Storm Cat Announces Third Quarter 2006 Results.* Gas Production Increases 82% * Revenue Increases 76% * 21 Wells Drilled in PRB PRB Pharmaceutical Resources Branch during the Quarter * 5 Wells Drilled in Elk Valley Elk Valley is a valley in southeastern British Columbia that runs via the basin of the Elk River from the southeastern Alberta border near Kananaskis to the Rocky Mountain Trench. during the Quarter DENVER & CALGARY, Alberta -- Storm Cat Energy Corporation (AMEX AMEX See: American Stock Exchange :SCU SCU Santa Clara University SCU Southern Cross University (New South Wales, Australia) SCU Southern California University of Health Sciences (Whittier, California) SCU Serious Crimes Unit SCU Special Care Unit , TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension : SME (1) (Small and Medium-sized Enterprise) See SMB. (2) (Subject Matter Expert) An individual who is well-versed in the policies and procedures of a particular department or division. ) today announced third quarter 2006 financial and operating results. Financial Overview (all figures in U.S. Dollars) For the three months ended September 30, 2006 Storm Cat reported oil and gas revenues of $2.2 million, a 76 percent increase over the comparable quarter last year. The increase in revenues was primarily due to an 82 percent increase in production offset by a 3.6 percent decrease in the average price for natural gas per thousand cubic feet of natural gas (Mcf). The Company reported a net loss of $3.8 million, or ($0.06) per share, in the third quarter of 2006 as compared to a net loss of $0.4 million, or ($0.01) per share, in the third quarter of 2005. The net loss in the quarter reflected a $1.9 million impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. expense related to the Company's Moose Mountain Moose Mountain refers to:
Weighted average shares outstanding for the third quarter of 2006 increased to 68,581,241 as compared to 46,832,470 in the third quarter of 2005. The increase in average shares outstanding is attributed to three private placements, two in Canada using the flow-through share structure, that were undertaken in the past 12 months, as well as the exercise of outstanding warrants and options. For the nine months ended September 30, 2006, Storm Cat reported oil and gas revenues of $5.1 million, a 77 percent increase over the first nine months of 2005. The Company reported a net loss of $6.2 million, or ($0.09) per share, for the nine months ended September 30, 2006 as compared to a net loss of $3.9 million, or ($0.09) per share, in the first nine months of 2005. J. Scott Zimmerman, President and Chief Executive Officer commented, "As we continue to execute on our growth strategy - growth thru the drill bit combined with selective acquisitions - we are pleased to deliver record production. Our production volumes increased by 82% this quarter and should continue to increase as we successfully drill and complete wells in the fourth quarter of 2006. We are positioned to capitalize in 2007 on the momentum we created in 2006. The 2007 capital expenditure program will feature a diversified portfolio of drilling locations. Through drilling and acquisitions we have identified over 800 potential drilling locations across our properties." Operating Overview Production Since October 2004, Storm Cat has acquired large and highly prospective acreage all targeting unconventional gas. Through increased drilling in the Powder River Basin The Powder River Basin is a region in southeast Montana and northeast Wyoming about 120 miles east to west and 200 miles north to south known for its coal deposits. It is both a topographic drainage and geologic structural basin. (PRB) net production, increased 82% to 371.5 million cubic feet (MMcf) in the third quarter of 2006 from 203.8 MMcf in the comparable period in the prior year. For the third quarter of 2006, the Company reported average daily net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight production of 4,128 thousand cubic feet per day (Mcf/d) as compared to 2,670 Mcf/d for the second quarter of 2006 and 2,264 Mcf/d in third quarter 2005. Net production from the PRB is currently averaging 7,050 Mcf/d net. Total gas production from Elk Valley, where the Company has five wells on production, is currently averaging 250 Mcf/d. Production had been as high as 400 Mcf/d. Pricing The average realized sales price of natural gas was $5.87 per Mcf in third quarter 2006 down from $6.09 per Mcf in the same period of the prior year. Storm Cat's fixed-price natural gas hedges are summarized as follows: Fixed-priced Financial Hedges * 1,500 MMBtu/day * U.S.$7.15 Colorado Interstate Gas Colorado Interstate Gas is a major producer of natural gas, connected to major supply basins in the Rocky Mountains and production areas in the Texas Panhandle, western Oklahoma, western Kansas, and Wyoming. Originally an independent company, CIG is now a subsidiary of El Paso Corp. (CIG CIG Ceiling (height above ground level to base of clouds) CIG Conference Intergouvernementale (French: Intergovermental Conference) CIG Conservation Innovation Grants (USDA NRCS) ) * August 2006 through July 2009 * 2,000 MMBtu/day * U.S.$7.27 CIG * October 2006 through September 2009 Fixed-price Physical Hedges * 333 MMBtu/day, 250 MMBtu/day net to Storm Cat * U.S.$8.31 CIG * November 2005 through October 2006 * 1,000 MMBtu/day, 750 MMBtu/day net to Storm Cat * U.S.$9.10 CIG, April 2006 through October 2006 Drilling Activities The Company to date has drilled and completed 66 wells in 2006. During the third quarter of 2006, 21 wells were spud in the PRB. To date the Company has spud 56 wells in the PRB and plans to drill an additional 35 wells in the Basin before year end. Twenty five of these wells are anticipated to be drilled on recently acquired PRB properties. The Company drilled five wells in Elk Valley with completion activities for these five wells drilled scheduled to begin in November 2006. Facility and pipeline construction to tie the west and central (east) facilities in Elk Valley is complete. [TABLE OMITTED] Balance Sheet Cash and equivalents on September 30, 2006 were $20.1 million, down from $29.5 million on December 31, 2005. Long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. increased to $20 million reflecting borrowings under the Company's credit facility. [TABLE OMITTED] [TABLE OMITTED] About Storm Cat Energy Corporation 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, exploration and development acreage in Canada and Alaska. The Company's shares trade on the American Stock Exchange American Stock Exchange (AMEX) Stock exchange in the U.S. Originally known as “the Curb,” it began as an outdoor marketplace in New York City c. 1850. It moved indoors to its present location in the Wall Street area in 1921. under the symbol "SCU" and in Canada on the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. under the symbol "SME." Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This press release contains certain "forward-looking statements", as defined in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc matters such as the Company's drilling and other exploration plans and projected well economics. 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; including production and reserve estimates, and potential benefits to Storm Cat of such acquisitions, 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 receipt of necessary approval from regulatory bodies, the failure to achieve the anticipated benefits of the acquisition, the failure to close the acquisition, 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 SEDAR System for Electronic Document Analysis and Retrieval SEDAR Southeast Data, Assessment, and Review (www.sedar.com) with Canadian securities regulators and its filings with the U.S. Securities and Exchange Commission, including the Company's Form 20-F for the fiscal year ended December 31, 2005. NO STOCK EXCHANGE HAS REVIEWED OR ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS NEWS RELEASE. |
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