International Sovereign Energy Corp. 2009 Q3 Results with Business Update

    
    /THIS NEWS RELEASE IS NOT FOR DISSEMINATION IN THE UNITED STATES OR TO
    U.S. PERSONS/TSX: "ISR"
    Common Shares: 16,096,084
    

CALGARY , Nov. 16 /CNW/ - International Sovereign Energy Corp. ("ISR" or the "Company") announces its operating and financial results for the three and nine months ended September 30, 2009 and 2008. These filings are available for review at www.sedar.com

    
    Q3 2009 Highlights

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                                 Three months ending      Nine months ending
                                       Sept 30                 Sept 30
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                                    2009        2008        2009        2008
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    Revenue                       $1.87M      $5.56M      $6.53M     $14.93M
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    Operating netback ($/boe)     $13.17      $38.34      $12.79      $39.54
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    Average production (boe/d)       847         967         922         863
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    Cash flow from operations
     per share                    $(0.02)      $0.20      $(0.05)      $0.43
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    Basic Earnings per share      $(0.14)      $0.08      $(0.32)     $(0.15)
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In the nine months ended September 30, 2009 , the Company had a negative cash flow from operations of approximately $870,151 . Despite economic challenges, commodity prices for oil products recovered to the $50-$60 /bbl level. Prices for natural gas, however, did not show the same level of recovery and prices hovered around $3-$4 /mcf, dropping as low as $2.63 /mcf, during the nine-month period.

Revenues for the nine month period ending September 30, 2009 were $6,528,200 , compared to $14,930,133 for the nine month period ending September 30, 2008 a decrease of 56%. Average production increased from 863 boe per day in 2008 to 922 boe per day, in 2009, an increase of 7%. During the quarter, six wells were shut in due to low natural gas prices. Average oil prices received in the nine month period fell from $99.98 per bbl in 2008 to $57.57 per bbl in 2009 a decrease of 42%. Average gas prices received for the nine month period decreased from $8.68 per mcf in 2008 to $3.70 per mcf in 2009, a reduction of 57% over the corresponding period.

Net loss for the three month period ended September 30, 2009 was $2,192,399 or $0.14 per share compared to net earnings of $1,149,935 or $0.08 per share, for the same period in 2008. In addition to significantly lower commodity prices, the Company provided for forfeiture of its interest in the Sukkur and Sujawal Blocks in Pakistan in the current period in the amount of $903,233 and year to date for the nine months ending September 30, 2009 $1,857,297 .

    
    Funds from (used in) Operations

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                                  Three months ended      Nine months ended
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                                      September 30          September 30
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                                    2009        2008        2009        2008
                                       $           $           $           $
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    Funds from (used in)
     operations                 (292,180)  2,844,260    (870,151)  5,976,764
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    Per share:
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      Basic ($)                    (0.02)       0.20       (0.05)       0.43
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      Diluted ($)                  (0.02)       0.18       (0.05)       0.40
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    The negative funds from operations for the three and nine month period in
2009 were primarily due to lower commodity prices resulting in lower revenues
and further reduced by a provision made for potential obligations in Pakistan.
Before providing for these potential obligations the funds from operations in
2009 would have been:

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                                  Three months ended      Nine months ended
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                                      September 30          September 30
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                                    2009        2008        2009        2008
                                       $           $           $           $
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    Funds from operations before
     provisions for potential
     obligations in Pakistan     611,053   2,844,260     987,147   5,976,764
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    Per share:
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      Basic ($)                     0.04        0.20        0.06        0.43
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      Diluted ($)                   0.04        0.18        0.06        0.40
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"The Company continues to feel the effect of the current climate in the North American natural gas market where AECO daily spot prices have dropped 49% from the spot price at the end of the same period last year," said International Sovereign's CEO, Eugene Hretzay. "However, cash flow from Canadian operations continues to be positive. Recently natural gas prices have shown some strength, and as we enter the winter season we anticipate that the prices will continue to strengthen."

Outlook

The Company's management has been immersed in the review of the assets of the Company and appraising the opportunities to enhance the financial performance from those assets. The volatility of the oil and gas markets affects all producers and in the past the higher prices have benefited the Company. However, the current decline in energy prices impacted the Company's performance in the first half of 2009. There is much discussion on the pricing levels of oil and gas because of the economic situation and current oversupply of gas, and it is difficult for the Company to project where these will be at any point in time. However, we see opportunities to expand our presence in the Canadian market place through a selective program of acquisition of oil and gas producing properties under acceptable financial conditions. Through such a program, the Company will increase production, revenue and profit streams and be able to generate the funds to fund further acquisitions as those become available.

Pakistan

The Company had previously reported on June 18, 2009 of a notice of forfeiture received from Mari Gas Company Limited ("MGCL") to forfeit its 15% working interest ("WI") in the Sukkur and Sujawal Blocks due to arrears of cash calls. On August 1, 2009 regarding Sukkur and on October 3, 2009 regarding Sujawal, the Company obtained temporary injunctions, without notice to the defendants, for rehearing now scheduled for November 23, 2009 , restraining MCGL or any person claiming through or on their behalf, from seeking to forfeit or otherwise alienate the WI of the Company in the Sukkur and Sujawal Blocks in order to sell the WI to parties that had expressed serious interest.

Ecuador

Company negotiations to sell its interest in Ecuador are ongoing, and have extended the period of exclusivity to November 30, 2009 .

Drilling Update

The Company was ready to spud a potential oil well this week when the Province of Alberta suspended issuance of all drilling permits concerning wells having a potential sour gas component pending review of all Energy Resources Conservation Board safety protocols as the result of the order of the Alberta Court of Appeal. When this suspension will be lifted is uncertain. However, the Company will drill two shallow sweet gas wells as soon as freeze up permits.

Reader Advisories

Forward-Looking Statements: This news release contains certain forward-looking statements, including management's assessment of future plans and operations, and capital expenditures and the timing thereof, that involve substantial known and unknown risks and uncertainties, certain of which are beyond the Company's control. Such risks and uncertainties include, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, the impact of general economic conditions in Canada , the United States and overseas, industry conditions, changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof, and obtaining required approvals of regulatory authorities. The Company's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits, including the amount of proceeds, that the Company will derive there from. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect the Company's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). All subsequent forward-looking statements, whether written or oral, attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

BOE may be misleading, particularly if used in isolation. A BOE conversion of 6 Mcf: 1 bbl 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 Toronto Stock Exchange has not reviewed and does not accept
    responsibility for the adequacy or accuracy of this news release.
    

For further information: Eugene N. Hretzay, President & CEO, T: [phone], F: [phone], E: [email protected]