Shona Energy Company, Inc. Announces Third Quarter 2012 Results

CALGARY, Nov. 19, 2012 /CNW/ - Shona Energy Company, Inc. (TSXV: SHO) ("Shona" 
or the "Company"), today announced its financial results and operational 
highlights for the quarter ended September 30, 2012. 
"We are very pleased with our third quarter results as our production 
increased 22% and EBITDA increased 43% over the second quarter of this year. 
The Letter of Intent with Altenesol and the Arrangement Agreement with Canacol 
which were signed subsequent to quarter end are reflective of our key 
initiatives to monetize our gas assets and pursue opportunities for mutually 
beneficial business combinations," said James L. Payne, Chairman and CEO of 
Shona Energy. "Shona is also planning a four- to five-well drilling program in 
2013 on the Esperanza Block which is intended to establish significant 
additional reserves that will allow the Altenesol contract to be expanded and 
provide uncommitted reserves for new gas sales." 
Operational Highlights 

    --  Entered into an Arrangement Agreement with Canacol Energy Ltd.
        ("Canacol") whereby Canacol will acquire 100% of the issued and
        outstanding common and preferred shares of Shona in exchange
        for a combination of common shares of Canacol and cash
    --  Announced that its subsidiary, Geoproduction Oil and Gas
        Company of Colombia, had signed a Letter of Intent ("LOI") with
        Altenesol LNG Colombia, S.A.S. ("Altenesol") to supply natural
        gas for Altenesol's Nataly I liquefied natural gas project
    --  Averaged gas sales volumes of 16.2 million cubic feet per day
        (Mmcf/d) in the third quarter of 2012
    --  Generated US$5.3 million in EBITDA, or US$0.02 per share in the
        third quarter of 2012
    --  Completed acquisition and processing of 103 square kilometers
        of 3-D seismic and 14 kilometers of 2-D seismic on the
        Esperanza Block


Shona anticipates the following activities to occur in the remainder of 2012:
    --  Shona Annual and Special Shareholder Meeting to be held on
        December 14, 2012 to approve the Plan of Arrangement with
    --  Closing of the Plan of Arrangement with Canacol on or around
        December 20, 2012
    --  Completion of a Definitive Agreement with Altenesol that will
        provide for the sale of 17 million cubic feet per day of
        natural gas for a period of ten years

Selected Financial and Operating Information
                                        2012                   2011


  Natural gas revenues      $           7,905,615          $           

  Income (loss) from                    3,845,618           (3,725,751)

  Net income (loss)                    2,368,943            (4,169,706)
         Per share                           0.01                     
    (basic and diluted)                                          (0.02)

  Total assets                         87,520,383           108,129,636

  Long-Term Debt                       20,549,529            16,211,423

  Share Capital                                                        
    Common - voting                   232,675,283           157,536,577
    Common - non-voting                                      77,231,263
           Series A 10%                   190,796               175,939
    Warrants                           40,145,993            40,145,993


    Natural Gas - Mcf                   1,492,894               190,764
    Natural Gas - Mcf/d                    16,227                      

  Realized prices -          $                       $                 
  $/Mcf                                      5.30                  4.07

  Operating Netback                                                    
    Natural Gas Revenue                      5.30                      
    Royalties                              (0.42)                     
    Production Expense                     (0.30)                     
    Operating Netback        $                       $                 
                                             4.57                  1.37

Financial Review

The increase in revenues in the third quarter of 2012 compared with 2011 is 
attributable to higher sales volumes from the Nelson field which commenced on 
December 1, 2011 and higher gas prices received from the gas sold from this 
field. Higher gas sales price due to the redetermination of the La Guajira 
price to $5.80 on February 1, 2012 and $6.04 on August 1, 2012 accounted for 
$1.8 million of incremental natural gas revenue for the three months ended 
September 30, 2012 compared to 2011. The increased volumes added $5.3 
million of additional revenue in the third quarter of 2012 when compared to 
the same period in 2011. Similarly, for the year to date period of 2012 higher 
realized sales prices added $2.1 million and higher volumes added $16.6 
million to revenues over the 2011 period.

The increase in production expense in the third quarter of 2012 compared with 
2011 is due to increased production from the Nelson field, which commenced 
sales in December 2011. The increased royalty expense in the third quarter of 
2012 was due to higher sales revenues. Higher operating expense in the third 
quarter of 2012 is due to the additional costs associated with the higher 
sales volumes in 2012. The higher sales volumes resulted in an average 
operating expense of $0.30 per Mcf and $0.39 per Mcf sold in the third quarter 
and year to date period, respectively, of 2012 compared to $2.10 per Mcf and 
$1.24 per Mcf for the same periods in 2011.

The average depletion, depreciation and amortization (DD&A) expense rate per 
Mcf decreased from $2.21 per Mcf in the third quarter of 2011 to $0.88 per Mcf 
in the third quarter of 2012 due to the commencement of sales from the Nelson 
field on December 1, 2011, which has larger natural gas reserves, and 
consequently a lower amortization expense rate per Mcf than the older 
fields. This factor also contributed to the decreased average DD&A expense 
rate per Mcf from $2.30 per Mcf in the year to date period of 2011 to $0.89 
per Mcf in the same period of 2012.

General and administrative (G&A) expense for the three month period ended 
September 30, 2012 decreased $2.0 million from the $3.5 million in the third 
quarter of 2011 to $1.5 million in 2012, primarily due to higher legal, 
consulting and other expenses in 2011 related to the reverse takeover 
transaction. G&A expense for the nine months ended September 30, 2012 of 
$4.4 million was $5.1 million lower than expense for the same 2011 period for 
the same reasons.

At September 30, 2012, Shona had unrestricted cash of $14.6 million and 
current working capital of $17.7 million. The Company's total debt at 
September 30, 2012 of $22.1 million consisted principally of the debt portion 
of the Preferred shares ($19.5 million) and the balance of the new credit 
facility ($2.3 million) and the remaining balance on the loan for a seismic 
contract ($0.3 million).

About Shona

Shona is an international oil and natural gas exploration, development and 
production company focusing on South America, specifically Colombia and Peru. 
The Company's assets currently include interests in the Company-operated 
Esperanza block located in Colombia's Lower Magdalena Basin, the non-operated 
Serrania, Los Picachos and Macaya Blocks in Colombia's Caguan Basin, and the 
non-operated Block 102 in Peru's Maranon Basin. The common shares of the 
Company trade on the TSX Venture Exchange under the stock symbol "SHO". More 
information on the Company is available at

Cautionary Statements

Certain information included in this press release constitutes forward-looking 
information under applicable securities legislation. Such forward-looking 
information is provided for the purpose of providing information about 
management's current expectations and plans relating to the future. Readers 
are cautioned that reliance on such information may not be appropriate for 
other purposes, such as making investment decisions. Forward-looking 
information typically contains statements with words such as "anticipate", 
"believe", "expect", "plan", "intend", "estimate", "propose", "project" or 
similar words suggesting future outcomes or statements regarding an outlook. 
Forward-looking information in this press release may include, but is not 
limited to, expectations regarding future oil and gas production from the 
Company's properties, the production capacity of the Company's properties, the 
anticipated use of seismic data and exploration and development plans on 
properties in which the Company holds an interest. Forward-looking 
information is based on a number of factors and assumptions which have been 
used to develop such information but which may prove to be incorrect. 
Although Shona believes that the expectations reflected in such 
forward-looking information is reasonable, undue reliance should not be placed 
on forward-looking information because Shona can give no assurance that such 
expectations will prove to be correct. In addition to other factors and 
assumptions which may be identified in this press release, assumptions have 
been made regarding and are implicit in, among other things: the ability of 
Shona to complete transactions described in this press release, the timely 
receipt of any required regulatory approvals, the performance of existing 
wells and success obtained in drilling new wells, anticipated expenses, cash 
flow and capital expenditures, the application of regulatory and royalty 
regimes and prevailing commodity prices and economic conditions. Readers are 
cautioned that the foregoing list is not exhaustive of all factors and 
assumptions which have been used. Shona undertakes no obligation to update 
forward-looking statements if circumstances or management's estimates or 
opinions should change, unless required by law. Actual results could differ 
materially from those currently anticipated due to a number of factors and 
risks. These include, but are not limited to, risks associated with the oil 
and gas industry in general (e.g., operational risks in development, 
exploration and production; delays or changes in plans with respect to 
exploration or development projects or capital expenditures; the uncertainty 
of reserve estimates; the uncertainty of estimates and projections relating to 
production, costs and expenses, and health, safety and environmental risks), 
commodity price and exchange rate fluctuations and uncertainties resulting 
from potential delays or changes in plans with respect to exploration or 
development projects or capital expenditures.

All dollar references in this press release are to U.S. Dollars.

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 press release.

please contact either of the following individuals:

 David Gian, Treasurer & Investor Relations Shona Energy Company, Inc. 
Houston, Texas 713-622-8809 

Shetal Mentlewski, VP Admin & Legal Shona Energy Company, Inc. Houston, Texas 

SOURCE: Shona Energy Company, Inc.

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CO: Shona Energy Company, Inc.
ST: Alberta

-0- Nov/19/2012 22:00 GMT

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