-- Current Production at 10.0 Million Cubic Feet Per Day Net DENVER
and CALGARY, Alberta, Aug. 9 /PRNewswire-FirstCall/ -- Storm Cat
Energy Corporation (Amex: SCU; TSX: SME) today provided an
operations update and announced second quarter 2007 financial and
operating results. Storm Cat continued to build on its track record
of production growth in the second quarter of 2007. During the
quarter the Company drilled 18 wells bringing the total number of
wells drilled during the first half of 2007 to 39. Current net
production is 10.0 million cubic feet per day (MMcf/d) from
producing properties in Wyoming's Powder River Basin (PRB) and from
the Arkoma Basin in Arkansas (Fayetteville Shale). Total net sales
increased 12.6% quarter-to-quarter to 745.8 million cubic feet
(MMcf) during the second quarter 2007 from 662.6 MMcf in the first
quarter 2007. Exit rate production for the quarter increased 15.3%
to 9.8 Mmcf/d at June 30, 2007 from 8.5 Mmcf/d at March 31, 2007.
Year-over-year production increased 218.2% to 745.8 MMcf in the
second quarter 2007 from 234.4 MMcf in the second quarter 2006.
Operations Update (all figures in U.S. Dollars) Current net
production in the PRB is 9.8 MMcf/d, an increase of 15.3% from 8.5
MMcf/d at March 31, 2007. The Company drilled and completed 18
wells in the PRB during the second quarter of 2007 as compared to
20 in the first quarter of 2007. The Company reprioritized its
drilling schedule during the quarter to drill wells that have
longer de-water times to maximize sales volume at year end 2007 in
order to minimize the impact of weak gas prices in the Rockies
during the second and third quarters of 2007. Storm Cat has three
rigs running in the PRB and expects to drill approximately 87
additional wells during the remainder of 2007. On the Company's
Fayetteville Shale acreage the first of three 2007 budgeted Storm
Cat operated wells reached total depth of 4,724 feet on July 30,
2007 and production casing has been run in the wellbore. The
drilling rig is currently being moved to the second location and
drilling is expected to commence within the next two weeks.
Completion activities will begin as the third well in the 2007
program reaches total depth, which is expected to occur during late
third quarter 2007. The Company anticipates preliminary flow test
rates from these three Fayetteville wells to be available in late
2007. The Company owns an average working interest of 80% in the
three wells. In addition, the Company is in negotiations with third
parties to construct a sales pipeline and associated facilities.
Based on current discussions, the Company anticipates that the
pipeline will be in place and initial sales from the wells will
commence during late fourth quarter of 2007. The Company holds
interests in 16 non-operated Fayetteville Shale wells that have
current net production of 0.2 MMcf/d. In Elk Valley, located in
southeastern British Columbia, the Company has nine producing
wells, including five wells drilled in 2006, in the de-watering and
evaluation stage. The Company remains encouraged by observed water
and associated gas production rates and expects to make a
determination on next steps for the project at year end 2007. In
Alberta, the Company drilled one Horseshoe Canyon / Belly River
sand well during the first quarter of 2007. Results from this well
are pending additional production testing. The Company recently
drilled and ran casing on a conventional well in the Wetaskiwin
area of Alberta and anticipates completion activities and
production testing results in the next few weeks. Storm Cat Chief
Executive Officer, Joe Brooker, said, "I am pleased with the
results that Storm Cat was able to produce during the second
quarter. We have made progress in all aspects of our business plan
with the year end goal of not only increasing production and
reserves, but also shareholder value. The Company is at a key stage
of its development and we are focused on the execution of our
business plan." Storm Cat President and Chief Operating Officer
Keith Knapstad commented, "During the second quarter Storm Cat met
a number of aggressive operational goals. We continued to grow our
core Powder River Basin asset, drilling 18 wells and bringing
additional production online. We spudded our first Fayetteville
Shale well, where initial geological indications are encouraging.
Finally we continue to make measured progress on our Elk Valley
project and are anticipating a decision point at year end."
Financial Overview (all figures in U.S. Dollars) For the quarter
ended June 30, 2007 Storm Cat reported oil and gas sales revenue of
$3.7 million, a 129.4% increase over second quarter 2006 sales of
$1.6 million. Sales volumes increased to 745.8 MMcf for the second
quarter 2007 from 234.4 MMcf in the second quarter 2006, an
increase of 218.2%. Increased volumes are attributed primarily to
acquisitions and successful drilling. The Company's average sales
price for natural gas decreased 27.9% to $4.92 per thousand cubic
feet (Mcf) in the second quarter 2007 from $6.82 per Mcf in the
second quarter 2006. The Company reported a net loss of $4.6
million, or $0.06 per share, for the second quarter 2007, as
compared to a net loss of $1.2 million, or $0.02 per share, in the
same period in 2006. The net loss is primarily attributable to
higher than average general and administrative expenses relating to
a number of non-recurring items, including the closing of the
Series B Convertible Notes, registering the common shares
underlying both the Series A and Series B Convertible Notes with
the SEC, amendment to the JP Morgan senior credit facility and the
departure of the Company's former President and Chief Executive
Officer Scott Zimmerman. Gathering and transportation, lease
operating expenses and production taxes decreased to $2.22 per Mcf
in the second quarter of 2007 from $4.49 per Mcf in the second
quarter of 2006. Weighted average shares outstanding for the second
quarter 2007 increased to 81.0 million as compared to 66.5 million
in the second 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. The Company was not in compliance
with the debt covenant in its JP Morgan senior credit facility for
the second quarter due, principally, to the impact of abnormally
low gas prices in the Rocky Mountains on un-hedged production. JP
Morgan has waived the covenant for the second and third quarter and
is in negotiations with the Company to amend the credit agreement
covenants. Until such agreement is reached, the borrowing base
under its credit facility is $27.5 million. Storm Cat's fixed-price
natural gas hedges are summarized as follows (As of 6/30/07): 2007
- 1,227,600 MMbtu at average price $6.24 Colorado Interstate Gas
(CIG) 2008 - 3,149,200 MMbtu at average price $7.10 CIG 2009 -
2,365,500 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, "The second quarter showed improvement in
operating efficiency as evidenced by lower costs per Mcf for lease
operating and gathering and transportation expenses. General and
administrative expenses were unusually high due to a significant
number of one time items related to financing and senior management
changes. We fully expect to bring G&A back in line in the
ensuing quarters. Finally, our hedging program continues to provide
relief from the current abnormally high differential in the Rockies
which we expect to abate by year end with the completion of the
western leg of the Rockies Express Pipeline." 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 exploration, production and development of large unconventional
gas reserves from fractured shales, coal beds and tight sand
formations and, secondarily, from conventional formations. The
Company has producing properties in Wyoming's Powder River Basin,
and Arkansas' Arkoma Basin and exploration and development acreage
in Canada. 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." 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 a change in the use of
proceeds, 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 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) Selected Operating Data: Three
Months Ended June 30, 2007 2006 Net Sales Volume: Natural gas
(MMcf) 745.8 234.4 Oil and Gas Sales (In Thousands) Natural gas
$3,668 $1,599 Average Sales Prices: Natural gas (per Mcf) $4.92
$6.82 Additional Data (per Mcf): Gathering and transportation $0.53
$1.19 Lease operating expenses $1.31 $2.52 Ad valorem and property
taxes $0.38 $0.78 Depreciation, depletion, amortization and
accretion $2.52 $2.98 General and administrative, net of
capitalization $3.70 $2.03 Stock-based compensation $0.98 $2.91
CONSOLIDATED BALANCE SHEETS (Stated in U.S. Dollars and in
thousands, except per share amounts) June 30, December 31, 2007
2006 (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents
$1,015 $5,299 Accounts receivable: Joint interest billing 2,790
1,932 Revenue receivable 1,037 2,121 Fair value of derivative
instruments - current 2,403 2,670 Prepaid costs and other current
assets 2,148 1,445 Total Current Assets 9,393 13,467 PROPERTY AND
EQUIPMENT (Full Cost Method), at cost: Oil and gas properties:
Unproved properties, net of impairments 69,918 54,873 Proved
properties 55,526 46,446 Less accumulated depreciation, depletion,
amortization and accretion (8,051) (4,764) Oil and gas properties,
net 117,393 96,555 Fixed assets 1,117 1,057 Accumulated
depreciation (555) (408) Total fixed assets, net 562 649 Total
property and equipment, net 117,955 97,204 Restricted investments
526 511 Debt issuance costs 3,551 0 Fair value of derivative
instruments - long term 782 Total Non-Current Assets 4,077 1,293
Total Assets $131,425 $111,964 LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES: Accounts payable $759 $7,302 Revenue payable
1,193 2,063 Accrued and other liabilities 4,764 10,011 Flow-through
shares liability 15 1,233 Notes payable - current 0 7,500 Interest
payable 429 952 Total Current Liabilities 7,160 29,061 Asset
retirement obligation 1,721 1,871 Fair value of derivative
instruments - long term 313 0 Bank debt - long term 13,219 19,350
Series A & B convertible notes 50,195 0 Total Non-Current
Liabilities 65,448 21,221 Total Liabilities 72,608 50,282
Commitments and contingencies - - STOCKHOLDERS' EQUITY Common
Shares, without par value, unlimited authorized, issued and
outstanding: 80,993,570 at June 30, 2007 and 80,429,820 at December
31, 2006 69,759 69,518 Contributed surplus 6,137 4,910 Accumulated
other comprehensive income 5,483 3,877 Accumulated deficit (22,562)
(16,623) Total Stockholders' Equity 58,817 61,682 Total Liabilities
and Stockholders' Equity $131,425 $111,964 CONSOLIDATED STATEMENTS
OF OPERATIONS (UNAUDITED) (Stated in U.S. Dollars and in thousands,
except per share amounts) Three Months Ended Six Months Ended June
30, June 30, 2007 2006 2007 2006 NATURAL GAS REVENUE $3,668 $1,599
$7,580 $2,878 OPERATING COSTS: Gathering and transportation 398 280
958 563 Operating expenses 1,256 774 2,159 1,350 General and
administrative 3,491 1,159 6,152 2,577 Depreciation, depletion,
amortization and accretion 1,879 698 3,513 1,201 Total Operating
Costs 7,024 2,911 12,782 5,691 Operating loss (3,356) (1,312)
(5,202) (2,813) OTHER EXPENSE (INCOME): Interest expense 1,519 0
2,148 0 Interest and other miscellaneous income (101) (139) (133)
(334) Loss on foreign exchange 0 11 0 11 Total Other Expense
(Income) 1,418 (128) 2,015 (323) Net loss before taxes (4,774)
(1,184) (7,217) (2,490) Recovery of future income tax asset from
flow-through shares (182) 0 (1,278) 0 NET LOSS $(4,592) $(1,184)
$(5,939) $(2,490) Basic and diluted loss per share $(0.06) $(0.02)
$(0.07) $(0.04) Weighted average number of shares outstanding
81,045,122 66,504,095 80,816,505 66,145,091 CONSOLIDATED STATEMENT
OF CASH FLOWS (UNAUDITED) (Stated in U.S. Dollars and in thousands,
except per share amounts) Six Months Ended June 30, 2007 2006 Cash
flows from operating activities: Net loss $(5,939) $(2,490)
Adjustments to reconcile net loss to net cash used in operating
activities: Recovery of future income tax asset from flow-through
shares (1,252) - Stock-based compensation 1,161 1,441 Depreciation,
depletion, amortization and accretion 3,521 1,201 Gain on
disposition of properties - 185 Changes in operating assets and
liabilities: Accounts receivable (761) (144) Prepaid costs and
other current assets 381 204 Accounts payable (2,674) (1,342)
Accrued and other current liabilities (1,461) 2,719 Net cash
provided by (used in) operating activities (7,024) 1,774 Cash flows
from investing activities: Restricted investments (8) (258) Capital
expenditures - oil and gas properties (32,386) (21,616) Other
capital expenditures (23) (118) Net cash used in investing
activities (32,417) (21,992) Cash flows from financing activities:
Issuance of common shares for cash 914 2,093 Debt issuance costs
(3,556) - Repayment of bank debt (13,278) - Proceeds from Series A
& B Convertible Notes 50,194 - Net cash provided by financing
activities 34,274 2,093 Effect of exchange rate changes on cash 883
958 Net decrease in cash and cash equivalents (4,284) (17,167) Cash
and cash equivalents at beginning of period 5,299 29,502 Cash and
cash equivalents at end of period $1,015 $12,335 Supplemental
disclosure of noncash investing and financing activities: Cash paid
for interest $2,449 $- 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