/NOT FOR DISTRIBUTION TO UNITED STATES NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/
CALGARY, Aug. 14 /CNW/ - Upper Lake Oil and Gas Ltd. ("Upper Lake" or the "Company") (TSX-UP) today announced its financial and operating results for the second quarter and first half of 2008. The Company's financial statements and management's discussion and analysis for the three and six months ended June 30, 2008 will be available on SEDAR at www.sedar.com and on Upper Lake's website at www.upperlake.ca.
Financial and operating highlights for 2008 do not include comparisons to 2007 because Upper Lake did not commence business until October 12, 2007.
Selected financial and operating information
Production Three months ended Six months ended
June 30, 2008 June 30, 2008
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Natural gas 3,455 mcf/day 3,624 mcf/day
Oil and natural gas liquids 309 bbls/day 325 bbls/day
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Total 885 boe/day 929 boe/day
Financial Three months ended Six months ended
June 30, 2008 June 30, 2008
($000s) $/unit ($000s) $/unit
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Revenue: oil and NGLs 2,744 97.46/bbl 5,095 86.04/bbl
Revenue: natural gas 3,382 10.76/mcf 6,233 9.45/mcf
Royalties: oil and liquids (700) 24.86/bbl (1,290) 21.78/bbl
Royalties: natural gas (845) 2.69/mcf (1,509) 2.29/mcf
Operating expenses (793) 9.85/boe (1,613) 9.54/boe
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Field netback(1) 3,788 47.01/boe 6,916 40.88/boe
General and administrative expenses (492) 6.11/boe (1,016) 6.00/boe
Interest expense (61) 0.76/boe (92) 0.54/boe
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Funds flow from operations(1) 3,235 39.61/boe 5,808 34.08/boe
Funds flow per diluted share(1) 0.12/share 0.22/share
Cash flow from operating activities 3,407 42.29/boe 6,378 37.71/boe
Net earnings 429 5.32/boe 241 1.43/boe
1. "Field netback" and "funds flow from operations" are non-GAAP
financial measures. Further information is provided below under the
heading "Non-GAAP Financial Measures."
Proposed Business Combination
On July 3, 2008, Upper Lake announced a proposed business combination with Monterey Exploration Ltd ("Monterey"). The arrangement agreement entered into between the Company and Monterey contemplates that the business combination will be undertaken by way of a plan of arrangement (the "Arrangement") under Section 193 of the Alberta Business Corporations Act and that Upper Lake shareholders will receive 0.28 of a Monterey share for each Upper Lake share held upon completion of the Arrangement.
A Management Information Circular detailing the Arrangement is available on SEDAR (www.sedar.com) and on the Upper Lake website (www.upperlake.ca). A special meeting of the shareholders and optionholders of Upper Lake (called to permit securityholders to consider and to vote on the Arrangement) has been scheduled for Friday, August 29, 2008.
Upper Lake is a Calgary-based corporation engaged in the exploration, development and production of oil and natural gas in western Canada. Additional information concerning Upper Lake is available on its website at www.upperlake.ca or on SEDAR at www.sedar.com.
Non-GAAP Financial Measures
This news release includes information concerning "field netback" and "funds flow from operations," which are non-GAAP financial measures that do not have any standardized meaning prescribed by Canadian Generally Accepted Accounting Principles ("GAAP") and are therefore unlikely to be comparable to similar measures presented by other issuers. Management and the directors of Upper Lake believe that "funds flow from operations" and "field netback" provide useful information to investors and management since they are an indicator of the Company's ability to fund future capital expenditures, which drives growth, and repay debt. Funds flow from continuing operations and funds flow from operations are calculated before changes in non-cash working capital.
See the "Funds Flow" section of Upper Lake's Management's Discussion and Analysis (MD&A) for the period ended June 30, 2008 for a reconciliation of funds flow from operations (non-GAAP) to cash flow from operating activities (GAAP). See the "Netback Analysis" section of the same MD&A for a reconciliation of field netback (non-GAAP) to funds flow from operations (non-GAAP) to net earnings (GAAP). Other financial data have been prepared in accordance with GAAP.
Boe
All calculations converting natural gas to a crude oil equivalent have been made using a ratio of six mcf of natural gas to one barrel of crude oil equivalent. Boe's may be misleading, particularly if used in isolation. A boe conversion ratio of six mcf of natural gas to one barrel of crude oil equivalent is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.