GEOCAN Energy Inc. Announces First Quarter 2008 Results

CALGARY, May 15 /CNW/ - GEOCAN Energy Inc. ("GEOCAN" or the "Company") (TSX: GCA.TO) announces its financial results for the quarter ended March 31, 2008.

2008 First Quarter Results

Cash flow from operating activities for the first quarter was $5.21 million or $0.09/basic share as compared to $2.82 million or $0.05/basic share in first quarter 2007. Geocan, in the first quarter of 2008 closed its previously announced major asset sales and applied the proceeds to reducing debt and related high interest costs. Further, the sales were primarily of heavy oil assets which contained inherently lower operating netbacks. As a result, average netbacks improved significantly. These factors combined with higher commodity prices more than offset lower revenues due to lower production during the quarter. Benefits from higher average netbacks and lower interest costs should continue to be realized going forward commencing with the second quarter of 2008.

Earnings (loss) after income tax for first quarter 2008 was $(0.23) million or $(nil)/basic share compared to a loss of $(2.98) million or $(0.05)/basic share for first quarter 2007. The 2008 first quarter earnings were predominantly made up of positive pre-tax operating earnings of $0.78 million or $0.01/basic share and a recapture of future tax related to the sale of assets and the reversal of a valuation allowance on successored tax pools of $6.00 million or $0.11/basic share offset by a loss on disposal of assets of $(6.67) million or $(0.12) basic share.

For the first quarter 2008, production sales averaged 2,023 boepd, weighted 70% to oil and 30% to natural gas. With the aforementioned sale of the heavy oil assets effective February 1, 2008 and the unit and non-unit interests in the Carrot Creek region, effective December 1, 2007, exit production sales volumes for the first quarter of 2008 decreased to approximately 975 boepd based on raw production volumes of 1050 boepd. Production volumes are now distributed approximately 62% to natural gas and 38% to light/medium oil.

Natural gas prices averaged $7.91/mcf in first quarter 2008, up 21% from $6.55/mcf in first quarter 2007. Light and medium oil prices (before financial instruments) averaged $76.09/bbl in first quarter 2008 up 38% from $55.19/bbl in first quarter 2007. Heavy oil averaged $59.46/bbl, up 42% from $41.92/bbl in first quarter 2007.

Further information regarding the Company's first quarter 2008 results is contained in the Company's March 31, 2008 consolidated financial statements, the attached notes and the management's discussion and analysis relating thereto, all of which are available for viewing on SEDAR (www.sedar.com) and on the Company's website (www.geocan.com).

Review of Strategic Alternatives Process

On March 6, 2008 the Company announced that its board of directors had unanimously approved a process to review strategic alternatives to maximize shareholder value and had retained Tristone Capital Inc. to act as its exclusive financial advisor to assist in exploring strategic alternatives. These alternatives may include the sale of the Company, an amalgamation or reorganization or such other transaction that is considered to be in the best interests of GEOCAN. At the time of writing, this process is well underway.

Advisory -- Forward-looking Information

This press release may include certain forward-looking statements. These statements involve known and unknown risks, uncertainties, and other factors that may cause actual results or events to differ materially from those anticipated in the forward-looking statements. However, while management believes these forward-looking statements to be reasonable, the reader cannot be assured that these expectations will prove to be correct. The reader should not unduly rely on these forward-looking statements as these statements speak only as of the date of May 15, 2008. Additional information about the company can be found on www.sedar.com.

Barrel of oil equivalent (BOE) may be misleading, particularly if used in isolation. A BOE conversion ratio for natural gas of 1 bbl : 6 mcf. This is based on an energy equivalency conversion method particularly applicable at the burner tip and does not represent a value equivalency at the wellhead.

Contacts

Wayne Wadley
President and CEO or Brad Farris
VP Finance and CFO
GEOCAN Energy Inc.
Phone (403) 261-3851
Fax (403) 261-3834
Email wwadley@geocan.com or bfarris@geocan.com

Website: www.geocan.com