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Press release from Marketwire

MGM Energy Corp. Announces 2011 Financial Results

Tuesday, March 27, 2012

MGM Energy Corp. Announces 2011 Financial Results 18:35 EDT Tuesday, March 27, 2012CALGARY, ALBERTA--(Marketwire - March 27, 2012) -THIS PRESS RELEASE IS NOT FOR DISTRIBUTION TO ANY UNITED STATES NEWSWIRE SERVICES OR OTHERWISE FOR DISTRIBUTION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF UNITED STATES SECURITIES LAWS.MGM Energy Corp. ("MGM Energy" or the "Company") (TSX:MGX) announced today its financial results for the year ended December 31, 2011.The Company reported a net loss for the year ended December 31, 2011 of $160.9 million ($0.51 per share) as compared to a net loss of $19.7 million ($0.06 per share) for the year ended December 31, 2010. The loss was primarily the result of a writedown in the book value of the Company's northern Canadian petroleum and natural gas properties of $150 million, from $214 million to $64 million. The writedown reflects the significant decrease in forecasted long-term natural gas prices over the past year and the continued delay in restarting work on the Mackenzie Valley Pipeline. "Our primary focus at present is the Canol shale oil play in the Central Mackenzie Valley, which continues to show great potential. We are currently focused on advancing the regulatory process and operational planning with the intention of drilling a well in the winter of 2012/13. We are also looking for a partner as one option to assist in the development of this exciting shale oil play." said Henry Sykes, President of MGM Energy. "We continue to believe that our substantial natural gas assets in Canada's North hold tremendous potential, which will eventually be realized. Given the current uncertain timing of the Mackenzie Valley pipeline, we are considering a number of alternative means of commercializing these Mackenzie Delta gas assets." MGM Energy's full audited financial statements and accompanying Management's Discussion and Analysis will be filed shortly on the SEDAR website (www.sedar.com). MGM Energy is a Canadian oil and natural gas exploration and development company active in Northern Canada. MGM Energy's common shares are listed on the Toronto Stock Exchange under the symbol "MGX".Certain statements or information included in this press release constitute forward-looking statements under applicable securities legislation. Forward-looking statements or information in this press release include but are not limited to business strategy and objectives, exploration and drilling plans and the timing thereof, as well as the anticipated timing for seeking regulatory approvals. Such forward-looking statements or information are based on a number of assumptions which may prove to be incorrect. Although MGM Energy 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 MGM Energy can give no assurance that such expectations will prove to be correct. Forward-looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by MGM Energy and described in the forward-looking statements or information. The forward-looking statements or information contained in this document are made as of the date hereof and MGM Energy undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.MGM Energy Corp.Balance Sheets($000s)As at December 3120112010ASSETSCurrent assetsCash and cash equivalents$12,064$1,174Accounts receivable and other current assets5521,64012,6162,814Non-current assetsExploration and evaluation assets63,929233,051Property and equipment, net16327264,092233,323$76,708$236,137LIABILITIESCurrent liabilitiesAccounts payable and accrued liabilities$1,782$2,175Due to related parties861071,8682,282Non-current liabilitiesAsset retirement obligations3,9772,9053,9772,905Total Liabilities5,8455,187SHAREHOLDERS' EQUITYShare capital454,465454,465Contributed surplus8,5927,820Deficit(392,194)(231,335)Total Shareholders' Equity70,863230,950Total Liabilities and Shareholders' Equity$76,708$236,137MGM Energy Corp.Statements of Loss and Comprehensive Loss($000s, except as noted)Years Ended December 3120112010Oil and natural gas revenue$-$-ExpensesGeneral and administrative3,5264,175Share-based compensation7631,487Exploration and evaluation2,53012,429Dry hole3,189477Accretion of asset retirement obligation5759Impairment of petroleum and natural gas properties150,000-Depreciation121220Pipeline and regulatory-10160,18618,857Loss before net finance expense(160,186)(18,857)Finance income(120)(31)Finance expense793918Net finance expense673887Net lossand comprehensive loss$(160,859)$(19,744)Net loss per common share ($/share)Basic$(0.51)$(0.06)Diluted$(0.51)$(0.06)MGM Energy Corp.Statements of Cash Flows($000s)Years Ended December 3120112010Operating activitiesNet loss$(160,859)$(19,744)Adjustments to add non-cash itemsStock-based compensation7631,487Non-cash general and administrative expense34-Increase in asset retirement obligation385-Accretion of asset retirement obligations5759Impairment of petroleum and natural gas properties150,000-Depreciation121220Change in non-cash working capital6699,624Cash flows used in operating activities(8,830)(8,354)Financing activitiesCash payment for options exercised(25)-Common shares issued, net of issuance costs-4,988Cash flows from financing activities(25)4,988Investing activitiesCapital expenditures(260)58Proceeds from divestitures20,000Change in non-cash working capital5(4)Cash flows from investing activities19,74554Increase (decrease) in cash and cash equivalents10,890(3,312)Cash and cash equivalents, beginning of year1,1744,486Cash and cash equivalents, end of year$12,064$1,174FOR FURTHER INFORMATION PLEASE CONTACT: H.W. (Henry) SykesMGM Energy Corp.President(403) 781-7800(403) 781-7801 (FAX)ORR. N. (Rick) MillerMGM Energy Corp.Chief Financial Officer(403) 781-7800(403) 781-7801 (FAX)