avenue S.W.,
Calgary, Alberta, T2P 3B6, Main Phone: (403) 265-5202, Facsimile: (403)
263-7007; Attention: Ken McCagherty, President and Chief Executive Officer,
Email: mccagherty@westenergy.ca, Direct Phone: (403) 716-3458; Attention:
Scott Bridge, Vice President Finance and Chief Financial Officer, Email:
sbridge@westenergy.ca, Direct Phone: (403) 716-3457

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