Standard Lithium Ltd. press release

Drilling Success and New Facilities Boost Result's Production and Cash Flow

2006-09-05

TSXV - TSX Venture Exchange · Lithium · Bromine · Potash · Sodium · Canada

CALGARY, Sept. 5 /CNW/ - Result Energy Inc. (TSX Venture:RTE) delivered much higher production, cash flow and field activity for the second quarter and first half of 2006 versus the same periods last year. Production averaged 567 boed in the second quarter, up over 49% from 380 boed a year earlier. For the first half, production averaged 584 boed, a 45% increase over the same period in 2005. Result has continued to bring on additional volumes and, as of August 31, 2006, production was 921 boed on a sustained basis. The Corporation expects a further 350 to 500 boed to come on stream through September and October. Second quarter cash flow was up 47% to $665,477 from $451,617 for the same period last year. First half cash flow was up over 100%, to $1,658,449 from $815,326 in 2005. Result declared a net loss of $416,350 for the quarter compared to a net loss of $456,034 for Q2 2005. For the half, the loss was $751,404 versus $493,612 for the same period last year. Over 90% of Result's current production has come through the drill bit and the Company intends to stick with this strategy of organic growth. Result will focus on its three core areas over the remainder of 2006 and into 2007 exploiting the 80 prospects currently in inventory. Result is pleased to provide the following update on recent exploration, development, facility and related pipeline tie-in operations:

<< Pembina, Alberta - Following extended regulatory delays affecting the construction of a third party compressor facility, Result has recently been able to commence production from its two Viking gas discoveries in the Pembina-Modeste area. These wells are flowing at an initial combined net rate of 900 mcfd (150 boed). This is expected to climb to 300 boed net as downstream facilities are adjusted to cope with the additional volumes. Result is shooting additional 3-D seismic at Modeste on lands acquired earlier this year to detail additional Viking prospects.

Peace River Arch, Alberta - At Clear Hills, Alberta, a new third party gas processing plant has been commissioned and is expected to be fully operational by mid-September. This plant will provide service to various stranded and shut-in gas wells in the greater Clear Hills area, including Result's five shut-in gas wells in the Clear Hills Field. Result's wells are expected to produce, in aggregate, at an estimated 2,000 mcfd net (330 boed) once the plant is running at full capacity. During the second quarter, Result was successful in acquiring four undeveloped sections in the greater Clear Hills area that the Company expects to add to drilling inventory for Q1-07.

In the Worsley area, Result has participated in drilling a total of 5 gross (2.1 net) wells in the first half of 2006, resulting in 2 gas wells that are currently producing, 2 that are awaiting testing and one waiting for a workover. Three gas wells commenced producing in the June/July period, with estimated combined incremental production of 1,160 mcfd (net) or 195 boed (net).

Result continues to aggressively develop additional prospect inventory throughout its Peace River Arch core area. At the present time, the Company holds, or has the opportunity to earn via farmin, interest in approximately 71 undeveloped sections (39.13 net sections), with more than 30 unrisked drilling opportunities identified. Additional 3-D seismic acquisition and land purchases are budgeted for third and fourth quarters of this year.

Kakwa, Alberta - Result recently participated in a new 3D survey over its working interest lands in this area and, pending results of the seismic, has plans to drill a Cadomin test. With this well, Result will increase its interest to 35% in 5.5 sections of land along a proven prolific trend with multi-zone potential existing in the Cardium, Dunvegan, Fahler, Bluesky and Cadomin.

West Saskatchewan - Result continues to enjoy success in its western Saskatchewan core area, centred around the Dodsland gas project. In July, Result completed a 6 well exploration and development program, which yielded 4 (3.0 net) cased potential gas wells, and 2 (1.6 net) D & A wells. Completion and testing operations are planned to be conducted over the next 2 to 3 months, with potential tie-in of a portion of these wells by mid Q4-06.

At the North Dodsland property, Result participated in drilling 5 (2.5 net) Viking gas wells in the June/July period. This included a 2 section pilot project evaluating a potential expansion of down-spacing from 2 to 4 per section. Result has interests in a total of 18 sections (with all but 1 at 50% WI) in this property. The five wells are tied in and flowing and the Company is cautiously optimistic that this will lead to quarter section spacing over all the Dodsland properties. If successful, this will add over 45 development drilling locations to Result's drilling inventory. >>

Result's current field estimated production volume is approximately 921 boed. As noted above, additional productive capability from the Clear Hills (330 boed) is anticipated to be fully on stream by the end of September, with Pembina gradually building over the next two months. At that time Result expects to be producing in excess of 1,400 boed weighted 98% towards natural gas. The Company's existing bank revolving credit facility has been expanded to $9.2 million and is scheduled to be increased to $10.2 million by the end of Q3 as the existing backlog of production is brought on stream. Bill Matheson noted "Even with soft gas prices and facilities delays, we managed to deliver record growth in the second quarter. As the Pembina and Clear Hills projects come on-stream, we expect all financial and operating results to strengthen even further. This, in turn will lead to increased field activity for the balance of 2006 and into 2007." Given these factors, Result is in process of completing a short-term convertible debenture financing of up to $3.275 million, with a coupon rate of Prime plus 3% and a maturity date of February 28, 2008, subject to prior redemption or conversion. The conversion price is set at $1.15 per share. Proceeds will be used to supplement working capital and for general corporate purposes. Closing of the financing is expected on or about September 12, 2006 and is subject to final approval from the TSX Venture Exchange.

Result Energy Inc. is a publicly traded Canadian energy company involved in the exploration and development of oil and gas properties in western Canada. Result trades on the TSX Venture Exchange under the symbol "RTE" and has a total of 47,658,138 common shares outstanding.

The TSX Venture Exchange does not accept responsibility for the adequacy and accuracy of this release.

Investors are cautioned that this news release contains forward looking information. Such information is subject to known and unknown risks, uncertainties and other factors that could influence actual results or events and cause actual results or events to differ materially from those stated, anticipated or implied in the forward-looking information. Readers are cautioned not to place undue reliance on forward-looking information, as no assurances can be given as to future results, levels of activity or achievements. The term barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet per barrel (6mcf/bbl) of natural gas to barrels of oil equivalence is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All boe conversions herein are derived from converting gas to oil in the ratio mix of six thousand cubic feet of gas to one barrel of oil.