CALGARY, Aug. 14 /PRNewswire-FirstCall/ -- GEOCAN Energy Inc. (TSX: GCA) reports that results from its second quarter, the three-months ended June 30, 2006, are the best recorded in its history. As a result, several record-breaking results are reflected in the company's six-month financial report. Compared to the six months ending June 30, 2005, cash flow increased 209 percent to $10,285,268 (2005 - $3,330,457), and field netbacks improved 111 percent to $22.57 per boe (2005 - $10.68). Production averaged 2,918 boepd in the six-month period, an increase of 51 percent over 2005, the result of drilling success and the acquisition of Assure Energy, Inc. acquisition in September 2005. The six-month average production mix was weighted 37 percent to natural gas and 63 percent to oil.
Q2/2006 Highlights
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Six months Six months Percent
ended Jun 30, ended Jun 30, change
2006 2005
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FINANCIAL
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Gross revenue $ 23,780,264 $ 11,264,916 +111
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Royalty (net of ARTC) $ 3,751,345 $ 1,671,469 +124
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Operating costs $ 6,629,097 $ 4,240,927 +56
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Cash flow from operations $ 10,285,268 $ 3,330,457 +209
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Cash flow per share - basic $ 0.19 $ 0.14 +33
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- diluted $ 0.19 $ 0.14 +33
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After tax earnings (loss) $ 1,062,869 $ (144,427)
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Per share (basic and diluted) $ 0.02 $ (0.01)
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Capital expenditures $ 14,950,923 $ 10,039,854 +49
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PRODUCTION & NETBACKS
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Total production (boe) 528,110 354,635 +49
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Average daily production (boepd) 2,918 1,930 +51
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Exit daily production (boepd) 3,068 1,935 +59
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Gross sales revenue/boe $ 43.78 $ 31.34 +40
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Loss on financial instrument/boe $ - $ (2.96)
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Gross revenue net of realized
loss/boe $ 43.78 $ 28.38 +54
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Production expenses/boe $ 12.55 $ 11.96 +5
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Netbacks from field
operations/boe $ 22.57 $ 10.68 +111
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On a quarterly basis, gross revenues in Q2/2006 were up 126 percent to $12,238,512 from $5,423,804 in Q2/2005. Cash flow for Q2/2006 was up 223 percent to $5,534,317 from $1,713,015 in Q2/2005.
During the second quarter, GEOCAN continued to increase its land position in British Columbia with the acquisition of two sections of 100 percent mineral rights, which brought the company's undeveloped land position to 108,232 net acres.
On May 18, 2006, GEOCAN announced its intention to acquire Columbus Exploration Ltd.; this transaction closed on July 10, 2006. This acquisition is in keeping with GEOCAN's strategy to achieve a more balanced commodity mix in order to better position the company to weather commodity price swings. Product mix during the first half of 2006 was 37 percent natural gas, 22 percent light/medium oil and 41 percent heavy oil, a substantial shift from the same period in 2005, which recorded 13 percent gas, 5 percent light/medium oil, and 82 percent heavy oil.
While spring breakup and a wet June impacted drilling operations somewhat, the company now has full access to drilling rigs and field services. July was GEOCAN's most active drilling month to date, with rigs drilling in both Alberta and Saskatchewan. To date in 2006, GEOCAN has drilled 10 gross (7.25 net) wells, averaging an 80 percent success rate. The company anticipates that the third quarter will be the most active quarter for drilling in its history.
GEOCAN continues to focus on exploration and development opportunities in three core areas: northeast BC (natural gas and light oil); west central Alberta (natural gas, light and medium oil); and Lloydminster (medium/heavy oil and natural gas). The Company's share capital at June 30, 2006 was $67,943,701. GEOCAN had 56,130,122 basic and 57,121,280 diluted common shares issued and outstanding at the end of Q2/2006.
Where amounts are expressed on a barrel of oil equivalent ("boe") basis, natural gas volumes have been converted to oil equivalence at six thousand cubic feet per barrel. The term boes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcg: 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 wellhead.
FORWARD-LOOKING STATEMENTS
This news release may contain forward-looking statements including expectations of future production, cash flow and earnings. This guidance is based on current expectations that involve a number of risks and uncertainties, which could cause actual results to differ from those anticipated. These risks include, but are not limited to: the risks associated with the oil and gas industry (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price, price and exchange rate fluctuation and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. GEOCAN's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur or, if any of them do, to what benefit GEOCAN will derive therefrom. GEOCAN disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
