Sharon Energy (fka sheyf)

[bigpike]

Sharon Announces Major Growth in Financial Results and Reserves for 2006
Thursday June 29, 9:00 am ET

CALGARY, ALBERTA--(MARKET WIRE)--Jun 29, 2006 -- (Sharon Energy Ltd. reports its financial results in U.S. dollars)

Sharon Energy Ltd. (TSX VENTURE:SHY.V - News) is pleased to report on the Company's improved operating and financial results for the year ended March 31, 2006.

Sharon reported revenues of $4.1 million for the year ended March 31, 2006, compared with $1.0 million one year earlier. Cash flow increased to $3.1 million, or $0.07 per share, a significant increase from $304,000 for the same period in 2005. Sharon reported earnings of $1.2 million for the year, compared with $766,000 one year earlier.

Production for the year nearly tripled to 331 BOEd from 115 BOEd reported in 2005. Proven and probable oil and gas reserves increased to 2.4 MMBOE from 1.0 MMBOE in 2005. The present value of the Company's reserves, discounted at 10%, increased to $45 million from $13 million for the prior year.

Financial and Operating Highlights 2006 2005 % Increase
-------------------------------------
- Production (BOEd) 331 115 188
- Revenue $ 4,103,904 $ 1,004,575 30
- Cash flow $ 3,086,657 $ 303,682 916
- Oil and gas reserves (MBOE) 2,426 1,060 130
- Present value of reserves $ 43,595,000 $ 13,268,000 265

ADVERTISEMENT
click here
Exploration and Development

During 2004/2005, Sharon drilled two deep Wilcox discovery wells in Texas, on the Hound Dog and Allen Ranch prospects. These wells, in which the Company holds working interests of 28% and 14%, respectively, are currently producing at 2.6 MMcfd and 4.8 MMcfd of gas and have cumulative production volumes of 1.2 Bcf and 1.4 Bcf. The Allen Ranch well has also produced commercial gas from three additional Wilcox zones and operations to commingle gas production from all four zones are anticipated to commence this summer.

During 2006, Sharon drilled a step-out well on each of the Allen Ranch and Hound Dog prospects, encountering multiple gas zones in various deep Wilcox sands. Completion operations have commenced on both wells and Sharon anticipates further re-completion and commingling operations to be completed by mid-summer.

In addition to the above captioned prospects, the Company holds a 50% working interest in the Northwest Speaks Wilcox prospect. The Company is presently seeking equipment to drill the first well on this multi-zone Wilcox prospect and hopes to commence operations by Q1 2007.

Based on the results of drilling and completions to date, Sharon anticipates continued production and reserve increases in the United States over the next year. In addition, new production planned to come on stream from oil and gas wells in Alberta should provide production and reserve increases from its Canadian drilling program.

Summary of Operations

For the Year Ended March 31
-----------------------------
(expressed in U.S. Dollars) 2006 2005
------------------------------------------------------------------------
Financial
Total revenue $ 4,103,904 $ 1,004,575
Cash flow from operations $ 3,086,657 $ 303,682
per share $ 0.07 $ 0.01
Earnings for the year $ 1,119,561 $ 766,460
per share $ 0.03 $ 0.02
Capital
Additions $ 6,905,939 $ 2,009,047
Dispositions $ 642,884 $ 150,000
Net debt $ 1,667,539 $ 3,269,078
Total assets $ 11,893,423 $ 6,320,738
Operations
Production
Gas (Mcfd) 1,734 540
Oil (Bopd) 42 25
BOEd (6Mcf =1Bbl) 331 115
Product Prices
Gas ($/Mcf) $ 7.50 $ 5.00
Oil ($/Bbl) $ 52.97 $ 38.38
Reserves
Gas (MMcf) 13,559 5,616
Oil (MBbl) 166 124
BOE (MBbl) 2,426 1,060
Present value, before income tax
discounted at 10% $ 43,595,000 $ 13,268,000
Total shares outstanding, at year end 50,811,065 38,422,265
------------------------------------------------------------------------
------------------------------------------------------------------------

Oil and Gas Reserves and Reserve Values

Sharon's petroleum and natural gas reserves were evaluated by independent engineering consultants, AJM Petroleum Consultants ("AJM"), effective March 31, 2006 and a summary of certain aspects of their report follows. The AJM report was prepared in accordance with National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101").

It should be noted that estimates of future net revenues either discounted or presented after tax do not represent fair market value of the reserves. The estimates of reserves and future net revenues for individual properties may not reflect the same confidence level as estimates of reserves and future net revenues for the Company.

Canadian oil and gas companies are required to have their oil and gas properties evaluated and reported upon in accordance with NI 51-101. This policy sets standards for reserve recognition which in some respects are higher than those used by evaluators in the past. The standard implies a 90% confidence rate that actual proved reserves will be equal or greater than the estimate and a 50% confidence rate that the proved and probable reserves will be equal or greater than the estimate. Given the inherent difficulties in estimating reserves and the limited amount of information available for newly drilled or completed wells which do not have production history, it is likely that reserve forecasts for these properties will be lower in early years of their development.

Over the last year, Sharon's proven and probable reserves increased by 129%, to 2.4 million BOE and the net present value of future revenue before income tax, using a 10% discount rate, increased by 229%, to $44 million. During the year ended March 31, 2006, the Company added proved reserves at a cost of $16.68 per BOE and proved and probable reserves at a rate of $9.81 per BOE.

At March 31, 2006, 66% of Sharon's reserves were classified as probable. These reserves were primarily assigned to the Allen Ranch and Hound Dog properties, where the two new Wilcox gas wells are being completed and production tested and are anticipated to be placed on production in July 2006. Once these wells are completed and placed on production, the Company believes a significant percentage of the probable reserves will be reclassified as proved producing reserves.

SUMMARY OF OIL AND GAS RESERVES
AND NET PRESENT VALUES OF FUTURE NET REVENUE
AS OF MARCH 31, 2006
FORECAST PRICES AND COSTS (US$)

RESERVES
----------------------------------------
LIGHT AND
MEDIUM OIL NATURAL GAS
----------------------------------------
Gross Net Gross Net
RESERVES CATEGORY (MBbl) (MBbl) (MMcf) (MMcf)
------------------------------------------------------------------------
PROVED
Developed Producing 79 66 3,101 2,419
Developed Non-producing - - 64 56
Undeveloped 30 25 1,152 949
------------------------------------------------------------------------
TOTAL PROVED 109 91 4,317 3,424
PROBABLE 48 41 9,242 7,060
------------------------------------------------------------------------
TOTAL PROVED PLUS
PROBABLE 158 132 13,559 10,483
------------------------------------------------------------------------
------------------------------------------------------------------------


NET PRESENT VALUES
OF FUTURE NET REVENUE (1)
BEFORE INCOME TAXES DISCOUNTED AT
(% per year)
------------------------------------------------
0 5 10 15 20
RESERVES CATEGORY (M$) (M$) (M$) (M$) (M$)
------------------------------------------------------------------------
PROVED
Developed Producing 19,670 17,261 15,435 14,018 12,889
Developed Non-producing 247 206 173 148 128
Undeveloped 7,212 5,898 4,988 4,319 3,805
------------------------------------------------------------------------
TOTAL PROVED 27,129 23,366 20,596 18,485 16,821
PROBABLE 56,183 33,517 22,998 17,235 13,685
------------------------------------------------------------------------
TOTAL PROVED PLUS
PROBABLE 83,312 56,882 43,595 35,720 30,506
------------------------------------------------------------------------
------------------------------------------------------------------------
NOTE: (1) Figures may not add due to rounding.

SEDAR Filings

Further information regarding financial and operating results may be obtained at www.sedar.com, where the Company's MD&A and financial statements have been filed.

BOE Presentation - The term barrels of oil equivalent (BOE) may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1 Bbl 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 this report are derived by converting gas to oil in the ratio of six Mcf of gas to one Bbl of oil.

Financial Reporting - All numbers are reported in U.S. dollars.

Sharon Energy Ltd. is a junior oil and gas company currently conducting active natural gas exploration programs in Texas, Alberta and Saskatchewan. Sharon is currently focused on exploring for natural gas in Alberta and deep Wilcox gas in Texas.

Forward-looking statements - the press release today contains "forward-looking" information. Actual results could differ materially from the conclusions, forecasts or projections in the forward-looking information. Certain material factors and assumptions were applied in drawing the conclusions or making the forecasts or projections as reflected in the forward-looking information. Additional information about the material factors that could cause actual results to differ materially from the conclusion, forecast or projection in the forward-looking information and the material factors or assumptions that were applied in drawing the conclusion or making the forecast or projection as reflected in the forward-looking information is contained in the press release.



The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.


Contact:

Contacts:
SHARON ENERGY LTD. - Houston, Texas
H.C. (Kip) Ferguson, III
President
[phone]
[phone] (FAX)

SHARON ENERGY LTD. - Calgary, Alberta
Robert W. Lamond
Chairman
[phone]
[phone] (FAX)

Sharon Energy Ltd.
#1800, 633 Sixth Avenue S.W.
Calgary, Alberta
T2P 2Y5 Canada
Website: http://www.sharonenergy.com


So