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* Non-recurring items include payments withdrawn by former executives of the Company prior to the 2008 AGM, contested proxy vote expenses and impairment of international assets.
During the year ended December 31, 2008 the Company's revenues increased from $9.6 million in 2007 to $18.5 million. The increase was primarily due to the volume of natural gas sold (increase of 84% over 2007), and the increase in the natural gas price, which rose sharply through the first seven months of 2008. After July 2008, natural gas prices fell steadily as storage levels increased and North American economy weakened. Average production for the twelve month period increased to 909 boe/d from 635 boe/d in 2007. Average oil production for the year was 154 bopd, down from the 238 bopd of 2007. Average gas production increased from 2007 levels of 2,308 Mcf/d to 4,258 Mcf/d during 2008 (385 boe/d to 710 boe/d). During the fourth quarter, revenues for the three-month period were $3,540,511, an increase of 41% from the 2007 level of $2,507,172. Average oil and gas production increased from 652 boe/d in the fourth quarter of 2007 to 1,052 boe/d in the fourth quarter of 2008. Company exited the quarter at 1,019 boe/d and is currently producing approximately 1100 boe/d plus the estimated 300 boe/d of production behind pipe in the Berwyn field. Average oil production for the quarter was 95 bopd as compared to 202 bopd in the fourth quarter of 2007 which was a result of the lost production from Marwayne. During the same period average gas production increased from 2,646 Mcf/d at December 31, 2007 to 5,413 Mcf/d at December 31, 2008 (441 boe/d to 902 boe/d, an increase of 104%). Oil prices received, decreased from an average of $54.94/bbl in Q4 2007 to $41.52/bbl in Q4 2008. Average gas prices received were virtually the same being $5.92/Mcf in Q4 2008, compared to $5.91/Mcf average price in the corresponding period of 2007. The proved reserves of the Company decreased a nominal amount from 1.563 MMBOE (Million BOE) to 1.553 MMBOE, while the proved plus probable (P+P) reserve count decreased from 4.346 MMBOE to 2.700 MMBOE. The reasons for the major drop off in P+P reserves was due to the Company's Marwayne property watering out, technical revisions based on production history, and certain projects with probable undeveloped reserves assigned were dropped as they were no longer economically viable. The value of the Company's 2008 proved reserves at December 31, 2008 increased to $30.9M (10% discount) from the $26.3M at December 31, 2007. The 2008 P+P reserve value decreased to $46.5M (10% discount) from the December 31, 2007 value of $62.8M. These reserves are expected to increase in 2009 and beyond as further development of potentially significant drilling opportunities are pursued. For the twelve months ended December 31, 2008, general and administrative expenses ("G&A") increased by 30% from those of the comparative period last year, primarily due to approximately $1.2 million that previous management had, immediately prior to the AGM, considered themselves entitled to as a change of control payment under their respective employment contracts and contested proxy vote expenses. If these expenses had not been incurred, G&A expenses would have decreased by 15%. In the year ending December 31, 2007, approximately $2 million of G&A expenses were capitalized compared to approximately $753,000 in 2008. The significant increase in capital expenditures in the three months ended December 31, 2008 was the result of capital expenditures in Pakistan. For the twelve months ended December 31, 2008, ISR participated in the drilling of 5 wells for an 83% success rate. In the third and fourth quarter the Company did not have any capitalized G&A expenses. Eugene Hretzay, CEO was quoted as saying: "Since your new board and management took charge of ISR following the AGM on June 23, 2008, we accomplished the following:
I am pleased to announce the engagement of QIS Capital to assist the Company in a marketing and investor awareness program. QIS Capital will provide corporate information to its large following of investors and will also communicate the investment merits of International Sovereign through its relationships with newsletter editors, brokers, media, and analysts. As part of this marketing program, International Sovereign has been invited to present at the bi-annual Small-Cap Conference Series held in Calgary on April 16, 2009. We are of the opinion that International Sovereign is trading well below its assessed value and plan to focus on increasing the exposure of the Company in the investment community. In summary, in the six months since assuming responsibility for the affairs of ISR, the board and new management have been able to use the positive cash flow from operations, plus the benefit of a share issue in a difficult credit and equity market, to move the Company forward with what is a sound capital program that is geared to build production, increase profitability and cash availability. The board and new management have also eliminated debt, reduced and controlled overhead expenditures and placed the Company on a sound financial base on which to grow and take advantage of acquisition opportunities." For further information, please contact:
Eugene Hretzay Reader Advisories Forward-Looking Statements: This news release contains certain forward-looking statements, including management's assessment of future plans and operations, and capital expenditures and the timing thereof, that involve substantial known and unknown risks and uncertainties, certain of which are beyond the Company's control. Such risks and uncertainties include, without limitation, 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, inability to retain drilling rigs and other services, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, the impact of general economic conditions in Canada, the United States and overseas, industry conditions, changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof, and obtaining required approvals of regulatory authorities. The Company's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits, including the amount of proceeds, that the Company will derive there from. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect the Company's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). All subsequent forward-looking statements, whether written or oral, attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws. BOE may be misleading, particularly if used in isolation. A BOE conversion 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. The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release. This news release is not for dissemination in the United States or to U.S. persons.
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