Winstar earns $2.1 mln on record Q3 2007 and $5.3 mln on 9 month 2007 results

Winstar Resources Ltd. reported record results for the periods ending September 30, 2007, provide an overview of its plans for the remainder of the year, and offer preliminary guidance for 2008. Winstar’s rapid growth, which began in Q3 2005 following the merger with Athanor, continues with record three and nine month 2007 production, funds from operations (cash flow) and earnings.

In the Q3 of 2007, Winstar realized funds from operations of $6.78 million, an increase of $3.69 million from $3.09 million in the Q3 of 2006. For the nine-month period, the Company recorded a 52% increase in funds from operations to $18.47 million compared with $12.14 million for the same period of 2006. Winstar attributes its increased funds from operations to increased sales volumes and higher commodity prices.

Commodity prices, on average, increased about 20% during 2007 compared with the three and nine month periods of 2006. Sales volumes increased 32% to 2,015 barrels of oil equivalent per day (boepd) for the nine months and 46% to 1,928 boepd for the three months compared with the equivalent periods of 2006. Winstar earned $5.3 million in the first nine months of 2007, an increase of 186% over the $1.9 million earned during the same period of 2006. In the Q3, the Company earned $2.1 million compared with a loss of $403,000 during the Q3 of 2006.

New equity issue
On August 23, 2007, Winstar raised $23 million (gross) through the sale of 5,000,200 common shares at $4.60 per share on a bought-deal basis through a syndicate of Research Capital Corporation, Jennings Capital Inc. and FirstEnergy Capital Corp. The initial portion of the transaction closed on September 12, 2007, and subsequently, the fully exercised 15% over-allotment option closed on September 27, 2007. The new issue gives Winstar increased financial flexibility.

The company now has the financial capability to commit to a number of strategic capital expenditures in Tunisia, such as a large 3D seismic program, and the contracting of a new, highly automated 3,000 meter drilling and service rig (announced on July 19, 2007). The rig, imported from Red Deer, Alberta to Tunisia in September 2007, will be used initially to develop Winstar’s Chouech Essaida and Ech Chouech concessions.

Production (not equal to sales)
Winstar realized record average daily oil and gas production in the first nine months of 2007 of 1,882 boepd, a 24% increase over the comparable period of 2006. This amount is different than the Company’s sales over the period because oil production in Tunisia is not equal to sales. Tunisian oil is transported to a terminal for periodic off loading into oil tankers. Revenue from tanker sales is recognized only after the oil is loaded. Average daily production in Hungary over the nine-month period declined as anticipated to 297 boepd in 2007 from 475 boepd in 2006 due to both lower demand because of warmer weather and lower well performance.

Average daily production in Canada during the same period declined to 419 boepd in 2007 from 498 boepd in 2006. The Company’s drilling and recompletion success in Tunisia resulted in nine month 2007 production that more than offsets natural declines in Hungary and Canada. In Tunisia, Q3 production start up of the new well, Sabria 11 (announced on July 9, 2007) and the rig contract mentioned above, reinforce the Company’s Tunisian focused business plan.

Hungary The Company’s very profitable Hungarian gas operations are expected to continue into the first half of 2008, at which time it is believed the field will reach its economic limit. Recent significant discoveries offsetting Winstar’s extensive 568,000 net acre land position in Central Hungary have encouraged the Company to shoot a combined 2D and 3D seismic data program in the area, and drill at least one well by July 2008.

Outlook
2007
Winstar is forecasting average net daily production (sales) of between 2,000 and 2,200 boepd in 2007 compared with 1,612 boepd in 2006. The Company’s 2007 production is expected to generate funds from operations of $25 to $30 million, or $0.74 to $0.89 per share, based on current commodity prices and fourth quarter operational success. Capital expenditures for 2007 are expected to total $30 to $35 million.

2008
Winstar expects its average net daily production (sales) during 2008 to increase by a third over 2007 to between 2,800 and 3,000 boepd. This guidance for 2008 is preliminary and presumes the Company will invest between 100% and 150% of its projected 2008 funds from operations. A number of material variables, including the anticipated success of all projects, partner consent, equipment availability, timely execution of programs, facility reliability and commodity prices, will have a significant impact on this guidance. (cnw – more details and figures)