Wrangler West Reports 2012 Operating and Financial Results

CALGARY, April 24, 2013 /CNW/ - Wrangler West Energy Corp. ("Wrangler West" or the "Company") (TSX-V "WX") announces filing on SEDAR of the Company's audited Financial Statements and related Management's Discussion and Analysis ("MD&A") for the year ended December 31, 2012 with comparative data for the year ended December 31, 2011. All documents may be viewed at www.sedar.com.

						Year ended December 31
						2012				2011				% Change
OPERATIONAL HIGHLIGHTS
Production
Crude oil and NGL (bbls/d)						118				189				(38)
Natural gas (mcf/d)						3,581				4,263				(16)
Total production (boe/d)						716				899				(20)
Prices
Crude oil and NGL ($/bbl)						80.62				86.46				(7)
Natural gas ($/mcf)						2.54				3.78				(33)
Per boe ($)
Petroleum and natural gas revenue						25.97				36.09				(28)
Royalties						(3.03)				(6.40)				(53)
Operating expenses						(14.47)				(14.17)				2
Netback						8.47				15.52				(45)
General and administrative						(3.77)				(3.82)				(1)
Interest						(0.60)				(0.49)				22
Other income						1.31				-				-
Funds flow from operations						5.41				11.21				(52)
Share-based payments						(0.34)				(0.33)				3
Depletion and depreciation						(16.05)				(15.16)				6
Impairment of property, plant and equipment						(8.44)				-				-
Loss on sale of assets						-				(2.84)				(100)
Accretion						(0.18)				(0.20)				(10)
Deferred income tax benefit						4.94				1.83				170
Net loss						(14.66)				(5.49)				167
FINANCIAL HIGHLIGHTS ($ thousand)
Petroleum and natural gas revenue						6,806				11,842				(43)
Royalties						(795)				(2,099)				(62)
Operating expenses						(3,793)				(4,651)				(18)
General and administrative						(987)				(1,252)				(21)
Interest						(158)				(162)				(2)
Other income						342				-				-
Funds flow from operations						1,415				3,678				(62)
Share-based payments						(90)				(108)				(17)
Depletion and depreciation						(4,206)				(4,975)				(15)
Impairment of property, plant and equipment						(2,212)				-				-
Loss on sale of assets						-				(933)				(100)
Accretion						(47)				(64)				(27)
Deferred income tax benefit						1,295				599				116
Net loss						(3,845)				(1,803)				113
Funds flow from operations - basic ($/share)						0.22				0.57				(61)
Funds flow from operations - diluted ($/share)						0.22				0.56				(61)
Net loss - basic and diluted ($/share)						(0.59)				(0.28)				111
Total assets ($ thousand)						25,343				27,964				(9)

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 the year ended December 31, 2012.  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.

2012 Overview

• Revenue $6.8 million
• Funds flow from operations $1.4 million
• Capital expenditures $2.8 million
• Waterflood expanded at Riviere

Review of 2012

During yet another twelve months of uneconomic natural gas prices, Wrangler West pursued a strategy of exploiting existing assets to increase their long-term potential.  The Company managed day-to-day activities with the objective of maximizing production while controlling costs.  We focused on maintaining positive cash flow while improving asset value.

For the year ended December 31, 2012, Wrangler West produced 716 barrels of oil equivalent ("boe") per day, a decrease of 20 percent compared to the same period one year ago.  Wrangler West's current production base is approximately 85 percent natural gas.

In 2012, the Company's netback was lower by 45 percent reflecting the decline in the price Wrangler West received for natural gas which was lower by 33 percent when compared to 2011.  Crude oil prices in 2012 were lower by seven percent when compared to 2011.  The Company's total operating expense for 2012 decreased 18 percent which was in line with the production rate.

During 2012, Wrangler West conducted a modest exploration program using available cash flow and the Company's credit facility.  One well was drilled, cased and placed on production.  An application to the Energy Resources Conservation Board ("ERCB") received approval to expand Wrangler West's existing waterflood pilot project at Riviere.  An existing horizontal well was converted to water injection as part of the expansion which was undertaken to optimize production by providing pressure support in the Wabamun A oil pool.  New pipeline and injection facilities were completed and became operational early in 2012 fourth quarter.  To further improve efficiency at Riviere during 2012, the Company right-sized compression facilities to better align with expected production volumes.  Installation of a new rental compressor replaced previous equipment to significantly reduce monthly operating expenses.

Wrangler West's corporate crude oil and natural gas reserves were evaluated by Sproule Associates Limited ("Sproule") with an effective date of December 31, 2012.  Reserves totaled 1.15 MMboe in the proved category and 1.92 MMboe in the proved plus probable category resulting in a net present value of $24.1 million discounted at ten percent and based on Sproule's December 31, 2012 commodity price forecast.

					Remaining Reserves									Net Present Value
								Company (Mboe)						Before Income Tax ($ thousand)
					Gross ^1			Gross ^2			Net ^3			at 0%			at 5%			at 10%			at 15%
Proved developed producing					815.1			815.1			671.0			11,793			9,999			8,781			7,877
Proved developed non-producing					199.5			199.5			169.4			4,063			3,577			3,181			2,853
Proved undeveloped					132.8			132.8			114.2			3,088			2,452			1,962			1,578
	Total proved				1,147.3			1,147.3			954.6			18,944			16,028			13,924			12,308
	Total probable				777.3			777.3			643.4			18,593			13,426			10,198			8,054
Total proved plus probable					1,924.6			1,924.6			1,598.0			37,537			29,454			24,122			20,362

^1		Gross Reserves				remaining reserves attributable to the property.
^2		Company Gross Reserves				Company's working interest share of the remaining reserves attributable to the property, before deduction of any royalties.
^3		Company Net Reserves				gross remaining reserves of properties in which the Company has an interest, less all crown, freehold, and overriding royalties and interests owned by others.
Note: Extracted from the Sproule Report Table S-1A Evaluation of the PNG Reserves SUMMARY OF THE EVALUATION OF THE PNG RESERVES

Business Environment

Over the past five years, the dynamics of the natural gas business have changed dramatically.  Natural gas prices dropped to a ten-year low during the first half of 2012. For some time now, production of dry natural gas has not been rewarded due to the robust supply created from shale gas exploration being conducted throughout North America.  While drilling for dry natural gas is expected to remain challenging, successful drilling for liquids-rich natural gas continues to exacerbate an already oversupplied North American market.

The lengthy cold winter of 2012-13, combined with growing electricity generation, has begun to set the stage for a modest recovery in natural gas prices. In March 2013, NYMEX reached $4.00 per Mcf with summer natural gas prices available at $3.45 per Mcf which is considerably higher than the April 2012 natural gas price of $1.73 per Mcf.

Crude oil prices remain strong with oil differentials narrowing to a more historical range as movement by rail appears to have relieved some of the backlogged crude oil volumes.  North American infrastructure debates persist regarding major pipelines (Keystone XL, Northern Gateway, TransCanada reversal, etc.). Considering the substantial foregone revenue for both government and industry, it will be important to establish new and expanded transportation capacity and facilities to deliver crude oil and natural gas to worldwide markets.  These mega-pipeline projects, if approved, will require significant time for permitting, engineering and construction as well as substantial capital to complete.  Unabated financial stress in world markets suggests producers can expect continuing commodity price volatility.

For junior producers, corporate planning is a challenge. In the first few months of 2013, sluggish capital markets provided the oil and natural gas industry with less than 10 percent of the new capital that has been historically available to this sector. A single 2013 equity offering absorbed most of that new capital.  In 2013, access to new capital will be an important element of oil and natural gas exploration budgets.

Outlook

Wrangler West is cautiously optimistic as the spring shoulder season approaches.  The maintenance and repairs required to extract the full potential of existing assets were completed in 2012.  With sustained stronger natural gas prices, the Company would have the opportunity to pursue the value of proved undeveloped reserves as evaluated effective December 31, 2012. Wrangler West continues to assess any merger and acquisition opportunities that arise with the ultimate objective of maximizing shareholder value.

WRANGLER WEST ENERGY CORP.
STATEMENTS OF FINANCIAL POSITION
(Stated in thousands of dollars)
								December 31, 2012				December 31, 2011
Assets
Current assets
	Accounts receivable (note 13)						$	1,079			$	756
	Prepaid expenses							132				212
								1,211				968
Property, plant and equipment (note 6)								24,132				26,995
							$	25,343			$	27,963
Liabilities and shareholders' equity
Current liabilities
	Bank indebtedness (note 8)						$	4,734			$	3,156
	Accounts payable and accrued liabilities							2,073				1,999
								6,807				5,155
Decommissioning obligations (note 9)								3,068				2,369
Deferred income tax (note 14(b))								1,509				2,804
								11,384				10,328
Shareholders' equity
	Common shares (note 10)							12,402				12,402
	Contributed surplus							4,909				4,740
	Retained earnings (deficit)							(3,352)				493
								13,959				17,635
Commitments (note 18)
Going concern (note 2)
							$	25,343			$	27,963

WRANGLER WEST ENERGY CORP.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Stated in thousands of dollars, except per share amounts)
								Year ended				Year ended
								December 31, 2012				December 31, 2011
Revenue
Petroleum and natural gas sales							$	6,806			$	11,842
Royalties								(795)				(2,099)
								6,011				9,743
Expenses
	Operating							3,793				4,651
	General and administrative							987				1,252
	Share-based payments (note 11)							90				108
	Depletion and depreciation							4,206				4,975
	Impairment of property, plant and
	equipment (note 7)							2,212				-
	Loss on sale of assets							-				933
Results from operating activities								(5,277)				(2,176)
Finance expenses (note 15)								205				226
Other income								(342)				-
Loss before income tax								(5,140)				(2,402)
Deferred income tax benefit (note 14 (a))								(1,295)				(599)
Net loss and comprehensive loss							$	(3,845)			$	(1,803)
Net loss per share (note 12)
	Basic and diluted						$	(0.59)			$	(0.28)

WRANGLER WEST ENERGY CORP.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(Stated in thousands of dollars and shares)
						Number of												Retained				Total
						common				Common				Contributed				earnings				shareholders'
						shares				shares				surplus				(deficit)				equity
Balance at January 1, 2012						6,466			$	12,402			$	4,740			$	493			$	17,635
	Share-based payments (note 11)					-				-				169				-				169
	Net loss					-				-				-				(3,845)				(3,845)
Balance at December 31, 2012						6,466			$	12,402			$	4,909			$	(3,352)			$	13,959
Balance at January 1, 2011						6,466			$	12,402			$	4,538			$	2,296			$	19,236
	Share-based payments (note 11)					-				-				202				-				202
	Net loss					-				-				-				(1,803)				(1,803)
Balance at December 31, 2011						6,466			$	12,402			$	4,740			$	493			$	17,635

WRANGLER WEST ENERGY CORP.
STATEMENTS OF CASH FLOWS
(Stated in thousands of dollars)
									Year ended				Year ended
									December 31, 2012				December 31, 2011
Cash provided by (used in):
Operating
	Net loss							$	(3,845)			$	(1,803)
	Items not involving cash:
		Depletion and depreciation							4,206				4,975
		Impairment of property, plant and equipment							2,212
		Accretion							47				64
		Share-based payments							90				108
		Loss on sale of assets							-				933
		Deferred income tax benefit							(1,295)				(599)
									1,415				3,678
	Change in non-cash operating
	working capital (note 16)								(151)				205
									1,264				3,883
Financing
	Increase (decrease) in bank indebtedness								1,578				(3,198)
Investing
	Property, plant and equipment expenditures								(2,824)				(4,941)
	Proceeds on sale of assets (note 6)								-				5,066
	Change in non-cash investing
	working capital (note 16)								(18)				(810)
									(2,842)				(685)
Cash and cash equivalents,
beginning and end of year								$	-			$	-
Supplementary cash flow information
	Interest paid								(150)				(173)
	Income tax refund								-				74

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, 2012.  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 [phone] or e-mail [email protected]).

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

Corporate Profile
Wrangler West is a Canadian junior crude oil and natural gas producer which explores for and develops natural gas and crude oil production assets in the Province of Alberta. Since inception, the Company's mandate has been to use the drill bit to add shareholder value. Disciplined management of operations and the 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 common shares trade on the TSX Venture Exchange under the symbol "WX".

Neither the TSX Venture Exchange nor its Regulation Services Provider (as defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

SOURCE: Wrangler West Energy Corp.

Wrangler West Energy Corp.
Steven F. Johnson
President and Chief Executive Officer
[email protected]
telephone:  [phone]