WEST ENERGY LTD. Announces 2008 Second Quarter Operating and Financial Results and Completion Results of the Crossfire 09-01 well


    CALGARY, Aug. 8 /CNW/ - West Energy Ltd. ("West" or the "Company")
(TSX: "WTL") provides a summary of the corporate results for the Second
Quarter ended June 30, 2008. A detailed review of the Company's results is
contained in the Consolidated Financial Statements and Management Discussion
and Analysis (MD&A) for this period which will be filed on SEDAR at
www.sedar.com on August 8, 2008.
    During the second quarter ended June 30, 2008 West initiated a major
refocus of the Company's current and future efforts. The Company undertook a
strategic initiatives process to identify the most efficient method of
maximizing the corporate value inherent in West's current and future
production and cash flow, together with West's balance sheet strength and
current existing inventory of drilling prospects. Various proposals were
reviewed and rejected since they did not recognize the potential value of
current commodity prices on West's production, the new Crossfire Nisku
discovery at 9-1 or share in the upside of its prospect inventory and
associated capital programs in both the Nisku and Montney programs.

    As an outcome of the strategic initiatives process, West will pursue the
following course of action:

      -  Concentrate future Pembina Nisku exploration and development
         activity in the Crossfire area.
      -  Undertake exploration activity in the three Montney fairways
         established by the Company over the past 18 months.
      -  Actively seek acquisitions that will provide sizable production
         additions as well as provide a more diversified stable of
         exploration and development opportunities.

    Implementation of this strategic direction has commenced. In recent weeks,
the Company has:

      -  Completed and flow-tested the Pembina Nisku well located at
         09-01-050-6W5 (67.5% W.I.). This well targeted a Nisku anomaly
         located approximately two miles from West's producing well at
         13-2-50-6W5. The well was successful with logs indicating a
         hydrocarbon column of approximately 18 meters in the Nisku
         formation. During a four hour flow-test, the well produced at a rate
         of 846 Bbl/d of 40 API oil and 564 Mcf/d of raw gas (over 930 boe/d
         sales) on a 24/64" choke and at a flowing pressure of 740 psi. The
         geological characteristics and the completion results are similar to
         the company's prolific oil well located at 13-02-50-6W5 which is
         currently flowing over 2,800 boe/d. The H(2)S concentration in the
         raw gas from the 09-01 well was 3.5%, which is consistent with the
         H(2)S concentration at the 13-02 well.
      -  Commenced both the construction of the pipeline from 09-01 to the
         existing Crossfire battery at 13-02-050-6W5 and the enlargement of
         the 13-02 battery to handle the increased production volumes from
         the 09-01 well by the end of the third quarter.
      -  Drilled and completed the Tangent 07-34-080-24W5 & 06-03-081-24W5
         wells. These two wells (both 35% W.I.) were cased and completed as
         oilwells in the Montney formation. Production test information will
         be available during the third quarter of 2008.
      -  Drilled three vertical Montney wells to assess gas in place and
         productivity in three separate trends. Results of this program are
         expected before the end of the third quarter.

    For the quarter ended June 30, 2008, the Company recorded strong revenue,
cashflow and net income results. Production averaged 6,135 Boe per day for the
three month period ended June 30, 2008 compared to 2,681 Boe per day for the
same period in 2007. Prices averaged $108.80/Boe in the second quarter of 2008
compared to $65.62 per Boe in the same quarter of 2007. As a result of higher
production and higher prices, revenue for the quarter ended June 30, 2008 was
$60.7 million compared to $16.0 million in the second quarter of 2007.
Cashflow from operating activities for the second quarter of 2008 was $42.3
million ($0.53 per share) compared to $15.6 million ($0.23 per share) for the
same period in 2007. Net income for the three month period ended June 30, 2008
was $8.7 million ($0.11 per share) compared to a net loss of $0.8 million
($0.01 per share) for the comparable period in 2007. At June 30, 2008 the
Company had a working capital surplus of $41.2 million compared to $30.2
million at June 30, 2007 including $38.2 million of cash holdings. This is in
addition to the $22.0 million of Asset Backed Commercial Paper recognized as a
non-current asset in the Company's balance sheet.
    During the quarter, West worked diligently on arriving at a solution to
the issues created by the collapse of the Asset Backed Commercial Paper (ABCP)
market. In July, West reached an agreement with its bank such that West may
borrow up to 75% of the face value of its ABCP holdings in addition to its
existing corporate credit facilities. West retains the option to sell its ABCP
holdings should a liquid and stable market be reestablished in the future.
    Capital additions amounted to $7.4 million for the second quarter of 2008
as expenditures were curtailed during the strategic initiatives process along
with the impacts of Spring break-up and uncertainties associated with
obtaining licenses for Nisku wells in the Pembina area. Capital expenditures
in the second quarter of 2007 were $11.6 million.


                                    Three months ended      Six months ended
                                           June 30,              June 30,
                                       2008       2007       2008       2007
                                       (unaudited)           (unaudited)
      Crude oil (Bbls/d)              3,594      1,566      3,527      1,877
      NGLs (Bbls/d)                   1,225        595      1,225        577
      Natural gas (Mcf/d)             7,893      3,120      7,273      3,797
      Barrels of oil equivalent
       (Boe/d at 6:1)                 6,135      2,681      5,964      3,087
      Crude (per Bbl)             $  124.23  $   67.75  $  110.10  $   66.50
      NGLs (per Bbl)              $   97.27  $   63.28  $   89.74  $   60.96
      Natural gas (per Mcf)       $   11.67  $    9.53  $   10.17  $    8.47
    Revenue (per Boe)             $  108.80  $   65.62  $   96.80  $   63.13
    Royalties (per Boe)           $   26.37  $   14.40  $   25.29  $   15.55
    Operating costs (per Boe)     $    9.07  $   13.25  $    9.54  $   12.67
    Operating netback (per Boe)   $   73.36      37.97  $   61.97  $   34.91
    General and administrative
     (per Boe)                    $    2.02       4.61  $    2.01  $    3.59
    Interest expense (per Boe)    $    0.08       2.80  $    0.16  $    2.27
    Corporate netback (per Boe)   $   71.26      30.56  $   59.80  $   29.05
    Wells drilled - Gross (net)
      Oil                           2/(0.70)   1/(0.25)   3/(0.74)   2/(0.60)
      Gas                               -/-        -/-        -/-    4/(1.26)
      Service (water source and
       injection)                       -/-        -/-        -/-        1/-
      Abandoned                         -/-    1/(1.00)   1/(0.04)   1/(1.00)
      Total                         2/(0.70)   2/(1.25)    4/0.78    7/(2.86)
      Drilling success rate
       (excluding service wells)  100%/100%   50%/(20%)   75%/95%   86%/(65%)
    Financial (000s, except per
     share amounts)
    Oil and gas revenues          $  60,740  $  16,010  $ 105,079  $  35,273
    Funds from operations         $  43,865  $   7,438  $  64,942  $  16,208
      Per share  - basic          $    0.55  $    0.11  $    0.82  $    0.25
                 - diluted        $    0.53  $    0.11  $    0.79  $    0.23
    Cash flow from operating
     activities                   $  42,291  $  15,641  $  66,540  $  17,410
      Per share  - basic          $    0.53  $    0.23  $    0.84  $    0.26
                 - diluted        $    0.51  $    0.22  $    0.81  $    0.25
    Net income (loss)             $   8,709  $    (777) $   7,027  $  (2,277)
      Per share  - basic          $    0.11  $   (0.01) $    0.09  $   (0.03)
                 - diluted        $    0.11  $   (0.01) $    0.09  $   (0.03)
    Working capital               $  41,197  $  30,158  $  41,197  $  30,158
    Capital expenditures          $   7,425  $  11,563  $  17,395  $  34,479
    Total assets                  $ 273,091  $ 273,917  $ 273,091  $ 273,917
    Common shares
      Outstanding                    79,437     79,307     79,437     79,307
      Weighted average  - basic      79,437     67,766     79,432     66,086
                        - diluted    82,393     70,677     82,151     69,019

    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.
    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

    Not for distribution to United States newswire services or dissemination
    in the United States.

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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