Winstar Reports 2009 Operational and Financial Results; Reserves, Net Asset
Value; an Update on Tunisian Operations and the Granting of New Stock Options

CALGARY, March 25 /CNW/ - Winstar Resources Ltd. ("Winstar" or the "Company") (TSX: WIX) is pleased to announce its operating and financial results for the fourth quarter and year ended December 31, 2009. All dollar values are expressed in Canadian dollars unless otherwise stated. As a result of the sale of Winstar's Canadian assets, effective September 1, 2009, the results from the Canadian segment of operations are presented as "discontinued operations" in this press release, and are consistent with GAAP.


During Q4 2009, and for the whole year, the Company generated the following operational and financial results:

    -   Oil and gas production from continuing operations amounted to
        1,816 boepd, which was 44% higher than production from continuing
        operations in Q4 2008, reflecting the increase in oil and gas sales
        from Chouech Essaida.
    -   Total funds from operations from continuing and discontinued
        operations for Q4 were $7.7 million which are a 50% increase over
        Q4 2008 reflecting higher production and commodity prices. Funds from
        operations during 2009 grew each quarter totaling $20.6 million for
        the 12 month period.
    -   The Company generated Q4 earnings from continuing and discontinued
        operations of $1.5 million, compared with a $3.8 million loss in
        Q4 2008.
    -   The Company established a revolving $10 million line of credit with
        HSBC Canada and EDC (Export Development Canada), a prestigious and
        unique relationship.
    -   At year end, the Net Asset Value (NAV) after tax, at a discount rate
        of 10%, was essentially unchanged from 2008 at $240.3 million
        ($7.02/share), compared with 2008 at $248.3 million ($7.25/share).
    -   Finding and development costs in 2009 amounted to $26.55 per boe

Corporate Summary

As early as September 2008, Winstar's corporate strategy of conservatively financing operations through existing working capital and internally-generated cash flows was challenged by the global financial crisis. With reduced working capital and unstable commodity prices, the first half of 2009 was spent optimizing existing production and funding only major projects already underway.

As the fall of 2009 approached, Winstar strategically rationalized its existing asset base to recapitalize the Company. In September, Winstar's Canadian assets were sold which re-established its capital strength. The Company's status was further enhanced by the establishment of a $10 million line of credit.

By year end, Winstar adapted to the new environment, while adhering to its prudent corporate financial strategy.

    Operational and Financial Highlights

                             Three Months Ended            Year Ended
                                December 31                December 31
    Financial              2009     2008   Change     2009     2008   Change
    Oil and gas sales    12,053    8,536      41%   39,843   56,376     (29%)
    Net royalty          (1,305)    (937)     39%   (4,237)  (5,184)    (18%)
    Operating expense     2,362    2,737     (14%)   9,895   10,765      (8%)
    General and
     (excludes non-cash
     stock based
     compensation)        1,511    1,255      20%    5,880    5,723       3%
     depreciation and
     accretion            3,488    3,949     (12%)  17,992   16,067      12%
    Current income tax     (996)  (1,669)    (40%)      29     (153)       -
    Funds from
     operations           7,708    5,464      41%   20,566   35,038     (41%)
      Basic and diluted
       per share           0.23     0.16      41%     0.60     1.03     (41%)
    Net income (loss)     1,503   (3,813)       -   (6,596) (13,645)       -
      Basic and diluted
       per share           0.04    (0.11)       -    (0.19)   (0.40)       -
    Capital expenditures  4,343   19,485     (78%)  18,204   53,511     (66%)
    Long term debt            -        -        -        -        -        -
    Common shares
      Basic (weighted
       average)          34,223   34,223        -   34,223   34,223        -
      Diluted (weighted
       average)          34,227   34,223        -   34,223   34,223        -

    Total production
     (boepd)              1,816    1,550      17%    1,739    1,724       1%
    Total sales (boepd)   1,735    1,550      12%    1,719    1,712       0%
      Oil (bopd)          1,504    1,291      17%    1,353    1,327       2%
        Average price
         ($ per bbl)      79.08    58.83      34%    68.44    98.90     (31%)
      Gas (mcfpd)         1,382    1,554     (11%)   2,196    2,307      (5%)
         Average price
          ($ per mcf)      8.81    10.84     (19%)    7.54     9.87     (24%)
    Operating expense
     ($ per boe)          14.80    19.20     (23%)   15.77    17.18      (8%)

    Financial from continuing operations (excludes Canadian operations)
    Oil and gas sales    10,946    6,390      71%   32,294   43,672     (26%)
    Net royalty          (1,318)    (743)     77%   (3,927)  (3,794)      4%
    Operating expense     2,475    2,194      13%    8,497    8,083       5%
     depreciation and
     accretion            3,488    3,004      16%   16,844   12,701      33%
    Income tax             (996)  (1,669)    (40%)      29     (153)   (132%)
    Funds from
     operations           7,777    5,051      54%   20,189   31,348     (36%)
      Basic and diluted
       per share           0.23     0.15      54%     0.59     0.92     (36%)
    Net income (loss)     1,573     (705)       -    1,398      (68)       -
      Basic and diluted
       per share           0.04    (0.02)       -     0.04    (0.00)       -
    Capital expenditures  4,343   19,572     (78%)  18,150   51,921     (65%)

    Operating from continuing operations (excludes Canadian operations)
    Total production
     (boepd)              1,816    1,257      44%    1,543    1,402      10%
    Total sales (boepd)   1,735    1,257      38%    1,523    1,389      10%
      Oil (bopd)          1,504    1,167      29%    1,275    1,194       7%
        Average price
         ($ per bbl)      79.09    59.51      33%    69.37    99.96     (31%)
      Gas (mcfpd)         1,108      537     107%    1,485    1,170      27%
        Average price
         ($ per mcf)       8.71    17.55     (50%)    9.12    10.45     (13%)
    Operating expense
     ($ per boe)          14.80    18.98     (22%)   15.29    15.90      (4%)


    Three months ended
     December 31,                   2009                       2008
                        Oil and                    Oil and
                        Liquids      Gas    Total  Liquids      Gas    Total
                          (bopd)  (mcfpd)  (boepd)   (bopd)  (mcfpd)  (boepd)
    Hungary                   -        -        -        -        -        -
    Chouech Essaida/
     Ech Chouech          1,250      865    1,394      814        -      814
    Sabria                  227      517      313      244      537      333
    Zinnia/Sanrhar          109        -      109      110        -      110
    Tunisia total         1,586    1,382    1,816    1,168      537    1,257
    Production from
     operations           1,586    1,382    1,816    1,168      537    1,257
    Canada                    -        -        -      123    1,017      293
    Total production      1,586    1,382    1,816    1,291    1,554    1,550

    12 months ended
     December 31,                   2009                       2008
                        Oil and                    Oil and
                        Liquids      Gas    Total  Liquids      Gas    Total
                          (bopd)  (mcfpd)  (boepd)   (bopd)  (mcfpd)  (boepd)
    Hungary                   -      185       31        -      564       94
    Chouech Essaida/
     Ech Chouech            977      819    1,114      795        -      795
    Sabria                  223      454      299      305      607      406
    Zinnia/Sanrhar          102        -      102      107        -      107
    Tunisia total         1,302    1,273    1,515    1,207      607    1,308
    Production from
     operations           1,302    1,458    1,545    1,207    1,171    1,402
    Canada                   76      710      194      133    1,137      322
    Total production      1,378    2,168    1,739    1,340    2,308    1,724

Oil and gas production from continuing operations was 44% and 10% higher for Q4 2009 and the 12 months respectively, than the comparable periods of 2008. The increased production was a result of the commencement of gas sales from Chouech Essaida, as well as improved well reliability and performance in Chouech Essaida.

    Funds from Operations

Funds from operations from both continuing and discontinued operations were $7.7 million and $20.6 million during Q4 and the 12 months of 2009 respectively. Funds from operations increased throughout 2009 due to increasing production and commodity prices.

Funds from continuing operations were $7.8 million for Q4 2009, compared with $6.8 million during Q3 2009. The improvement in funds from operations is described below, but is primarily a result of recording a current tax credit during Q4 2009 for previously accrued taxes during the first nine months of 2009.

                                                              Variance Q4/09
                                      Q4 2009       Q3 2009         vs Q3/09
    Production (continuing
     operations)                  1,816 boepd   1,790 boepd         26 boepd

    Sales (continuing operations) 1,735 boepd   1,790 boepd       (55) boepd

    Average sales price            $76.52/boe    $68.13/boe        $8.39/boe

                                       $ 000s        $ 000s           $ 000s
    Oil and gas revenue                12,066        11,222     844 increase
    Royalty (net of international
     royalty income)                   (1,318)       (1,263)     55 increase
    Operating cost                     (2,475)       (1,909)    566 increase
    General and administrative
     (excluding non-cash stock
     based compensation)               (1,465)       (1,633)  (168) decrease
    Cash income tax                       996          (329)  1,325 decrease
    Other                                 (27)          494     521 decrease

    Funds from continuing operations    7,778         6,582   1,195 increase
    Funds from discontinued operations    (69)          107   (177) decrease
    Funds from operations               7,708         6,689   1,109 increase


During Q4 2009, recorded earnings were $1.5 million compared with a net loss of $3.8 million during Q4 2008.

During the 12 month period, the Company recorded net earnings from continuing operations of $1.4 million. When the net loss of $8.0 million from discontinued operations is included, the Company reported a net loss of $6.6 million during the 12 month period of 2009. The net loss from discontinued operations reflected the $2.2 million impairment on assets disposed of, as well as the $4.9 million future income tax expense related to the disposition of existing tax pools, which were transferred as part of the Canadian asset disposition.


Reserves for 2009 decreased essentially due to the sale of Canadian assets, but also well performance at Sabria and a decrease in future gas reserves at Chouech Essaida due to an eventual forecasted back-in by the state-owned oil company, ETAP.

                                                       Proved plus Probable
                           Proved Reserves (1P)*       Reserves (2P)*

                           2009     2008   Change     2009     2008   Change
                           ----     ----              ----     ----

    Tunisia               4,252    4,394     (142)  14,876   17,148   (2,272)
    Canada                    -      556     (556)       -      908     (908)
    Hungary                  36       12       24       51       19       32
    Total (mboe)          4,288    4,962     (674)  14,927   18,075   (3,148)
    * Net Company working interest before royalty

Events affecting Reserves:

    -   Better performance from existing wells at Chouech Essaida and
        improved confidence in future drilling locations due to
        interpretation of recent 3D seismic survey
        (1P = +1,007 mboe);
    -   Sale of Canadian reserves (1P = (556mboe);
        2P = (908mboe));
    -   Sabria proved reserves write-down (1P = (1,155) mboe;
        2P = (1,160) mboe) due to well performance of the Sabria
        No.11 and Sabria N3H wells as well as moving one of the future
        development wells from the 1P to the 2P category due to budgetary
    -   Reduction in the net working interest estimate of 2P gas reserves at
        Chouech Essaida. With the improved oil reserves recovery forecast for
        this field in the 2009 reserves evaluation, it is now anticipated
        that Winstar will eventually produce and sell enough oil to trigger
        ETAP's contractual right to back-in for a 50% working interest in the
        concession. This back-in right is triggered once Winstar sells
        6.5 mmbbl of oil net of royalties. The current net oil sales from the
        field total approximately 3.5 mmbbl to date, and the December 2009
        production forecast predicts ETAP's back-in will occur in the year
        2022. It should be noted that this change has little effect on the
        Company's discounted NAV, as the loss of gas revenue occurs 12 years
        into the future.

    2009 Net Asset Value (NAV)

Winstar's Net Asset Value was essentially unchanged from 2008. This was due to an increased valuation at Chouech Essaida, with an offsetting decrease in valuation at Sabria and sale of the Canadian assets.

Events affecting NAV:

    -   Increased value associated with Tunisian Chouech Essaida and Ech
        Chouech concessions;
    -   Sale of Canadian assets for $9.5 million (2008 value:
        1P = ($9.2) million; 2P = ($13.4) million);
    -   Drop in Sabria concession reserves, due to well performance issues at
        Sabria No.11 and Sabria N3H wells;
    -   Change in commodity price forecast, as the Company elected to use the
        RPS price forecast instead of the McDaniel's price forecast.
        Approximate impact of change in price forecast (January 2009 to
        January 2010): 1P NAV = ($5) million;
        2P = ($15) million.

The Company's NAV at a 10% discount rate, as compared to 2008, was:

                                             Before Tax         After Tax
    $million (except per share values)     2009(2)  2008(1)  2009(2)  2008(1)
    Proved developed reserves                87.2     92.2     66.4     69.1
    Proved undeveloped reserves              34.5     45.2     18.1     23.6
    Total proved reserved value             121.7    137.4     84.5     92.7
    Probable reserves                       272.3    270.9    147.7    146.5
    Total proved + probable reserves
     value (P+P)                            394.0    408.3    232.2    239.2
    Land(3)                                     -      7.1        -      7.1
    Working capital                           8.1      2.0      8.1      2.0
    Long-term debt                              -        -        -        -
    Net Asset Value (NAV)                   402.1    410.3    240.3    248.3
    P+P NAV per basic and fully diluted
     share - Dec 31,(4)                    $11.75   $11.99    $7.02    $7.25
    Proved only NAV per basic and fully
     diluted share Dec 31,(4)               $3.79    $4.27    $2.71    $2.97


    1.  2008 Reserves were evaluated by McDaniel (Canada) and RPS (Tunisia
        and Hungary). Present worth was discounted at 10%, using McDaniel
        forecast prices as at December 31, 2008.
    2.  2009 Reserves were evaluated by RPS (Tunisia and Hungary). Present
        worth was discounted at 10% using RPS forecast prices as at
        December 31, 2009. The present worth estimates presume Winstar spends
        $30 million on capital in 2010 and 2011(1P case), and a total of
        $75.9 million on capital 2010 - 2013(2P case), which are currently
        not all approved by the Board.
    3.  2008 NAV included $7.1 million value for Canadian undeveloped land as
        independently evaluated by Seaton-Jordan & Associates Ltd. The
        Canadian undeveloped acreage was sold effective September 1, 2009,
        concurrently with other assets.
    4.  As at December 31, 2009 and 2008, the Company had 34.2 million shares
        outstanding. Under the treasury stock method, outstanding options
        were anti-dilutive and therefore weighted average fully diluted
        outstanding shares are equal to weighted average basic outstanding

    2009 Finding & Development costs (F&D), including changes in Future
    Development Capital (FDC)

F&D costs per boe for 2009 showed a marked improvement for the Proved Reserves (1P) additions to the Company. For the Proved and Probable reserves (2P), downward reserves revisions as described above exceeded reserves additions, and therefore the calculation is not shown in the tabulation below.

Events affecting F&D:

    -   Tunisian 1P F&D have improved significantly this year due to better
        than forecast well performance in Chouech Essaida, Sanrhar and Ech
        Chouech concessions in Tunisia, and the impact of a stronger Canadian
        dollar reducing the future capital development costs.
    -   Due to the various reserves issues as described, a 2P F&D calculation
        is not applicable for the year, but the three year rolling average
        including 2009 results, in particular for Tunisia, is $19.13/boe.

Based on Winstar's independently evaluated reserves (using RPS forecast prices) at year-end 2009, the Company's F&D costs per boe, including FDC, are calculated as follows:

                      2007             2008           2009     3 Year Average
                   1P      2P       1P      2P      1P     2P    1P      2P
    Tunisia      $41.91  $19.10   $46.93  $10.54  $32.98  N/A  $43.17  $19.13
    Canada       $48.59  $61.86   $16.02  $11.13     N/A  N/A  $35.18  $26.46
    Hungary       $2.80   $0.53  $1955.9       -       -    -       -       -
    Consolidated $44.00  $21.70   $47.60  $11.22  $26.55  N/A  $42.76  $19.88

    Tunisia Three Year F&D including changes in FDC

In Tunisia, where the Company has focused 100% of its recent capital program, the three year (2007 to 2009) average Proved Reserves F&D costs are $43.17/boe and Proved plus Probable Reserves F&D costs are $19.13/boe.


The beginning of 2010 finds Winstar in an advantageous position and geared for growth, particularly in Tunisia. With its 100% interest ownership in the Chouech Essaida and Ech Chouech concessions, the Company owns world class assets in Tunisia's Silurian and Triassic plays, as identified through the 3D seismic interpretations. The favorable tax and royalty rate agreements with the Tunisian government in these concessions encourage Winstar to concentrate efforts here.

A strong working capital position, an unused $10 million line of credit and funds from operations allow Winstar to take advantage of these future developmental and exploratory opportunities. In an effort to escalate work in Ech Chouech, Winstar is looking for partners to spread the risk and share the rewards, as a possible alternative to funding these programs through cash flow.

Plans in 2010 focus on those opportunities where the greatest rate of return can be achieved; and generally, that will be in Tunisia, specifically the Chouech Essaida and Ech Chouech concessions. The increase of production is paramount in funding future activity. In early 2010, Winstar resumed significant scale operations with a re-entry and sidetrack drilling operation at the existing well, Chouech Essaida No.8 (CS No.8). After some operational difficulties the production casing has been set, the drilling rig moved off location and well completion operations are underway. Preliminary indications are that the potential zones encountered are very similar to the original nearby CS No.8 and test results are expected by mid April. The drilling rig has moved to spud the development well, Chouech Essaida No.11 (CS No.11). This well has been identified as an opportunity to add material incremental production and reserves due to its advantageous, geologic structural position compared to the offset producing wells. Later this year, Winstar is considering the prospect of deepening of an existing well to test the Silurian Acacus geologic horizon and then continuing with the Triassic development drilling program at Chouech Essaida.

While the 2010 capital spending focus will be in Tunisia, Winstar will not lose sight of its European assets. In Romania, Winstar continues to move forward with its regional interpretational study of the Satu Mare exploration concession and expects to become operational as early as the fourth quarter of 2010. The Company will continue to look for partners for its Igal exploration permit in Hungary.

With experienced management and skilled employees worldwide to direct and guide our production prospects, the Board of Directors and management are excited about Winstar's future. After significant investment in time spent planning and developing the prospects and infrastructure in Tunisia, Winstar is now poised to reap the benefits of these efforts.

    New Stock Options Awarded

On March 25, 2010, Winstar' Board of Directors approved the grant, effective April 7, 2010, of options to purchase 500,000 common shares to directors, officers and employees. The options will be priced equal to the weighted average price of shares traded for the five day period from March 30 to April 6, 2010. As of March 25, 2010 the company has 34,243,000 common shares issued and outstanding and (giving effect to the approved grants described above) 3,178,000 common shares issuable pursuant to outstanding stock options.

    Winstar's Annual and Special General Meeting

Shareholders are cordially invited to attend Winstar's Annual and Special General Meeting on Tuesday, May 11, 2010, at 3:00 PM (MDT), which will be held in the Viking room of the Calgary Petroleum Club, 319 - 5th Ave SW, Calgary, Alberta, Canada.


References herein to boe mean barrels of oil equivalent derived by converting gas to oil in the ratio of 6,000 cubic feet (mcf) of gas to one barrel (bbl) of oil. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf: 1 bbl is based upon an energy conversion method primarily applicable at the burner tip and does not necessarily represent a value equivalency at the wellhead.

    Non-GAAP Measures

Funds from operations are a non-GAAP measure, defined by the Company as cash flow from operating activities excluding:

    -   The change in non-cash working capital related to continuing and
        discontinued operations, which is eliminated to show the net cash
        effect on income;
    -   Geological and geophysical expenses from continuing and discontinued
        operations, which are costs incurred for the purpose of generating
        future investment opportunities and are therefore not indicative of
        operational performance; and
    -   Expenditures on asset retirement obligations and reclamation, which
        are also not indicative of operational performance.

The Company also presents:

    -   Funds from operations per share, whereby amounts per share are
        calculated using weighted average common shares outstanding.

Management uses funds from operations to analyze performance and considers it to be a key measure as they demonstrate the Company's ability to generate the cash necessary to fund future capital investments. Winstar's determination of funds from operations may not be comparable to that reported by other companies nor should it be viewed as an alternative to cash flow from operating activities, net earnings or other measures of financial performance calculated in accordance with Canadian GAAP.

Field operating netback is a non-GAAP measure defined by the Company as revenue, plus international royalty income less royalty, operating expense and current income tax. Management considers field operating netbacks an important measure as they demonstrate the Company's profitability from field operations, before general and administrative costs, relative to current commodity prices.

    Sales and Seasonality

Oil production is not necessarily equal to sales. Tunisian oil is transported via truck or pipeline to a terminal for periodic offloading onto oil tankers. Revenue from tanker sales is recognized only when the sale occurs. Production during the period is carried in inventory until sold. Hungarian natural gas is sold on a monthly basis into the local market. Monthly sales are subject to local market product demand, which increases during the heating seasons of fall and winter, and lessens over the warmer spring and summer seasons.

    Forward-looking Statements

This press release contains certain forward-looking statements. These statements relate to future events or future performance of the Company. When used in this press release, the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "predict", "seek", "propose", "expect", "potential", "continue", and similar expressions, are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties, and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Such statements reflect the Company's current views with respect to certain events, and are subject to a number of risks, uncertainties and assumptions. Many factors could cause Winstar's actual results, performance, or achievements to materially differ from those described in this press release. Should one or more of these risks or uncertainties materialize, or should assumptions underlying forward-looking statements prove incorrect, actual results may vary materially from those described in other public disclosures made by the Company or this press release as intended, planned, anticipated, believed, estimated, or expected. Specific forward-looking statements in this press release include, among others, statements pertaining to the following: factors upon which Winstar will decide whether or not to undertake a specific course of action; and estimated volumes and timing of future production; business plans for drilling, exploration and development; and other expectations, beliefs, plans, goals, objectives, assumptions, information and statements about possible future events, conditions, results of operations or performance. The risks to which the Company is subject include those of the oil and gas industry in general, including operational risks in exploring for, developing and producing crude oil and natural gas; risks and uncertainties involving geology of oil and gas fields and deposits; volatility in global market prices for oil and natural gas; general economic conditions; competition; liabilities and risks, including environmental liability and risks inherent in oil and gas operations; uncertainties as to the availability and cost of financing and changes in capital markets; alternatives to and changing demand for petroleum products; and changes in legislation and the regulatory environment, including uncertainties with respect to the Kyoto Protocol. Furthermore, statements relating to "reserves" or "resources" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions that the resources and reserves described can be produced profitably in the future. The forward-looking statements contained in this press release are expressly qualified in their entirety by this cautionary declaration. These statements speak only as of the date of this press release. The Company does not intend and does not assume any obligation, to update these forward-looking statements to reflect new information, subsequent events or otherwise, except as required by law.

Winstar Resources Ltd. is a Calgary-based junior oil and gas Company, which explores for, develops, produces, and sells crude oil, natural gas liquids and natural gas in Tunisia, Hungary and Romania. Winstar's common shares trade on The Toronto Stock Exchange under the symbol WIX.

Winstar's audited financial statements and management discussion and analysis for the three and 12 month periods ended December 31, 2009 can be obtained at

SOURCE Winstar Resources Ltd.

For further information: For further information: Mr. David Monachello, President, Phone: (403) 513-4200, E-mail: Or Mr. Bradley Giblin, Chief Financial Officer, Phone: (403) 513-4207, E-mail: Or Mr. Charles de Mestral, Chief Executive Officer, Phone: Toll-free (Canada and USA) 1-800-875-1217 (Note: Mr. de Mestral is based in Europe, in a time zone eight hours ahead of Calgary time), E-mail:

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