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Press release from Marketwire

AvenEx Energy Corp. Announces First Quarter 2011 Results

Friday, June 10, 2011

AvenEx Energy Corp. Announces First Quarter 2011 Results21:30 EDT Friday, June 10, 2011CALGARY, ALBERTA--(Marketwire - June 10, 2011) - AvenEx Energy Corp. ("AvenEx" or the "Company") (TSX:AVF) is pleased to announce the financial and operational results for the first quarter ended March 31, 2011 and to announce they have filed the complete Management Discussion and Analysis and Unaudited Interim Consolidated Financial Statements. Certain selected financial and operational information is set out below and should be read in conjunction with AvenEx's financial statements and related Management Discussion and Analysis. These filings will be available on the Corporation's SEDAR profile at www.sedar.com.TOTAL CONSOLIDATED FINANCIAL SUMMARY ---------------------------------------------------------------------------- For the quarter ended March 31 ---------------------------------(in thousands of dollars except for per % share amounts) 2011 2010 Change ----------------------------------------------------------------------------Total Revenue $209,981 $221,018 (5)Funds (Used In) From Continuing Operations (FFCO)(1) $14,395 $13,130 10 FFCO(1)Per Share - Basic $0.27 $0.31 (13)Funds From Operations (FFO)(1) $14,534 $13,725 6 FFO Per Share(1)- Basic $0.27 $0.32 (16)Dividends $9,518 $7,647 24 Dividends Per Share - Basic $0.18 $0.18 0 Dividend Payout Ratio(2) 65% 56% (16)Net (Loss) Income from Continuing Operations (NICO) ($1,971) ($2,269) (13)NICO Per Share - Basic ($0.03) ($0.05) (20)Net Income (loss) ($1,745) ($2,153) (19)Net Income (loss) Per Share - Basic ($0.03) ($0.05) (40)Total Assets $416,134 $376,163 11 Working Cap. excluding assets held for sale ($46,677) $20,972 (323)Mortgages (assets held for sale) $5,573 $25,628 (78)Wtd. Avg. Shares Outstanding - Basic 52,864,658 42,442,597 25 Shares Outstanding 52,877,930 42,546,303 24 (1) Funds from continuing operations ("FFCO"), funds from continuing operations per share, funds from operations ("FFO"), Funds from Operations per share are not recognized measures under International Financial Reporting Standards (IFRS). Funds from Operations is calculated by taking cash provided by operating activities on the statement of cash flows adjusted for the effect of changes in non- cash working capital and asset retirement costs incurred. Management believes that these measures are useful supplemental measures to analyze operating performance as they demonstrate AvenEx's ability to generate the Funds from Operations necessary to fund future dividends and capital investments. AvenEx's method of calculating these measures may differ from other issuers, and accordingly, they may not be comparable to measures used by other issuers. Investors should be cautioned that these measures should not be construed as an alternative to net income, cash flow from operating activities or other measures of financial performance calculated in accordance with IFRS.(2) Dividend Payout Ratio is calculated by dividing the Monthly Dividends by the Funds from Operations. During the first quarter of 2011 there were four dividends declared versus three in the first quarter of 2010.FIRST QUARTER 2011 RESULTS SUMMARYThe Corporation's first quarter 2011 results were slightly ahead of management expectations as the impact of higher oil production and prices together with strong winter demand in Elbow River offset continued weak natural gas prices. For the quarter ended March 31, 2011, the Corporation had a net loss of $1.7 million, funds from operations of $14.5 million and distributions of 65% of funds from operations. The payout ratio is higher than our target as there were four dividend payments in the quarter versus the normal three as the normal December distribution was not declared in 2010 and instead a dividend was declared in January 2011 to take advantage of dividend tax treatment. Without the additional dividend payment, the dividend payout ratio would have been 49% for the quarter. With respect to funds from operations for the first quarter 2011, the Oil and Gas Division provided 69% of funds, with 35% coming from Elbow River, 1% from Real Estate and the Corporate Division using 5%.In the Oil and Gas Division, first quarter 2011 production averaged 5,391 BOE per day up 4% from fourth quarter 2010 levels of 5,201 BOE per day and up 56% from the 3,450 BOE per day in the corresponding quarter of 2010 largely as a result of the Great Plains acquisition in the fourth quarter of 2010. Quarterly production volumes were split 45% oil and NGL and 55% natural gas. Strong volumes from the completions and tie-ins on the fourth quarter 2010 Noel Cadomin natural gas projects and a number of oil projects primarily on the Great Plains acquisition lands pushed production volumes higher. First quarter oil and NGL prices were $77.26 up 7% over the previous year while natural gas prices were $4.57 per mcf down 36% from the previous year level despite having greater than 50% of the current natural gas production hedged at prices of approximately $6.50 per Mcf. Given the continued weakness in the natural gas markets, the Corporation has protected its 2011 funds from operations with approximately 25% of its natural gas production hedged at prices above $5.75 per Mcf for the year. The second quarter of 2011 will be impacted by wild fires and pipeline restrictions in NW Alberta; scheduled plant maintenance in Noel; and the shutting-in of low netback natural gas in Liege due to a gas over bitumen ruling in June. Accordingly, the second quarter is expected to average approximately 5,100 BOE per day.The 2011 oil & gas capital budget has been set at $34 million not including an additional $8.9 million property acquisition that was completed in the first quarter which added 110 BOE per day of oil production on a Southern Alberta property in which AvenEx already had a working interest. After a successful first quarter capital program centered in the Randell area of Northwest Alberta, the balance of the year will focus on horizontal oil projects in the Cardium at Pembina, the Shaunavon and Viking in SW Saskatchewan and the Beaverhill Lake and Slave Point zones in NW Alberta. Over $2.0 million was spent in the first quarter on land and seismic as the Corporation moves to expand its oil prospect inventory. The 2011 capital program is focused 90% on oil projects with a view to increasing the oil weighting to 50% by year end. Although AvenEx has significant natural gas upside, natural gas development continues to be closely managed in view of current low natural gas prices.Overall, Elbow River's results were strong as it benefitted from solid propane, ethanol and heavy fuel oil sales. The first quarter provided funds from operations of approximately $5.0 million which was ahead of internal forecasts but slightly behind last year's $5.7 million, which benefited from a one-time $1.3 million ethanol arbitrage opportunity. The first quarter is historically one of Elbow River's stronger quarters due to the winter seasonal sales cycle while the second and third quarters are traditionally weaker as winter propane and butane demand subsides. With term sales ahead of last year's numbers, the second quarter appears to be more in line with prior year's sales levels rather than the weak 2010. In addition, marketing and logistics staff have been increased in order to take advantage of opportunities across all of Elbow River's product lines.AvenEx is continuing with the disposition of its real estate portfolio in order to focus on its more energy related divisions. Four properties remain, including an industrial property in Ontario and the "larger centre" Western Canadian theatre package. We are now targeting to have transactions in place on the remaining properties by the end of 2011. Funds from property sales will be redeployed into growth opportunities in the energy divisions. The portfolio continues to be 100% leased and perform as expected.In the first quarter, the Corporation did not sell any of the EnerVest Diversified Income Trust units being held for investment purposes. The EnerVest units currently yield approximately 8%, but will be disposed of as opportunities arise for the redeployment of capital into the Oil and Gas Division. The Corporation continues to maintain a strong balance sheet post the Great Plains acquisition, with a debt to cash flow ratio of less than 1:1 at 0.81:1 (exclusive of mortgages), undrawn bank lines in the Oil and Gas Division and remaining mortgages of about $5.5 million in the Real Estate Division.The Corporation paid its initial dividend of $0.045 per shre on January 22, 2011 and the monthly dividends of $0.045 per share have been paid on the 15th of each month to date. The AvenEx Board of Directors reviews the dividend level monthly. Based on current commodity prices, tax pool balances, operational forecasts and balance sheet strength the current forecasted 2011 dividend payout ratio is targeted at 60% of funds from operations. This compares to a 70%-80% target distribution payout ratio of funds from operations that the Trust had prior to its conversion to a Corporation.OutlookAvenEx looks to combine the cash flows from its Elbow River LPG and petroleum marketing and logistics business with a traditional junior oil and gas company to provide sustainable dividends and modest growth. The dividend payout ratio continues to target approximately 60% of funds from operations for the full year 2011. Based on current projections, the oil and gas division should provide about 70% of go forward cash flows and Elbow River about 30%.2011 capital expenditure projections of about $34.0 million look to focus over 90% of spending on oil related projects while inventorying natural gas projects for the future if and when natural gas prices increase. The second quarter 2011 capital spending will pick up in June after spring break up with oil projects in our SW Saskatchewan, Pembina and NW Alberta areas. Production product mix is forecast to move to a 50%/50% oil and natural gas liquids to natural gas split by year end 2011.Elbow River results are traditionally weaker in the second and third quarters due to reduced seasonal demand for propane and butane. That will be the case again this year, although results are expected to be ahead of 2010 due to stronger presales and increased heavy fuel oil demand.The Corporation is moving forward with the sale of its remaining real estate assets and is pushing to have deals in place later this year.REVIEW OF FINANCIAL RESULTSNet loss from continuing operations for the quarter ended March 31, 2011 was $2.0 million down from a net loss of $2.3 million in the quarter ended March 31, 2010. Net loss for the quarter ended March 31, 2011 was $1.7 million down from a net loss of $2.2 million for the quarter ended March 31, 2010.Funds from continuing operations were $14.4 million for the quarter ended March 31, 2011 slightly higher than $13.1 million in the comparable quarter in 2010. Funds from operations were $14.5 million for the quarter ended March 31, 2011, up from funds from operations for the quarter ended March 31, 2010 of $13.7 million.AvenEx declared dividends of $9.5 million ($0.18 per share) for the quarter ended March 31, 2011 which is up from the $7.6 million ($0.18 per share) distributed for the quarter ended March 31, 2010. The first quarter payout ratio was 65% of funds from operations compared to 56% at March 31, 2010. The dividend payout ratio was higher than long term targets of 60% due to an extra dividend being declared on January 4, 2011 as AvenEx transitioned to a corporation. This was followed by the normal monthly dividend for January with a record date of January 31, 2011. Without this additional dividend, the dividend payout ratio would have been 49%.On December 31, 2010, Avenir Diversified Income Trust (the "Trust") effectively completed its conversion to a dividend paying corporation from an income trust pursuant to a Plan of Arrangement (the "Arrangement") under Section 193 of the Business Corporations Act (Alberta). Pursuant to the Arrangement, holders ("unitholders") of trust units ("trust units") of the Trust received one common share ("common shares") of AvenEx for each trust unit. In addition, holders of exchangeable shares ("Exchangeable Shares") of AvenEx received common shares of AvenEx for each Exchangeable Shares. As a result of the Arrangement, on December 31, 2010 AvenEx had approximately 52.9 million common shares issued and outstanding.The Common Shares of AvenEx trade on the Toronto Stock Exchange (the "TSX") under the trading symbol AVF. Previous historical references to "unitholders", "distributions", "trust units" and "per unit' have now been replaced by "shareholders", "dividends", "common shares" and "per share", respectively, where applicable. Despite the change in legal structure from a trust to a dividend paying corporation, AvenEx's business activities and business strategy remain unchanged and all officers and directors remain the same.Adoption of International Financial Reporting Standards ("IFRS")On January 1, 2011, AvenEx adopted IFRS for financial reporting purposes, using a transition date of January 1, 2010. The unaudited interim condensed consolidated financial statements for the three months ended March 31, 2011, including required comparative information, have been prepared in accordance with IAS 34, as issued by the IASB. Except as noted in the Selected Quarterly Information section of this MD&A, 2010 comparative information has been prepared in accordance with IFRS. Reconciliations between Canadian GAAP and IFRS can be found in Note 23 of the unaudited interim condensed consolidated financial statements for the three months ended March 31, 2011. The adoption of IFRS has not had an impact on the Corporation's operations, strategic decisions or cash flow. The most significant area of impact was the adoption of the IFRS accounting policies relating to property, plant and equipment, and income taxes. Further information on the impact of converting to IFRS is provided in the Critical Accounting Policies section of this MD&A and in Notes 3 and 23 of the Corporation's unaudited interim condensed consolidated financial statements for the three months ended March 31, 2011.AvenEx Energy Corp. was created to provide stable, sustainable dividends to shareholders while providing modest growth. AvenEx is focused on energy with two distinct business units, namely Oil & Gas development and production and LPG marketing and logistics.AvenEx trades on the TSX under the symbol AVF. For further information on AvenEx please go to our website at: www.avenexenergy.com.This press release shall not constitute an offer to sell or the solicitation of an offer to buy the securities in any jurisdiction. The securities offered have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold in the United States except in certain transactions exempt from the registration requirements of the U.S. Securities Act and applicable state securities laws.Forward Looking StatementsCertain statements contained herein including, without limitation, financial and business prospects and financial outlook, the effect of government announcements, proposals and legislation, plans in its Oil and Gas Division regarding hedging, wells to be drilled, expected or anticipated production rates, timing of expected production increases, the weighting of production between different commodities, expected commodity prices, exchange rates, production expenses, transportation costs and other costs and expenses, maintenance of productive capacity and capital expenditures; plans in the Elbow River Marketing Limited Partnership ("Elbow River") business regarding plans for its ongoing Liquefied Petroleum Gas ("LPG") business and activities around the exit from marketing its bio-diesel product; plans in the Real Estate Division for the timing of selling assets and the nature of capital expenditures; and the timing and method of financing these businesses, may be forward looking statements. Words such as "may", "will", "should", "could", "anticipate", "believe", "expect", "intend", "plan", "potential", "continue", "targeted" and similar expressions may be used to identify these forward looking statements. These statements reflect management's current beliefs and are based on information currently available to management. Forward looking statements involve significant risk and uncertainties.A number of factors could cause actual results to differ materially from the results discussed in the forward looking statements including, but not limited to, 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 and the inability to retain drilling rigs and other services; risks associated with its Elbow River business including, but not limited to, counterparty risk in default, operational risks, hedging, access to credit, competitor risk, seasonality and impact of the global recession on overall economic activity; and risks associated with the Real Estate Division including, but not limited to the impact the overall economy has on valuations, future delinquencies, access to mortgages and impact on interest rates; as well as the risks associated with AvenEx's incorrect assessment of the value of acquisitions, failure to realize the anticipated benefits of acquisitions, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources and the risk factors outlined under "Risk Factors" and elsewhere herein. The recovery and reserve estimates of AvenEx's reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements.Forward-looking statements or information are based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect. Although AvenEx believes that the expectations reflected in such forward- looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because AvenEx can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this document, assumptions have been made regarding, among other things: the impact of increasing competition; the general stability of the economic and political environment in which AvenEx operates; the timely receipt of any required regulatory approvals; the ability of AvenEx to obtain qualified staff, equipment and services in a timely and cost efficient manner; Divisional results; the ability of operators to operate the field in a safe, efficient and effective manner; the ability of AvenEx to obtain financing on acceptable terms; field production rates and decline rates; the ability to replace and expand oil and natural gas reserves through acquisition, development of exploration; the timing and costs of pipeline, storage and facility construction and expansion and the ability of AvenEx to secure adequate product transportation; future oil and natural gas prices; currency, exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which AvenEx operates; and the ability of AvenEx to successfully market its products, fluctuations in foreign exchange or interest rates and stock market volatility, credit risk and the ability to realize on collateral in the event of default, failure of counter parties to perform on contracts, fluctuation in the value of real property, failure to produce income or revenue from real estate, failure of tenants to meet lease obligations, increase in property taxes and mortgage, maintenance, insurance, operating costs and decreases in occupancy and rental rates, and fixed costs in relation to variable revenue streams. Readers are cautioned that the foregoing list of factors is not exhausted.Forward looking statements and other information contained herein concerning the Oil and Gas Division, Elbow River's business, the Real Estate Division and AvenEx's general expectations concerning these industries are based on estimates prepared by each Division's management and from using data from publicly available industry sources as well as from reserve reports, market research and industry analysis and on assumptions based on data and knowledge of these industries which AvenEx believes to be reasonable. However, this data is inherently imprecise, although generally indicative of relative market positions, market shares and performance characteristics. While AvenEx is not aware of any misstatements regarding any industry data presented herein, these industries involve risks and uncertainties and are subject to change based on various factors.These forward looking statements are made as of the date hereof and AvenEx assumes no obligation to update or review them to reflect new events or circumstances except as required by applicable securities laws.AvenEx Energy Corp. CONSOLIDATED BALANCE SHEETS (Unaudited) As at March 31, December 31, January 1, 2011 2010 2010 (in thousands of dollars) $ $ $ ----------------------------------------------------------------------------ASSETS Current Cash - 1,028 2,183 Marketable securities 7,814 7,595 19,842 Accounts receivable 56,018 64,659 56,310 Prepaid expenses 3,446 3,514 8,626 Inventory 14,505 25,591 13,687 Risk management assets 3,420 4,950 22,825 ---------------------------------------------------------------------------- 85,203 107,337 123,473 Assets held for sale - Real Estate 12,714 12,533 - ---------------------------------------------------------------------------- 97,917 119,870 123,473 Exploration and evaluation 34,447 32,613 14,586 Property, plant and equipment 218,609 204,731 147,498 Investment property - - 33,529 Intangibles and other assets 12,461 12,836 9,094 Goodwill 28,069 28,069 23,424 Deferred income taxes 24,631 24,492 20,102 ---------------------------------------------------------------------------- 416,134 422,611 371,706 --------------------------------------------------------------------------------------------------------------------------------------------------------LIABILITIES AND SHAREHOLDERS' EQUITY Current Bank indebtedness 49,733 58,380 12,351 Accounts payable and accrued liabilities 76,347 72,988 67,194 Dividend payable 2,380 - 2,527 Deferred revenue - - 215 Risk management liabilities 10,693 5,461 404 Current portion of mortgages - - 4,063 ---------------------------------------------------------------------------- 139,153 136,829 86,754 Liabilities of assets held for sale - Real Estate 5,679 5,862 - ---------------------------------------------------------------------------- 144,832 142,691 86,754 Mortgages - - 21,391 Decommissioning liabilities 23,489 22,198 16,885 Deferred income taxes - - 8,099 Liability for share-based compensation - - 4,279 ---------------------------------------------------------------------------- 168,321 164,889 137,408 ----------------------------------------------------------------------------Shareholders' equity Share capital 250,936 250,337 - Unitholders' capital - - 421,270 Contributed surplus 6,710 6,144 - Retained earnings (deficit) (11,263) - (187,550)Accumulated other comprehensive income 1,430 1,241 578 ---------------------------------------------------------------------------- 247,813 257,722 234,298 ---------------------------------------------------------------------------- 416,134 422,611 371,706 --------------------------------------------------------------------------------------------------------------------------------------------------------AvenEx Energy Corp. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Unaudited) For the three months ended March 31, 2011 2010 (in thousands of dollars) $ $ ----------------------------------------------------------------------------REVENUE Oil and gas revenue 24,752 16,140 Royalties (4,694) (2,305)Unrealized gain (loss) on financial (4,527) 910 ----------------------------------------------------------------------------Total oil and gas revenue 15,531 14,745 ----------------------------------------------------------------------------Elbow River revenue 196,529 223,317 Unrealized gain (loss) on financial instruments (2,235) (17,949)----------------------------------------------------------------------------Total Elbow River revenue 194,294 205,368 ----------------------------------------------------------------------------Gain (loss) on sale of marketable securities - 465 Interest and other revenue 156 440 ----------------------------------------------------------------------------Total revenue 209,981 221,018 ----------------------------------------------------------------------------EXPENSES Oil and gas operating 7,705 5,248 Oil and gas transportation costs 654 307 Elbow River operating 190,284 214,873 General and administrative 4,761 4,976 Share based compensation 729 2,071 Bad debt expense (recovery) (507) (54)Finance costs 81 407 Capital taxes 72 90 Exploration and evaluation 214 57 Depletion, depreciation and amortization 8,118 4,844 ---------------------------------------------------------------------------- 212,111 232,819 ----------------------------------------------------------------------------Income (loss) from continuing operations before income tax (2,130) (11,801)Deferred income tax recovery (expense) 159 9,532 ----------------------------------------------------------------------------Net income (loss) from continuing operations (1,971) (2,269)Net income from discontinued operations - Real Estate 226 116 ----------------------------------------------------------------------------Net income (loss) for the period (1,745) (2,153)Other comprehensive income: Change in fair value of marketable securities, net of tax 189 1,235 ----------------------------------------------------------------------------Other comprehensive income 189 1,235 ----------------------------------------------------------------------------Comprehensive income (loss) for the period (1,556) (918)--------------------------------------------------------------------------------------------------------------------------------------------------------Net income (loss) from continuing operations per share Basic (0.03) (0.05)--------------------------------------------------------------------------------------------------------------------------------------------------------Net income from discontinued operations per share Basic 0.00 0.00 --------------------------------------------------------------------------------------------------------------------------------------------------------Net income (loss) per share Basic (0.03) (0.05)--------------------------------------------------------------------------------------------------------------------------------------------------------AvenEx Energy Corp. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited) As at (in thousands March 31, 2011 December 31, 2010 March 31, 2010 of dollars) Number $ Number $ Number $----------------------------------------------------------------------------Share capital Balance, beginning of period 52,781,690 250,337 - - - -Issued to trust unitholders - - 51,652,333 481,232 - -Exchanged for exchangeable shares - - 1,131,357 7,116 - -Elimination of deficit 94,240 599 - (238,011) Exercise of options - -----------------------------------------------------------------------------Balance, end of period 52,877,930 250,936 52,781,690 250,337 - ---------------------------------------------------------------------------------------------------------------------------------------------------------Unitholders' capital Balance, beginning of period - - 42,110,678 421,270 42,110,678 421,270Exercise of options - - 978,526 5,586 435,625 2,343Issued upon acquisition of Great Plains - - 8,563,129 54,376 - -Exchanged for common shares - -(51,652,333) (481,232) - -----------------------------------------------------------------------------Balance, end of period - - - - 42,546,303 423,613--------------------------------------------------------------------------------------------------------------------------------------------------------Contributed surplus Balance, beginning of period 6,144 - - Exercise of options (107) - - Cash settlement of options (56) - - Share based compensation capitalized - - - Share based compensation expense 729 - - Reclassification from liability - 6,144 - ----------------------------------------------------------------------------Balance, end of period 6,710 6,144 - --------------------------------------------------------------------------------------------------------------------------------------------------------Retained earnings (deficit) Balance, beginning of period - (187,550) (187,550)Net income (loss) (1,745) (21,693) (2,153)Distributions declared during the period - (28,768) (7,647)Dividends declared during the period (9,518) - - Transfer into share capital - 238,011 - ----------------------------------------------------------------------------Balance, end of period (11,263) - (197,350)--------------------------------------------------------------------------------------------------------------------------------------------------------Accumulated other comprehensive income Balance, beginning of period 1,241 578 578 Change in fair value of Marketable securities, net of tax 189 663 1,235 ----------------------------------------------------------------------------Balance, end of period 1,430 1,241 1,813 --------------------------------------------------------------------------------------------------------------------------------------------------------AvenEx Energy Corp. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) For the three months ended March 31, 2011 2010 (in thousands of dollars) $ $ ----------------------------------------------------------------------------OPERATING ACTIVITIES Net income (loss) from continuing operations (1,971) (2,269)Add (deduct) non-cash items: Share based compensation 729 2,071 Non-cash general and administrative 252 - Exploration and evaluation 214 57 Depletion, depreciation and amortization 8,118 4,844 Accretion of decommissioning liabilities 404 289 Unrealized loss (gain) on financial instruments 6,762 17,039 Unrealized foreign exchange 46 631 Deferred income tax recovery (159) (9,532)----------------------------------------------------------------------------Funds from continuing operations 14,395 13,130 Funds from discontinued operations - Real Estate 139 595 ---------------------------------------------------------------------------- 14,534 13,725 Asset retirement expenditures during year (385) (5)Net change in non-cash working capital 28,455 6,744 ----------------------------------------------------------------------------Cash provided (used in) by operating activities 42,604 20,464 ----------------------------------------------------------------------------FINANCING ACTIVITIES Issue of shares, net of issue costs 354 1,446 Cash settlement of options (56) (181)Dividends paid (9,518) (7,647)Real estate repayment of mortgages (61) (187)Net change in non-cash working capital - 26 ----------------------------------------------------------------------------Cash provided (used in) by financing activities (9,281) (6,543)----------------------------------------------------------------------------INVESTING ACTIVITIES Oil and gas property acquisitions (9,133) (655)Oil and gas property disposals 2 3,596 Oil and gas development expenditures (12,774) (7,992)Purchase of other assets (741) (95)Net change in non-cash working capital (3,101) 6,999 ----------------------------------------------------------------------------Cash provided by (used in) investing activities (25,747) 1,853 ----------------------------------------------------------------------------Increase (decrease) in cash and cash equivalents during the period 7,576 15,774 Cash and cash equivalents (bank indebtedness), beginning of period (57,354) (10,117)Change in cash of assets held for sale 45 - ----------------------------------------------------------------------------Cash and cash equivalents (bank indebtedness), end of period (49,733) 5,657 --------------------------------------------------------------------------------------------------------------------------------------------------------Supplemental information: Cash taxes paid 22 48 Cash interest paid 370 439 --------------------------------------------------------------------------------------------------------------------------------------------------------FOR FURTHER INFORMATION PLEASE CONTACT: William GallacherAvenEx Energy Corp.President & CEO(403) 237-9949(403) 237-0903 (FAX)ORGary H. DundasAvenEx Energy Corp.Vice-President, Finance and CFO(403) 237-9949(403) 237-0903 (FAX)ORSuite 300, 808 – 1st Street S.W.AvenEx Energy Corp.Calgary, Alberta T2P 1M9www.avenexenergy.comThe TSX Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.