CALGARY, ALBERTA--(Marketwire - June 30, 2011) - Petro-Reef Resources Ltd. (News - Market indicators)

Petro-Reef Resources Ltd. has released its first quarter 2011 results. Full financial details are contained in the financial statements and management's discussion and analysis filed on SEDAR.

For the three months ended March 31, 2011, the company produced an average of 807 barrels of oil equivalent per day (boe/d) comprising 296 bbl/d of oil and natural gas liquids and 3,064 mcf/d per day of natural gas. The company received an average of $75.14 per barrel for oil and $4.06 per thousand cubic feet for natural gas. Field netbacks averaged $26.69/boe and corporate netbacks averaged $22.50/boe.

Total revenue decreased 0.6% to $3,122,279 for the three month period ended March 31, 2011 compared to $3,142,052 for the same period ended March 31, 2010. Petro-Reef realized a combined price per boe for the three month period ended March 31, 2011 of $42.99 representing a 21.3% increase compared to the realized price per unit of production of $35.44 for the same period ended March 31, 2010.

For the three month period ended March 31, 2011, Petro-Reef generated cash flows from operations of $1,634,148 an increase of 9.3% compared to $1,495,231 for the three month period ended March 31, 2010 due to a higher crude weighting that provided higher netbacks than natural gas.

Petro-Reef's bank debt and working capital deficit at March 31, 2011 was $12,458,134 compared to $10,560,062 at December 31, 2010. Included in the working capital deficit was $10,099,856 in outstanding bank lines of credit which is included in current liabilities. As at March 31, 2011, Petro-Reef's bank credit facility was structured as a $15,000,000 revolving operating demand loan and a $1,000,000 non-revolving acquisition / development demand loan. 

1. Excluding risk management contract liabilities and flow through share premium liability

In June, 2011 the Company renewed its credit facilities as follows:

Facility A - revolving operating demand loan with a maximum limit of $11,000,000.

Facility B - non-revolving acquisition/development demand loan that provides an additional $6,000,000 of financing.

Interest is at prime plus 1.0% per annum for Facility A and prime plus 1.5% per annum for Facility B.

Capitalized resource properties as at March 31, 2011 were $33,943,968 net of accumulated depletion, compared to $31,947,074 as at December 31, 2010. For the three month period ended March 31, 2011 Petro-Reef incurred $3,616,000 in net capital expenditures.

Capital expenditure summary:

Financial and Operational summary

(1) Funds from operations, funds from operations per share, operating netbacks and cash flow per barrel of oil equivalent are not defined by generally accepted accounting principles in Canada and are regarded as non-GAAP measures. Funds from operations and funds from operations per share are calculated as cash provided by operating activities before changes in non-cash working capital, and decommissioning obligations settled. Funds from operations are used to analyze the company's operating performance and the ability of the business to generate the cash flow necessary to finance future growth through capital investment and to repay debt. Funds from operations do not have a standardized measure prescribed by GAAP and therefore may not be comparable with the calculations of similar measures for other companies. The company also presents funds from operation per share whereby per share amounts are calculated using the weighted average number of common shares outstanding consistent with the calculation of net income or loss per share.

(2) The term barrel of oil equivalent may be misleading, particularly if used in isolation. A boe conversion ratio of 6,000 cubic feet per barrel of natural gas to barrels of oil equivalence is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All boe conversions in the report are derived from converting gas to oil in the ratio mix of 6,000 cubic feet of gas to one barrel of oil.

Forward-Looking Statements: All statements, other than statements of historical fact, set forth in this news release, including without Limitation, assumptions and statements regarding reservoirs, resources and reserves, future production rates, exploration and development results, financial results, and future plans, operations and objectives of the Corporation are forward-looking statements that involve substantial known and unknown risks and uncertainties. Some of these risks and uncertainties are beyond management's control, including but not limited to, the impact of general economic conditions, industry conditions, fluctuation of commodity prices, fluctuation of foreign exchange rates, environmental risks, industry competition, availability of qualified personnel and management, availability of materials, equipment and third party services, stock market volatility, timely and cost effective access to sufficient capital from internal and external sources. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable by the Corporation at the time of preparation, may prove to be incorrect. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements.