* Current Production at 9.6 Million Cubic Feet Per Day Net DENVER
and CALGARY, Alberta, May 10 /PRNewswire-FirstCall/ -- Storm Cat
Energy Corporation (Amex: SCU; TSX: SME) today provided an
operations update and announced first quarter 2007 financial
results. Operations Update (all figures in U.S. Dollars) Current
net production in the Powder River Basin (PRB) is 9.6 million cubic
feet per day (MMcf/d) an increase of 20% from 8.0 MMcf/d at year
end 2006. The Company drilled and completed 20 wells in the PRB
during the first quarter of 2007. Storm Cat currently has an
average of four rigs running in the PRB and expects to drill
approximately 130 additional wells during the remainder of 2007.
The total capital budget for the PRB for 2007 is $20.0 million.
With respect to the Company's Fayetteville Shale acreage, located
in the Arkoma Basin in Arkansas, preparations are underway to begin
drilling the first of Storm Cat's operated wells within the next 75
days. The Company has staked its initial well locations and is
completing final negotiations with drilling and pipeline
contractors. During the first quarter 2007, the Company added
approximately 2,320 gross and net acres in the Fayetteville Shale
which are contiguous and interspersed among the Company's current
acreage. This brings Storm Cat's current acreage position to 21,200
gross acres and 16,670 net acres. The Company expects to spend
approximately $10.0 million in the Fayetteville Shale during 2007
to drill and complete four to six Company wells. In Elk Valley the
Company currently has 10 wells on production and de-watering. Wells
completed in 2006 are maintaining strong and sustained water rates
and have begun to see increases in associated gas rates. The early
performance of these wells has exhibited higher production rates
than previous well completions performed to date. The Company
expects to be in a position to report determinative results from
these wells in the fourth quarter of 2007. The Company drilled one
Horseshoe Canyon / Belly River sand well during the first quarter
of 2007 in Alberta. Completion and production test results from
this well are pending. During 2007 the Company intends to target
conventional prospects in Alberta that also present unconventional
opportunities. Storm Cat expects to spend $10.0 million in Canada
this year. Acting Storm Cat President and CEO, Keith J. Knapstad,
said: "The first quarter has set Storm Cat on a path to success for
the full year. We intend to continue to grow our assets, execute in
all operating areas and expand credibility with the broader
investment community. We believe that year-end results will
demonstrate increased production, cash flows and reserves. Two
projects, Fayetteville and Elk Valley, are poised to have
meaningful impacts on the Company in 2007. Initial well locations
on our Fayetteville Shale acreage are staked, and we expect to spud
our first operated well within the next 75 days. The Elk Valley
pilot wells drilled in 2006 are performing as expected and are
maintaining their de-watering progression. We are seeing increases
in associated gas rates in these wells and remain on track to
provide results and next steps during the fourth quarter. These
upside projects are joined by our predictable and increasing cash
flow from the Powder River Basin. We are optimistic that our fully
funded 2007 capital program coupled with success in our operating
areas will increase net asset value to Storm Cat's shareholders."
Financial Overview (all figures in U.S. Dollars) For the quarter
ended March 31, 2007 Storm Cat reported oil and gas sales revenue
of $3.9 million, a 206% increase over first quarter 2006 sales of
$1.3 million. Sales volumes increased to 665.5 million cubic feet
(MMcf) for the first quarter 2007 from 225.4 MMcf in the first
quarter 2006, an increase of 195%. Increased volumes are attributed
primarily to acquisitions and successful drilling over the past
year. The Company's average sales price for natural gas increased
3.6% to $5.88 per thousand cubic feet (Mcf) in the first quarter
2007 from $5.67 per Mcf in the first quarter 2006. The Company
reported a net loss of $1.4 million, or $0.02 per share, for the
first quarter 2007, as compared to a net loss of $1.3 million, or
$0.02 per share, in the same period in 2006. The net loss includes
higher than average legal and public filing expenses relating to
the Extraordinary General Meeting of shareholders required to close
our Series B Convertible Notes, the remaining amortization of
expenses relating to the payoff of the $7.5 million bridge loan
from JP Morgan, and the discontinuation of capitalizing internal
costs related to project development. The Company's net loss for
the first quarter 2007 also reflected a tax benefit of $1.1 million
related to the Canadian flow-through shares issued in September of
2006. Gathering and transportation, lease operating expenses and
production taxes decreased to $2.19 per Mcf in the first quarter of
2007 from $3.82 per Mcf in the first quarter of 2006. Weighted
average shares outstanding for the first quarter 2007 increased to
80.5 million as compared to 66.0 million in the first quarter 2006.
The increase in average shares outstanding is attributed to the
private placement the Company completed in Canada in September 2006
as well as the exercise of outstanding warrants and options. Storm
Cat's fixed-price natural gas hedges are summarized as follows:
2007 remaining -- 1,764,500 MMBtu at average price $6.30 Colorado
Interstate Gas (CIG) 2008 -- 3,149,200 MMBtu at average price $7.10
CIG 2009 -- 2,365,000 MMBtu at average price $7.33 CIG 2010 through
April -- 557,000 MMBtu at average price $7.75 CIG Chief Financial
Officer Paul Wiesner commented "Positive cash flow continues to
grow as a result of the ongoing development in the PRB. We have
protected our cash flow by hedging 80% of our year-end 2006 proved
producing production through April of 2010. Our hedging program is
providing relief from the current abnormally high differential in
the Rockies due to pipeline capacity. Our projected 2007 cash flow
together with the closing of the Series A and B Convertible Notes
and the negotiated increase in the Company's borrowing base
provides Storm Cat the capital to fully fund its 2007 $40.0 million
CAPEX budget." Financial and operations tables accompany this
release. Please reference the Company's filing on Form 10-Q with
the Securities and Exchange Commission and with Canadian securities
regulators on SEDAR for important notes to the financial
statements. About Storm Cat Energy Storm Cat Energy is an
independent oil and gas company focused on the pursuit, exploration
and development of large unconventional gas reserves from fractured
shales, coal beds and tight sand formations. The Company has
producing properties in Wyoming's Powder River Basin, and
exploitation and development acreage in Canada, Arkansas and
Alaska. The Company's shares trade on the American Stock Exchange
under the symbol "SCU" and in Canada on the Toronto Stock Exchange
under the symbol "SME." Company Contact: William Kent Director,
Investor Relations Phone: 303-991-5070
http://www.stormcatenergy.com/ Forward-looking Statements This
press release contains certain "forward-looking statements," as
defined in the United States Private Securities Litigation Reform
Act of 1995, and within the meaning of Canadian securities
legislation, relating to the proposed use of proceeds.
Forward-looking statements are statements that are not historical
facts; they are generally, but not always, identified by the words
"expects," "plans," "anticipates," "believes," "intends,"
"estimates," "projects," "aims," "potential," "goal," "objective,"
"prospective," and similar expressions, or that events or
conditions "will," "would," "may," "can," "could" or "should"
occur. Forward-looking statements are based on the beliefs,
estimates and opinions of Storm Cat's management on the date the
statements are made and they involve a number of risks and
uncertainties. Consequently, there can be no assurances that such
statements will prove to be accurate and actual results and future
events could differ materially from those anticipated in such
statements. Storm Cat undertakes no obligation to update these
forward-looking statements if management's beliefs, estimates or
opinions, or other factors, should change. Factors that could cause
future results to differ materially from those anticipated in these
forward-looking statements include, but are not limited to the
volatility of natural gas prices, the possibility that exploration
efforts will not yield economically recoverable quantities of gas,
accidents and other risks associated with gas exploration and
development operations, the risk that the Company will encounter
unanticipated geological factors, the Company's need for and
ability to obtain additional financing, the possibility that the
Company may not be able to secure permitting and other governmental
clearances necessary to carry out the Company's exploration and
development plans, and the other risk factors discussed in greater
detail in the Company's various filings on SEDAR
(http://www.sedar.com/) with Canadian securities regulators and its
filings with the U.S. Securities and Exchange Commission, including
the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2006. NO STOCK EXCHANGE HAS REVIEWED OR ACCEPTS
RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS NEWS RELEASE.
SELECT OPERATING DATA (UNAUDITED) Three Months Ended Selected
Operating Data: March 31, 2007 2006 Net Sales Volume: Natural gas
(MMcf) 665.5 225.4 Oil and Gas Sales (In Thousands) Natural gas
$3,912 $1,279 Average Sales Prices: Natural gas (per Mcf) $5.88
$5.67 Additional Data (per Mcf): Gathering and transportation $0.84
$1.45 Lease operating expenses $0.86 $1.51 Ad valorem and property
taxes $0.49 $0.86 Depreciation, depletion and amortization $2.45
$2.17 General and administrative, net of capitalization $3.33 $3.70
Stock-based compensation $0.67 $3.40 CONSOLIDATED BALANCE SHEETS
(Stated in U.S. Dollars and in thousands, except per share amounts)
March 31, December 31, 2007 2006 (Unaudited) ASSETS CURRENT ASSETS:
Cash and cash equivalents $6,732 $5,299 Accounts receivable: Joint
interest billing 850 1,932 Revenue receivable 1,765 2,121 Fair
value of derivative instruments - current 1,932 2,670 Subscription
receivable on Series B convertible notes 17,485 -- Prepaid costs
and other current assets 1,686 1,445 Total Current Assets 30,450
13,467 PROPERTY AND EQUIPMENT: Oil and gas properties: Unproved
properties, net of impairments 57,927 54,873 Proved properties
54,499 46,446 Less accumulated depreciation, depletion, and
amortization (6,262) (4,764) Oil and gas properties, net 106,164
96,555 Fixed assets 1,072 1,057 Accumulated depreciation (484)
(408) Total other property, net 588 649 Total property and
equipment, net 106,752 97,204 Restricted investments 511 511 Debt
issuance costs 1,306 -- Fair value of derivative instruments - long
term -- 782 1,817 1,293 Total Assets $139,019 $111,964 LIABILITIES
AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $36
$7,302 Revenue payable 1,584 2,063 Accrued and other liabilities
5,781 10,011 Flow-through shares liability 147 1,233 Notes payable
- current -- 7,500 Interest payable 446 952 Total Current
Liabilities 7,994 29,061 Asset retirement obligation 1,977 1,871
Fair value of derivative instruments - long term 73 -- Bank debt -
long term 19,220 19,350 Series A & B convertible notes 50,195
-- 71,465 21,221 Total Liabilities 79,459 50,282 Commitments and
Contingencies -- -- STOCKHOLDERS' EQUITY Common Shares, without par
value, unlimited authorized, issued and outstanding: 80,939,820 at
March 31, 2007 and 80,429,820 at December 31, 2006 69,695 69,518
Contributed surplus 5,240 4,910 Accumulated other comprehensive
income 2,598 3,877 Accumulated deficit (17,973) (16,623) Total
Stockholders' Equity 59,560 61,682 Total Liabilities and
Stockholders' Equity $139,019 $111,964 CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED) (Stated in U.S. Dollars and in thousands,
except per share amounts) Three Months Ended March 31, 2007 2006
OPERATING REVENUES: Oil and gas revenue $3,912 $1,279 OPERATING
EXPENSES: Operating costs: Gathering & transportation 561 326
Operating expenses 903 533 General & administrative expenses
2,662 1,602 Depreciation, depletion, amortization and accretion
1,634 503 Other -- (185) Total operating expenses 5,760 2,779
Operating loss (1,848) (1,500) OTHER EXPENSE (INCOME): Interest
expense 629 6 Interest and other miscellaneous income (32) (201)
Total other expense (income) 597 (195) Net loss before taxes
(2,445) (1,305) Recovery of future income tax asset from
flow-through shares (1,095) -- NET LOSS $(1,350) $(1,305) Basic and
diluted loss per share ($.02) ($.02) Weighted average number of
shares outstanding 80,498,487 66,013,392 CONSOLIDATED STATEMENT OF
CASH FLOWS (UNAUDITED) (Stated in U.S. Dollars and in thousands,
except per share amounts) Three Months Ended March 31, 2007 2006
Cash flows from operating activities: Net Loss $(1,350) $(1,305)
Adjustments to reconcile net loss to net cash used in operating
activities: Recovery of future tax asset (1,090) -- Stock-based
compensation 454 758 Depreciation, depletion and amortization 1,574
503 Asset retirement obligation 103 -- Gain on disposition of
properties -- 185 Changes in operating assets and liabilities:
Accounts receivable 1,437 (552) Prepaid costs and other current
assets (1,538) (148) Accounts payable (456) (2,296) Accrued and
other current liabilities (1,736) (3,342) Net cash used in
operating activities (2,602) (6,197) Cash flows from investing
activities: Restricted investments -- (3) Capital expenditures -
oil and gas properties (21,446) (2,651) Fair value of derivatives
378 -- Proceeds from sale -- (1,000) Other capital expenditures
(11) (78) Net cash provided by (used in) investing activities
(21,079) (3,732) Cash flows from financing activities: Issuance of
common shares for cash 811 1,669 Proceeds from bank debt (7,630) --
Proceeds from Series A & B convertible notes 32,950 -- Net cash
provided by financing activities 26,131 1,669 Effect of exchange
rate changes on cash (1,017) 319 Net increase (decrease) in cash
and cash equivalents 1,433 (7,941) Cash and cash equivalents and
beginning of period 5,299 29,502 Cash and cash equivalents at end
of period $6,732 $21,561 Supplemental disclosure of noncash
investing and financing activities: Cash paid for interest $792 $--
DATASOURCE: Storm Cat Energy Corporation CONTACT: William Kent,
Director, Investor Relations of Storm Cat Energy Corporation,
+1-303-991-5070 Web site: http://www.stormcatenergy.com/
Copyright
