Wrangler West Reports 2012 Six Months Operating and Financial Results

CALGARY, Aug. 23, 2012 /CNW/ - Wrangler West Energy Corp. ("Wrangler West" or the "Company") (TSX-V "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 and six months ended June 30, 2012 with comparative data for the three and six months ended June 30, 2011 and the year ended December 31, 2011. All referenced documents may be viewed at www.sedar.com.

		Three months ended June 30				Six months ended June 30
		2012	2011	% Change		2012	2011	% Change
OPERATIONAL HIGHLIGHTS
Production
Crude oil and NGL (bbls/d)		124	238	(48)		130	243	(47)
Natural gas (mcf/d)		3,687	4,308	(14)		3,882	4,505	(14)
Total production (boe/d)		738	956	(23)		778	994	(22)
Prices
Crude oil and NGL ($/bbl)		77.30	92.47	(16)		83.15	85.34	(3)
Natural gas ($/mcf)		2.02	3.98	(49)		2.14	3.95	(46)
Per boe ($)
Petroleum and natural gas revenue		23.08	40.96	(44)		24.59	38.74	(37)
Royalties		0.03	(6.95)	(100)		(2.15)	(6.14)	(65)
Operating expenses		(12.08)	(14.26)	(15)		(13.07)	(14.84)	(12)
Netback		11.03	19.75	(44)		9.37	17.76	(47)
General and administrative		(3.50)	(3.85)	(9)		(3.62)	(3.57)	1
Interest		(0.58)	(0.78)	(26)		(0.51)	(0.70)	(27)
Other income		1.76	-	-		0.83	-	-
Funds flow from operations		8.71	15.12	(42)		6.07	13.49	(55)
Share-based payments		(0.39)	-	-		(0.36)	-	-
Depletion and depreciation		(16.14)	(13.11)	23		(16.22)	(14.65)	11
Loss on sale of assets		-	(11.98)	(100)		-	(5.79)	(100)
Accretion		(0.16)	(0.22)	(27)		(0.18)	(0.21)	(14)
Deferred income tax benefit		1.89	2.58	(27)		2.56	1.81	41
Net loss		(6.09)	(7.61)	(20)		(8.13)	(5.35)	52
FINANCIAL HIGHLIGHTS ($ thousand)
Petroleum and natural gas revenue		1,550	3,564	(57)		3,482	6,966	(50)
Royalties		2	(605)	(100)		(305)	(1,105)	(72)
Operating expenses		(811)	(1,240)	(35)		(1,851)	(2,668)	(31)
General and administrative		(235)	(335)	(30)		(512)	(642)	(20)
Interest		(39)	(67)	(42)		(72)	(126)	(43)
Other income		118	-	-		118	-	-
Funds flow from operations		585	1,317	(56)		860	2,425	(65)
Share-based payments		(26)	-	-		(51)	-	-
Depletion and depreciation		(1,084)	(1,141)	(5)		(2,296)	(2,634)	(13)
Loss on sale of assets		-	(1,042)	(100)		-	(1,040)	(100)
Accretion		(11)	(20)	(45)		(26)	(37)	(30)
Deferred income tax benefit		127	225	(44)		362	325	11
Net loss		(409)	(661)	(38)		(1,151)	(961)	20
Funds flow from operations -
	basic and diluted ($/share)	0.09	0.20	(55)		0.13	0.38	(66)
Net loss - basic and diluted ($/share)		(0.06)	(0.10)	(40)		(0.18)	(0.15)	20
Total assets ($ thousand)						26,619	26,982	(1)

 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 three and six months ended June 30, 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.

Six Month Highlights

• $3.5 million of revenue
• $0.9 million of funds flow from operations
• $1.0 million in capital expenditures

Review of 2012 First Half

For the six months ended June 30, 2012, Wrangler West produced 778 barrels of oil equivalent ("boe") per day, a 22 percent decrease compared to the same period one year ago.  The decrease in production relates to the prior year's asset dispositions as well as expected production declines from the corporate reserves base.

Wrangler West is 80 percent-weighted toward natural gas. During the first half of 2012, the Company experienced a ten-year low in the AECO spot price received for natural gas.  In response to this continued deterioration of natural gas prices, we minimized capital expenditures and reduced other expenses wherever possible.  Our year-to-date capital expenditures program has targeted 3D seismic and land acquisitions as well as implementation of the expanded waterflood at Riviere.  After a long spring break-up, continuing wet weather further delayed planned drilling activity.

Industry Conditions

Difficult market conditions persisted throughout the first half of 2012.  Historically, Canada's oil and natural gas industry has relied on new capital to drive growth in production and assets.  Today, our industry's access to equity is constrained. Within the Western Canada Sedimentary Basin, more than 110,000 boe per day is currently for sale in one form or another.  A few major transactions have commenced and are now in the process of closing.  It would be reasonable to expect reinvestment of the proceeds from these transactions in the public oil and natural gas business.  General consensus among industry participants suggests further significant merger and acquisition activity could occur in the fall of 2012.

Natural gas prices appear to have bottomed at the ten-year low reached in April 2012 and natural gas storage volumes are moving toward the historical five-year average.  A hot, dry summer throughout North America, increased electrical power generation switching to natural gas and reduced natural gas drilling all contributed to lower than expected natural gas storage volumes during 2012 second quarter.  However, until withdrawal from storage becomes more predictable, natural gas prices are expected to remain range-bound.  With the approach of the winter heating season, natural gas prices could trend higher by year-end 2012 and into 2013.

Strategy for 2012 Second Half

Wrangler West is a micro-cap oil and natural gas company.  We must manage through this difficult commodity price cycle which has wiped out most of the profitability of the dry natural gas business.  Wrangler West intends to maintain a conservative approach with regard to capital spending until such time as funds flow strengthens from any sustained increase in natural gas prices.  We are committed to being cash flow positive and to maintaining our conservative approach.  This message of austerity remains consistent with commentary in Wrangler West's first interim report for 2012.

These are challenging times for dry natural gas producers like Wrangler West.  We are fortunate to have a creative team guiding the Company through the difficult dynamics of fundamental changes in the conventional junior oil and natural gas sector.  Wrangler West has an inventory of exploration prospects to pursue aggressively providing we achieve drilling success.  Any commodity price improvement or production increase could have a significant impact on per share results.

Management is committed to improving Wrangler West's balance sheet.  We are ready to commence a drilling program as part of our strategy to rebuild the Company's asset mix with the objective of increasing the oil weighting in our production base.

Economic instability throughout the world has contributed to highly volatile financial markets.  We recognize that many investors have withdrawn from resource-based investments as the current economic uncertainty has eroded profitability and reduced overall liquidity.  In the meantime, we are striving to move the Company forward and to deliver positive results.

During the last half of 2012, Wrangler West intends to focus on growth through the drill bit.  We have three 100 percent working interest oil-prone opportunities on 15 sections of land.  With exploration success, a significant development drilling program would take Wrangler West well into the future.

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WRANGLER WEST ENERGY CORP.
STATEMENTS OF FINANCIAL POSITION
(Stated in thousands of dollars)
(Unaudited)

			June 30, 2012			December 31, 2011
Assets
Current assets
	Accounts receivable	$	650		$	756
	Prepaid expenses		192			212
			842			968
Property, plant and equipment			25,777			26,995
		$	26,619		$	27,963
Liabilities and shareholders' equity
Current liabilities
	Bank indebtedness	$	4,177		$	3,156
	Accounts payable and accrued liabilities		988			1,999
			5,165			5,155
Decommissioning obligations			2,433			2,369
Deferred income tax			2,442			2,804
			10,040			10,328
Shareholders' equity
	Common shares		12,402			12,402
	Contributed surplus		4,835			4,740
	Retained earnings (deficit)		(658)			493
			16,579			17,635
		$	26,619		$	27,963

 

WRANGLER WEST ENERGY CORP.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Stated in thousands of dollars, except per share amounts)
(Unaudited)
 

				Three months ended June 30						Six months ended June 30
				2012			2011			2012			2011
Revenue
	Petroleum and natural gas sales		$	1,550		$	3,564		$	3,482		$	6,966
	Royalties			2			(605)			(305)			(1,105)
				1,552			2,959			3,177			5,861
Expenses
	Operating			811			1,240			1,851			2,668
	General and administrative			235			335			512			642
	Share-based payments			26			-			51			-
	Depletion and depreciation			1,084			1,141			2,296			2,634
	Loss on sale of assets			-			1,042			-			1,040
Results from operating activities				(604)			(799)			(1,533)			(1,123)
Finance
	Interest and accretion			50			87			98			163
Other income				(118)			-			(118)			-
Loss before income tax				(536)			(886)			(1,513)			(1,286)
Deferred income tax benefit				(127)			(225)			(362)			(325)
Net loss and comprehensive loss			$	(409)		$	(661)		$	(1,151)		$	(961)
Net loss per share
	Basic and diluted		$	(0.06)		$	(0.10)		$	(0.18)		$	(0.15)

 

WRANGLER WEST ENERGY CORP.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(Stated in thousands of dollars and shares)
(Unaudited)

				Number of common shares			Common shares			Contributed surplus			Retained earnings (deficit)			Total shareholders' equity
Balance at January 1, 2012				6,466		$	12,402		$	4,740		$	493		$	17,635
	Share-based payments			-			-			95			-			95
	Net loss			-			-			-			(1,151)			(1,151)
Balance at June 30, 2012				6,466		$	12,402		$	4,835		$	(658)		$	16,579
Balance at January 1, 2011				6,466		$	12,402		$	4,538		$	2,297		$	19,237
	Net loss			-			-			-			(961)			(961)
Balance at June 30, 2011				6,466		$	12,402		$	4,538		$	1,336		$	18,276

 

WRANGLER WEST ENERGY CORP.
STATEMENTS OF CASH FLOWS
(Stated in thousands of dollars)
(Unaudited)
 

				Three months ended June 30							Six months ended June 30
					2012			2011			2012			2011
Cash provided by (used in):
Operating
	Net loss			$	(409)		$	(661)		$	(1,151)		$	(961)
	Items not involving cash:
		Depletion and depreciation			1,084			1,141			2,296			2,634
		Accretion			11			20			26			37
		Share-based payments			26			-			51			-
		Loss on sale of assets			-			1,042			-			1,040
		Deferred income tax benefit			(127)			(225)			(362)			(325)
					585			1,317			860			2,425
Change in non-cash operating working capital					(545)			(10)			(318)			169
					40			1,307			542			2,594
Financing
	Increase (decrease) in bank indebtedness				103			(5,120)			1,021			(4,358)
Investing
	Property, plant and equipment expenditures				(481)			(813)			(995)			(1,677)
	Proceeds on sale of assets				-			4,933			-			4,959
	Change in non-cash investing working capital				338			(307)			(568)			(1,518)
					(143)			3,813			(1,563)			1,764
Cash and cash equivalents beginning and end of period				$	-		$	-		$	-		$	-
Supplementary cash flow information
	Interest paid				(38)			(67)			(68)			(124)
	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, F3 and F4 effective December 31, 2011.  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 these FLS are reasonable, undue reliance should not be placed on the FLS because the Company can give no assurance they will prove to be correct. Since FLS address future events and conditions, by their very nature, they 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 and 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, 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, 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]