DALLAS, Dec. 18 /PRNewswire-FirstCall/ -- Sonoran Energy, Inc. (OTC:SNRN.PK), the independent oil and gas exploration and production company, yesterday filed its Form 10-QSB with the US Securities and Exchange Commission, which is accessible through the SEC's forms and filings website at www.sec.gov/edgar.shtml.
Second Quarter Downtime for Upgrades and Repair - Louisiana Work Over Program Underway in Third Quarter
For the three months ended October 31, 2007, Sonoran reported a net loss of $1,868,300, or $0.01 per diluted share. Included in the net loss was $1,432,267 of operating loss, as well as an interest expense of $551,956, which was partially offset by a gain of $214,936 related to the company's investment in Jordan. For the three months ended July 31, 2007, Sonoran recorded a net loss of $849,390 or $0.01 per diluted share. The increased operating loss in this period is primarily due to a wide swing in legal settlement expenses which went from a gain of $515,389 to a loss of $255,837.
Sonoran produced 6,177 Bbls (including plant products) for the three month period ending October 31, 2007, a decrease from 9,146 Bbls in the three month period ending July 31, 2007. Gas production also decreased quarter-on-quarter to 10,742 Mcf for the period ending October 31, 2007 down from 19,253 in the prior quarter. Though some East Texas facilities upgrades were completed, an early failure of the new water injection pump and failure of a high-pressure water injection line negatively impacted production from the field. Louisiana production suffered a decline when down-hole obstructions developed in the Strickland 17 and Crosby 2 wells. The recent replacement of the failed injection pump, a planned flowline replacement in East Texas, a planned three- well coiled-tubing intervention, and a five-well rig-assisted work-over program in Louisiana are projected to provide a positive impact on production rates in early 2008.
Management has continued efforts to reduce base costs, however production costs for the quarter increased to $435,211, compared to $364,026 in the prior quarter. The increase was driven by an expenditure of $132,622 on repair work on Strickland 17. The non-recurring costs associated with the Strickland expenditure and lower production volumes caused operating costs per BOE for the current quarter to increase to $54.62 per BOE from $29.46 per BOE in the prior quarter. General and administrative costs in the quarter were essentially flat as lower audit fees were offset by increases in legal fees.
Six months Results
For the six months ended October 31, 2007, Sonoran reported a net loss of $2,717,960 million, or $0.02 per diluted share. Included in the net loss was $1,957,175 of operating loss, as well as an interest expense of $1,064,678 which was partially offset by a gain of $388,853 related to the company's investment in Jordan. For the six months ended October 31, 2006, Sonoran recorded a net loss of $3,495,661 or $0.04 per diluted share. For the six months ended October 31, 2007, Sonoran's sales were 15,324 Bbls of oil and 29,996 Mcf of natural gas, or 20.3 MBOE, a 7% increase compared to the six months ended October 31, 2006.
Year-to-date production costs of $799,237 are 14% below the $922,494 incurred for the same period last year. The decrease reflects management's success at controlling costs by shifting work from contractors to company personnel. In addition, year-to-date General and Administrative costs have declined by 30% from $2,919,819 to $2,041,582.
Peter Rosenthal, Chairman & CEO commented: "Our second quarter results reflect the investments we are making to bring significant production on-line in the coming weeks, and to stabilize production from our baseline wells in East Texas. We have also significantly strengthened our financial foundation with $3 million of equity investments from management, Board members and major shareholders, and by closing a three-year $15 million credit facility with Standard Bank PLC. Currently, we have greatly expanded the capacity of our water injection well as the first major step in our work-over program in Louisiana. The rig is now on site at the Crosby 25 #1 well and operations are so far proceeding according to plan. The next six months should be transformational for Sonoran in terms of our production, cash flow profile and financial results."
About Sonoran Energy, Inc.
Sonoran Energy is a US-based independent oil and gas company that explores, develops, and enhances the performance of high value oil and gas opportunities. With a focus on health, safety and the environment, we leverage the Company's innovative organizational alignment model with leading technical partners.
For more information contact: Investor Relations Dana Johnston Taylor Rafferty Tel: (212) 889-4350 Email: email@example.com
This news release may contain forward-looking statements that are subject to certain risks and uncertainties that may cause actual results to differ materially from those projected on the basis of such forward-looking statements. Such forward-looking statements are made based upon management's beliefs, as well as assumptions made by, and information currently available to, management pursuant to the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995.
Source: Sonoran Energy, Inc.