SHY Sharon Enery Ltd

CALGARY, Aug. 30 /CNW/ -- CALGARY, Aug. 30 /CNW/ - Sharon Energy Ltd. (TSX-V: SHY) ("Sharon") announces that it has filed its Q1 2011 MD&A and Financial Statements for the three months ended June 30, 2010, on SEDAR. During the quarter, Sharon realized $1.5 million from the sale of a portion of its Magnum Hunter holdings. The fair value of the remaining investment of 2,022,631 shares was approximately $9.3 million at June 30, 2010. Subsequent to the end of the quarter, Sharon sold an additional 180,000 shares for $858,000. To date Sharon has sold approximately 452,000 shares at an average price of $4.88 per share, realizing $2.2 million. Sharon's remaining share holdings have a market value of approximately $7.7 million at the date of this report. Sharon plans to continue to prudently sell a portion of these shares to fund its ongoing activities. Subsequent to the quarter, Sharon drilled a vertical Shaunavon oil well, 91/13-19-7-18W3, located in the Chambery field, Saskatchewan. Based on Sharon's analysis, the open hole logs indicate potential oil pay in the lower Shaunavon formation. Sharon has a 20% interest in the section along with an 20% interest in six additional sections of land in the area. Completion operations are planned for the Fall. Sharon is now in an enviable position, for a growth oriented junior exploration company, with a: - Significant cash position. - Substantial and highly liquid holding in Magnum Hunter Resources. - Growing inventory of oil focused prospects. - Joint venture program with two related junior exploration companies which will allow Sharon to minimize overhead costs and maximize the amount of expenditure used to grow its production and reserves base. Financial Revenue from continuing operations for the quarter ended June 30, 2010, totaled $58,000 compared with $172,000 for the prior year period. Revenue from discontinued operations for the quarter was nil compared with $171,000 for the prior year period. Cash flow from continuing operations for the quarter was negative $65,000 compared with positive $89,000 for the prior year period. Revenue was reduced by lower natural gas production and lower interest income. Cash flow from discontinued operations for the quarter was nil compared with positive $100,000 for the prior year period. Net earnings from continuing operations for the quarter was $934,000 compared with a loss of $46,000 for the prior year period; however, this was primarily driven by the $1.0 million gain on the sale of Magnum Hunter shares. Net loss from discontinued operations for the quarter was nil compared with a net loss income of $510,000 for the prior year period. Capital expenditures for continuing operations for the quarter totaled $130,000 compared with $87,000 for Q1 2010F. Capital expenditures for discontinued operations for the quarter totaled nil compared with $272,000 for the prior year period. Capital expenditures were financed from property dispositions, working capital and cash flow. Sharon exited the quarter with working capital of $1.3 million versus working capital from continuing operations of $133,000 at the beginning of the fiscal year. The MD&A and financial statements of Sharon Resources Ltd. for the three month period ended June 30, 2010 is available on SEDAR at www.sedar.ca The following table summarizes the financial and operating results of Sharon from continuing operations for the year. (Thousands, except per BOE, BOEd and per share Three Months Ended amounts, unaudited) June 30 ------------------------- 2010 2009 ------------------------------------------------------------------------- Financial (Restated) Total revenue (net of royalty expense) $ 58 $ 172 Cash flow from operations * $ (65) $ 89 per share, basic and diluted $ - $ - Earnings (loss) for the period $ 934 $ (46) per share, basic and diluted $ 0.01 $ 0.00 Capital additions $ 130 $ 87 Dispositions $ 48 $ - Working capital $ 1,332 $ 187 Total assets $ 12,353 $ 3,367 Total shares outstanding, at period end 74,004 74,086 Operations (for continuing operations) Production Gas (Mcfd) 173 253 Oil (Bopd) 3 11 BOEd (6 Mcf = 1 Bbl) 32 53 Product Prices Gas ($/Mcf) $ 3.66 $ 3.61 Oil ($/Bbl) $ 64.80 $ 61.08 ------------------------------------------------------------------------- * Non-GAAP measure. Please see the reconciliation of "cash flow from operations" to "cash flow from operating activities" after the shareholders message in the Q1 2011 interim report. Business Outlook After the completion of the sale of the U.S. properties and the Parkman oil pool, Sharon has significantly increased its financial flexibility. Over the last few months oil prices have stabilized at relatively high levels and natural gas prices have recovered from the very low prices of the Fall of 2009. Sharon plans to use its strong financial base to focus its efforts on the development of its heavy oil prospects in Alberta and Saskatchewan. Financial Reporting - all numbers are reported in Canadian dollars. ADVISORY: This press release contains forward looking statements. Although Sharon believes that the expectations reflected in these forward looking statements are reasonable, undue reliance should not be placed on them because Sharon can give no assurance that they will prove to be correct. Since forward looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. The forward looking statements contained in this press release are made as of the date hereof and Sharon undertakes no obligations 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. Where amounts are expressed on a barrel of oil equivalent (boe) basis, natural gas volumes have been converted to barrels of oil at six thousand cubic feet (mcf) per barrel (bbl). Boe figures may be misleading, particularly if used in isolation. A boe conversion of six thousand cubic feet per barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. References to oil in this discussion include crude oil and natural gas liquids (NGLs). NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE. Robert W. Lamond, President & Chairman; Donald K. Clark, VP Operations, Calgary, Alberta, SHARON ENERGY LTD., Telephone: (403) 269-9889, Fax: (403) 269-9890, TSXV: SHY

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