Growth Through Successful Exploration and Drilling Strategies
August 28, 2008 NEWS RELEASE
NORDIC OIL AND GAS ANNOUNCES 2008 SECOND QUARTER
AND FIRST HALF RESULTS
WINNIPEG, MB. (AUGUST 28, 2008) Nordic Oil and Gas Ltd. (TSXV: NOG) today
announced the Company's financial results from operations for its second quarter and six
months ended June 30, 2008. All amounts referenced herein are in Canadian dollars.
6-Months Results
Revenue from natural gas and Coal Bed Methane (“CBM”) sales for the six-month period
(including liquids and transport revenue and interest revenue) totalled $524,724 up
substantially from the $364,568 reported for same period in 2007. The increase in the
first half revenue totals was due to a sharp rise in oil and gas revenue to $473,376 as
compared to $348,541 a year ago and an increase in interest income to $34,604 as
compared to $3,626 in 2007.
Net cash flow from operating activities (cash received from operators minus cash paid to
suppliers and for royalties) was down slightly for the first half of 2008 to $173,886 as
compared to $182,877 during the same period a year ago. This was due to the increase in
both operating and royalty costs for the period along with increased drilling costs.
Cash, including short term investments, accounts receivable, deposits and deferred costs
for the first six months of the year totalled $6,523,631 more than double that of the
$3,169,248 at the end of December, 2007. Total assets as at June 30, 2008 were
$12,723,058, up 65% from the $7,713,059 as at December 31, 2007.
General and administrative expenses for the first half of 2008 totalled $218,080, up from
the $108,584 reported for the same period in 2007. Overall expenses for the first half of
2008 were up approximately $388,000 at $929,524 compared to the first half of 2007 at
$541,248.
The Company recorded a net loss of $272,233 for the first six months of 2008, a decrease
of more than $80,000 over the same period a year ago ($354,745). The decrease in the net
loss for the six-month period can be attributed to the future income tax recovery of
$451,441, along with a strong increase in revenue.
Second Quarter Results
Revenue for the three-month period ended June 30, 2008 totalled $375,622, the highest
three-month total in more than two years This represents an increase of approximately
$230,000 over the Q1 2008 total of $145,854, and an increase of about $200,000 over the
2007 Q2 total of $175,430. The increase in quarter over quarter revenue totals was due to
a higher average price for the Company’s gas and stronger production from some of its
wells at Joffre, Alberta.
General and administrative expenses for the three months under review totalled
$108,744, up about $40,000 from the $68,081 in the same period in 2007. Overall
expenses for the second quarter under review totalled $342,201 up from those recorded in
Q2 2007 ($307,457) by approximately $45,000 and down substantially from the Q1 2008
total of $575,264.
For the quarter, the Company recorded a net loss of $135,730, an improvement of more
than $100,000 versus the $239,055 loss reported in Q2 2007.
Average production volume for the three months ended June 30, 2008 was 12.95
103m3/day (475.46 GigaJoules/day), as opposed to 8.78 103M3/day (322.36 GJ/day)
during the second quarter of 2007. The Company received $9.6846/GJ as an average gas
price during the second quarter of 2008 compared to $6.7005/GJ for the second quarter
last year.
Quarterly Corporate Review
Drilling of the Company’s two potential oil wells commenced in Preeceville in mid-May.
The first well had to be abandoned due to the intersection of faults, as the well deviated
and the drilling tools became lodged in the hole and could not be dislodged. Drilling
subsequently commenced at the second well and was completed at a depth of
approximately 850 metres. When the perforating and testing had been completed at the
second well at Preeceville, the results indicated that the well did not have any production
capabilities. However, the top perforations have been left open for possible re-entry for
shale gas.
In June, the Company announced that three new wells were licensed in Lloydminster; the
three were subsequently drilled in early July.
Also in June, a brokered private placement financing (the “Offering”) was completed
with Raymond James Ltd. who offered the financing to a predetermined select group of
clients. The Offering consisted of 4,166,666 Units ("Units") at a price of $0.60 per Unit
for total gross proceeds to the Company of $2.5 million.
Each Unit consisted of one Class A common share of the Company issued as a "flow-
through share" within the meaning of the Income Tax Act (Canada) and one half of one
Class A common share purchase warrant (a "Warrant"). Each whole Warrant entitles the
holder thereof to purchase one non flow-through regular Class A common share of the
Company at a price of $0.85 for a period of two years from the date of issuance.
Looking Ahead
Mr. Benson stated that the Company is looking forward to the remainder of 2008 with
considerable optimism: “While we were disappointed to learn that our second well in
Preeceville will not be commercially productive, we are nonetheless very upbeat about
our drilling programs in Lloydminster and Joffre.”
Earlier this month the Company began shipping oil from the first of its new wells at
Lloydminster. Testing has been completed on two wells, both of which are capable of
producing at least 30 barrels of oil per day (BBls/d). In addition, the Company is
currently in the process of testing its four well bores acquired earlier this year at
Lloydminster. As such, this will result in even stronger revenue and production totals for
the third quarter and beyond.
Three additional locations have been identified and surveying consent is in the midst of
being obtained.
At Joffre, Alberta, the Company’s new Belly River well will be spud shortly, and results
from the drilling should be completed in the coming days.
“When all of these wells are on full production, both our production volumes and revenue
totals will be significantly enhanced,” Mr. Benson added. “We are targeting production
of approximately 500 BOEs/d by the end of the year, along with near record revenue
levels.”
In addition, notifications pertaining to the Company’s compressor station at Joffre have
gone out, and barring any objections from anyone, the station should be ready for use by
October 2008.
In conjunction with this, Desoto Resources Limited, a sister company of Nordic, which is
also the operator in the area, also signed a contract with Atco Pipelines to transport the
Company’s gas. “This will result in a significant reduction in the costs to the Company’s
natural gas production in the region,” Mr. Benson added.
At Preeceville, Saskatchewan, the Company has received its re-entry license, allowing it
to drill to the basement the well that was originally drilled in 2005. Arrangements are
now being made for a drilling rig to be deployed to the site at the earliest possible date.
About Nordic Oil and Gas Ltd.
Nordic Oil and Gas Ltd. is a junior oil and gas company engaged in the exploration and
development of oil, natural gas and Coal Bed Methane in Alberta and Saskatchewan. The
Corporation is listed on the TSX Venture Exchange and trades under the symbol NOG.
Nordic is one of the “2008 TSX Venture 50” companies, a ranking of the top 10 public
venture capital companies in five industry sectors listed on the TSX Venture Exchange.
This news release contains certain statements that may be deemed "forward-looking statements". All
statements in this release, other than statements of historical fact, that address events or developments that the Corporation expects to occur, are forward looking statements. Forward looking statements are
statements that are not historical facts and are generally, but not always, identified by the words "expects", "plans", "anticipates", "believes", "intends", "estimates", "projects", "potential" and similar expressions, or that events or conditions "will", "would", "may", "could" or "should" occur. Although the Corporation believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results may differ materially from those in forward looking statements. Factors that could cause the actual results to differ materially from those in forward-looking statements include market prices, exploration and drilling
success, continued availability of capital and financing and general economic, market or business
conditions. Investors are cautioned that any such statements are not guarantees of future performance and actual results or developments may differ materially from those projected in the forward-looking
statements. Forward looking statements are based on the beliefs, estimates and opinions of the
Corporation’s management on the date the statements are made. The Corporation undertakes no
obligation to update these forward-looking statements in the event that management's beliefs, estimates or opinions, or other factors, should change.
* The term BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1
barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and
does not represent a value equivalency at the wellhead.
The TSX Venture Exchange has not reviewed nor accepts responsibility for the adequacy
or accuracy of the contents of this News Release.
For additional information, contact:
Donald Benson
Chairman & CEO
Nordic Oil & Gas Ltd.
Tel: 204-956-5042
Fax: 204-897-7154
E-mail: dbenson57@shaw.cawww.nordicoilandgas.com
