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Wrangler West Reports 2011 First Quarter Operating and Financial Results

^{Published on 2011-06-16 16:10:59 - Market Wire}
 

CALGARY, June 16, 2011 /CNW/ - Wrangler West Energy Corp. ("Wrangler West" or the "Company") (TSXV: WX) announces today's filing on SEDAR ([ www.sedar.com ]) of the Company's unaudited Financial Statements and related Management's Discussion and Analysis ("MD&A") for the three months ended March 31, 2011 with comparative data for the three months ended March 31, 2010 and the year ended December 31, 2010. Effective January 1, 2011, Wrangler West has prepared interim financial statements and comparative information according to International Financial Reporting Standards. Previously, the Company prepared financial statements according to Canadian generally accepted accounting principles. All documents may be viewed at [ www.sedar.com ].

Wrangler West converts petroleum and natural gas reserves and volumes to a common unit of measure on a basis of six thousand cubic feet ("mcf") of natural gas equals one barrel ("bbl") of oil.  Disclosure using barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. The basis for the boe conversion ratio of 6 mcf equals one bbl is an energy equivalency conversion method, primarily applicable at the burner tip.  This conversion rate does not represent a value equivalency at the wellhead. The Company calculates boe per day based on total production for the period divided by the number of days during the period.

Wrangler West Energy Corp. ("Wrangler West" or the "Company") presents operating and financial results for 2011 first quarter.  Wrangler West is a Canadian junior oil and natural gas exploration company focused on generating shareholder value by exploring for, developing and producing natural gas and crude oil from properties located in the Province of Alberta.

2011 First Quarter Highlights

• $3.4 million in revenue
• $1.1 million in funds flow from operations
• $0.9 million in capital expenditures
• potential asset disposition of Grand Forks oil pool

Review of First Quarter
For the three months ended March 31, 2011, Wrangler West produced an average of 1,031 boe per day, higher by seven percent when compared to the same period one year ago.  However, our field netback fell significantly as Wrangler West experienced a 31 percent decrease in the natural gas price received.  A six percent increase in crude oil price slightly offset the 2011 first quarter lower netback.  Operating costs increased 14 percent on a per boe basis, somewhat higher than expected as we battled to keep production moving through an unusually cold winter.  Funds flow from operations, at $1.1 million, declined year-over-year and compared to 2010 fourth quarter which had funds flow of $1.4 million.

Capital Expenditures
Wrangler West invested $0.9 million in capital expenditures during 2011 first quarter.  The Company acquired land and conducted multiple seismic programs prior to break-up.  Seismic and land acquisitions accounted for 72 percent of 2011 first quarter capital expenditures.  Wrangler West will continue to build quality, seismically-defined drilling targets throughout 2011.  Our capital expenditures forecast is $8.0 million for the current fiscal year.

Commodity Prices
During 2011 first quarter, natural gas prices demonstrated unexpected seasonal weakness.  Although a long, cold winter persisted throughout most of North America, natural gas prices remained weak throughout the heating season, a period when, typically, natural gas experiences some strength as storage volumes are depleted.

During the winter of 2010-2011, natural gas storage volumes were slightly below the five-year average and injection into storage was below expectations.  It is likely the lower injection rate is a result of the drilling rig fleet being kept busy pursuing crude oil exploration and development opportunities.  Drilling for natural gas appears to have dropped significantly as much of the drilling to maintain land assets in the United States was completed.

The natural gas business remains volatile.  In the near term, we continue to expect natural gas prices will remain somewhat range-bound between $4.00 and $5.00.  North American natural gas markets are showing some signs of life as we move into the summer.  A few well-respected analysts are suggesting the bottom may have occurred and are indicating positive price projections moving forward.

Crude oil prices continue to be robust with the WTI benchmark hovering around $100 per bbl.  World events influence the premium in crude oil price although ongoing consumption is relatively stable.  As consumption in Asia and other developing economies improves demand, prices can be expected to remain strong.  Economic recovery throughout North America is still tentative and high energy costs are deemed a threat to any potential recovery.  The energy producing countries will carefully monitor supply and demand to maximize crude oil prices while avoiding the potential destruction of purchasing power.  Their objective is to ensure production of adequate volumes to sustain a healthy balance in crude oil supply and demand.  This scenario has played out many times in recent history as global issues impact world energy markets.

Outlook for 2011
Once again, Wrangler West is focused on finding economic crude oil and natural gas within the context of the commodity prices we receive.  As the crude oil market is quite strong, we are investigating the potential asset disposition of our Grand Forks oil producing properties.  If we complete this process, the proceeds would be applied to bank indebtedness.  We expect to invest most of our 2011 capital expenditures budget of $8.0 million in crude oil exploration activity.  We have a growing inventory of opportunities that are approaching the drill-ready stage and we expect to accelerate activity in the latter half of 2011.

Reader Advisory
This news release contains forward-looking statements about potential new crude oil and natural gas drilling, production operations, sources and use of capital, potential asset purchases or dispositions and expected future operations. Although Wrangler West believes the expectations reflected in these forward-looking statements are reasonable, undue reliance should not be placed on them because the Company can give no assurance they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. A more detailed discussion of forward-looking statements is provided in Wrangler West's Management's Discussion and Analysis for the three months ended March 31, 2011 which is filed on SEDAR ([ www.sedar.com ]).  The forward-looking statements contained in this news release are made as of the date hereof and Wrangler West undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Corporate Profile
Wrangler West is a Canadian junior crude oil and natural gas producer which explores for and develops crude oil and natural gas production assets in the Province of Alberta. Since inception, our mandate has been to use the drill bit to add shareholder value. Disciplined management of our operations and production portfolio creates sufficient funds flow to support ongoing operations. Wrangler West intends to continue to reinvest funds flow from operations and other available capital to protect current and add future value.  Wrangler West trades on the TSX Venture Exchange under the symbol "WX".

Additional Information
Wrangler West files additional shareholder and public information on SEDAR accessible at [ www.sedar.com ]. This includes the Statement of Reserves Data and Other Oil and Gas Information Form NI 51-101 F1, F2 and F3 effective December 31, 2010.  Alternatively, to obtain copies of published corporate information, contact Crista L. Ferguson, Chief Financial Officer, Wrangler West Energy Corp., 1950, 444 Fifth Avenue SW, Calgary, Alberta, Canada  T2P 2T8 (telephone +1 403 290 6800 or e-mail [ info@wranglerwest.ca ]).

The TSX Venture Exchange has not reviewed, and does not accept responsibility for, the adequacy or accuracy of this news release.