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CALGARY, Aug. 28 /CNW/ -- TSX-V SYMBOL: ANG

CALGARY, Aug. 28 /CNW/ - AltaCanada Energy Corp. is pleased to present operating and financial highlights for the second quarter of 2008. Complete details in the Report to Shareholders are available on our website (www.altacanada.com), on SEDAR at www.SEDAR.com, or from the Corporation.

Fort Belknap, Montana

In the second quarter 2008, we continued to direct substantially all of our effort and available financial resources to the Fort Belknap Reservation in Montana. Potential for significant reserves and production additions exist on our large unexplored acreage position. As a result, no new wells were drilled and tied in on our existing lands and natural declines continued to reduce our current production base. We are pleased to report that exploration success was attained at Fort Belknap with the commitment of limited capital. In the third quarter, 3 Fort Belknap wells encountered natural gas pay thicknesses of 92 feet, 48 feet and 34 feet respectively, all from a drilling depth of less than 1,200 feet. In August, these three wells (1.5 net) tested at rates of 410 Mcf/d, 310 Mcf/d and 80 Mcf/d of dry gas with other zones remaining to be completed. Work progresses for a Q4 2008 tie-in of these three wells along with 6 (3.0 net) previous gas wells and a drilling program commencing in the fourth quarter.

We estimate that threshold reserves have now been achieved with fewer wells than we anticipated to build the connecting pipeline from Fort Belknap to our gathering system. The total tested rate from 9 wells (4.5 net) is 1.8 MMcf/d which would result in an initial flow rate of 1.5 MMcf/d (0.75 MMcf/d net). We anticipate 6 to 10 development locations on 640 acre spacing will be drilled in Q4 which could double this initial rate. First year declines average 35% but provide early payout and subsequent long reserve life. This first producing area represents only a small portion of the new lands we control.

During the second quarter, AltaCanada completed a significant purchase of an additional 25 percent interest (66,600 net acres) in Fort Belknap Reservation lands including a 25 percent interest in 6 (1.50 net) gas wells, for 7,250,000 common shares. This brought our working interest in the Reservation to a minimum of 50 percent and a maximum of 60 percent across 243,484 gross acres (133,134 net). Our total land position in Montana is now 400,000 gross acres (300,000 net acres) giving the corporation considerable exploration potential for both our traditional shallow gas play and for prospective deeper oil and gas zones.

Like many other gas producers, hedging losses are reported by AltaCanada for the period ending June 30, 2008. However, in the fifty-seven days following the close of the quarter our unrealized hedge position has gone from a loss of $1.7 million to a gain. On August 26, AltaCanada unwound all three hedging positions for a gain of $216,713. We will continue to evaluate our risk management strategy while maximizing the amount of capital that we have for investment in new exploration and development targets.

Financial Review

Cash flow from operations was $0.8 million for the six months ended June 30, 2008 a decrease of 60 percent compared to $1.9 million for the six months ended June 30, 2007, reflecting a decline in sales volumes of 42 percent and a realized hedging loss of $0.2 million in 2008 compared to a realized hedging gain of $0.2 million in 2007. On a per share basis, basic and diluted cash flow from operations in the six months of 2008 was $0.01 per share compared to $0.03 per share basic and diluted in the second quarter of 2007.

For the six months ended June 30, 2008, the Corporation had a net loss of $2.5 million compared to a net loss of $0.7 million for the same period in 2007. Loss per share basic and diluted for the six months ended June 30, 2008 was $(0.04) compared to a basic and diluted loss per share of ($0.01) for the six months ended June 30, 2007.

Sales volumes for the six months ended June 30, 2008 averaged 476 BOE/d, a decrease of 21 percent from the first quarter of 2008 (533 BOE/d). The average natural gas sales price of $9.00/Mcf for the six months was 24 percent higher than for the same period in 2007, ($7.23/Mcf in 2007), before the reported hedging activity.

Outlook

The acquisition of the additional 25% working interest was completed in the second quarter of 2008 strengthened our Fort Belknap land position and doubled our working interest position.

AltaCanada now controls a huge block on the Reservation and after drilling successes encountered on 9 of 11 Reservation wells, all on the northernmost portion of the block, we are moving forward with pipeline plans and are targeting bringing new production on stream in the fourth quarter of 2008.

Significant new gravity data was recorded in the second quarter over parts of the 5 northernmost townships (75,000+/- gross acres). Following the July drilling successes, 30 miles of new 2-D seismic is being shot in August and will lead to additional fourth quarter drilling, likely 6 to 10 wells. In the fourth quarter our pipeline plans include 6.5 miles of 6 inch steel line tieing to our existing facilities. We will also lay significant gathering lines to individual wells over this large area.

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RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

BOEs MAY BE MISLEADING, PARTICULARLY IF USED IN ISOLATION. A BOE
CONVERSION RATIO OF 6 MCF : 1 BBL IS BASED UPON AN ENERGY EQUIVALENCY
CONVERSION METHOD PRIMARILY APPLICABLE AT THE BURNER TIP AND DOES NOT
REPRESENT A VALUE EQUIVALENCY AT THE WELLHEAD.
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The corporate information contained in this news release may contain forward-looking forecast information. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonably accurate by AltaCanada Energy Corp. at the time of preparation, may prove to be incorrect. The actual results achieved during the forecast period will vary from the information provided herein and the variations may be material. Consequently there is no representation by AltaCanada Energy Corp. that actual results achieved during the forecast period will be the same in whole or in part as those forecast.

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HIGHLIGHTS

Three Months Six Months
Period ended June 30 2008 2007 2008 2007
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FINANCIAL

Petroleum and Natural
Gas Revenue * ($) 2,444,673 3,090,333 4,682,961 6,459,614
Cash Flow from
Operations ($) 253,467 1,019,306 754,743 1,903,873
Per Common Share
($ - Basic/Diluted) 0.00 0.02 0.01 0.03
Net Earnings (Loss) ($) (1,360,164) 459,763 (2,549,060) (729,473)
Per Common Share ($)
- Basic/Diluted) (0.02) 0.01 (0.04) (0.01)
Capital Expenditures ($) 2,696,811 1,158,577 3,260,875 2,387,143
Net Debt ($) at June 30 11,408,365 10,298,506
Shareholders' Equity ($)
at June 30 25,221,454 24,069,665
Total Assets ($)
at June 30 41,780,695 40,285,808
Common Shares - (weighted
average for the quarter)
Basic 67,957,912 60,230,745
Diluted 67,957,912 60,565,791
Common Shares -
(outstanding -at June 30) 74,381,538 60,230,745
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OPERATIONS

Average Daily Oil and
Gas Sales
Natural Gas (Mcf/d) 2,482 4,938 2,823 4,908
Oil and NGLs (BOIs/d) 6 5 6 5
Total (BOE/d) 420 828 476 823
% Gas/Oil Ratio 99/1 99/1 99/1 99/1
Average Prices:
Natural Gas ($/Mcf) 10.69 6.85 9.00 7.23
Oil and NGLs ($/Bbls) 55.90 32.04 55.44 39.10
Total ($/BOE) 64.03 41.04 54.03 43.38
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WELLS DRILLED

Gross - 5 1 8
Net - 3.5 0.25 4.1
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* Including royalty income and excluding hedge revenue (loss)
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