Shoreline Energy Corp. Announces Financial and Operating Results for the Quarter and Year-Ended December 31, 2012

CALGARY, ALBERTA–(Marketwire – Apr 1, 2013) – Shoreline Energy Corp. (SEQ.TO) (“Shoreline” or the “Corporation“) is pleased to announce its 2012 year-end financial and operating results. A complete copy of the Company’s financial statements along with management’s discussion and analysis may be obtained at www.sedar.com or on the Company’s website at www.shorelineenergy.ca.

Fourth Quarter 2012 Financial and Operating Highlights

Corporate

• Record annual revenue of $19.1 million, increase of 130% over 2011.
• Q4 2012 Funds from operations increased to $2.0 million compared to $0.5 million for Q4 2011.
• Q4 2012 Sales volumes increased by 26% and averaged 1,459 boe/d compared to 1,159 boe/d for Q4 2011.
• Oil and NGL production as a percentage of total production increased to 35% this quarter compared to 28% during the same quarter last year.
• Q4 2012 Capital expenditures totaled $27.8 million.
• For the fourth quarter, dividends of $0.7 million or $0.12 per share were declared equaling 33% of funds from operations.
• Subsequent to year end the Company closed an equity private placement and a debt financing for gross proceeds of approximately $10 million.
• Operating netbacks per boe were $26.25 and $16.31 for the three and twelve months ended December 31, 2012 compared to $13.13 and $14.23 respectively for 2011.
• Operating and transportation expenses per boe were $13.72 for the three months ended December 31, 2012.

Peace River Arch

• Drilled 4 (3.1 net) horizontal oil wells and brought onto production 1 (0.4 net) oil well.
• Subsequent to year-end the Company sold a non-core property for $2.15 million.

Colorado

• Acquired royalty interest and working interest in three transactions in Wattenberg Colorado for $15.7 million late in the fourth quarter.
• Subsequent to year-end the Company closed two additional Wattenberg working interest acquisitions for $21.4USD million. The acquisitions were financed through cash and a vendor take back financing.

Financial and Operating Summary

Q4 and FY 2012 Results

Petroleum and natural gas sales for the three months ended December 31, 2012 increased 51% to $5.6 million, compared to $3.7 million in the same period last year despite lower commodity prices. The increase is related to production gains arising from both successful drilling and increased oil volumes. Revenue for the year increased 130% to $19.1 million compared to $8.3 million for the same period last year.

Average production volumes for the three months ended December 31, 2012 increased 26% to 1,459 boe/d compared to 1,159 boe/d, last year. The production and royalty volume mix for the current quarter improved to 65% natural gas and 35% light crude oil and NGL’s in comparison to the product mix for the three months ended December 31, 2011 of 72% natural gas and 28% light crude oil and NGL’s. Oil and NGL production has increased by 21% from the previous quarter as the result of a new well that came on production during the quarter in the Company’s Progress area. Current production from field estimates are 1,760 boe/d. Shoreline expects to have its second Montney oil well tied in and on stream on or about April 10. Shoreline is budgeting average daily production of 400 boe/d for this well. The Company will continue to focus on horizontal light oil projects and expects that the light crude mix will continue to increase as more production comes on stream from drilling activities in the Peace River Arch and in Colorado.

The Company’s netbacks were $26.25 and $16.31 for the three and twelve months ended December 31, 2012 compared to $13.13 and $14.23, respectively, in the comparable periods a year ago. The increase in the current year operating netback is primary due to increased oil volumes and decreased royalty costs per boe. The Company anticipates future operating netbacks to increase quarter over quarter as the Company brings on additional oil production in Canada and the United States and the effects of stronger natural gas prices are realized. Operating and transportation expenses for the three months ended December 31, 2012 were $1.8 million or $13.72/boe in comparison to $1.6 million or $15.42/boe for the comparative three-month period.

For the three-month period and year ended December 31, 2012, the Company incurred a net loss and comprehensive loss of $1.0 million or $0.18 per share and $3.3 million or net loss of $0.59 per share basic and diluted, respectively. For the comparative three-month period and year ended, December 31, 2011, the Company had a net loss and comprehensive loss of $12.2 million or $2.68 per share and $13.1 million or $4.68 per share. Net loss for the comparative three month period and year end included a goodwill impairment related to the Worsley CGU.

Shoreline’s funds from operations increased by 303% and 255% for the three and twelve months ended December 31, 2012 to $2 million and $5.2 million, respectively. The Company declared $0.7 million and $3.2 million of cash dividend payments in the fourth quarter and full year 2012, representing $0.12 and $0.56 per share, respectively.

The Company spent $23.7 million for capital expenditures and $15.8 million for acquisitions during the full year of 2012.

Net debt and shareholders’ equity were $55.8 million and $32 million, respectively, at December 31, 2012 compared to $21.3 million and $34.8 million at December 31, 2011. The Company increased its net debt significantly in 2012 to fund the Colorado acquisitions. The Company is actively looking to reduce its current debt level and has taken several steps since the end of 2012. They include:

• In March 2013, the Company closed a private placement financing by issuing 1,400,000 common shares for gross proceeds of $4.9 million at a price of $3.50 per share;
• On March 15, 2013, the Company sold a non-core property for $2.15 million of cash consideration. The effective date of the sale was February 1, 2013.

Shoreline is evaluating additional non-core asset sales and other means to reduce it’s outstanding indebtedness.

Conference Call

Shoreline will host a conference call at 4:15 pm ET on April 4, 2013 to discuss its fourth quarter and full year 2012 results. Please see the details below:

Please dial in at least 10-minutes before the call to ensure timely participation.

A playback of the call will be available until 4:15 p.m. ET on April 10, 2013. To listen, call 1-877-344-7529 within the United States or 1-412-317-0088 when calling internationally. Please use the replay pin number 10026990.

About Shoreline Energy Corp.

Shoreline is a Calgary, Alberta based corporation engaged in the exploration, development and production of petroleum and natural gas. Shoreline offers investors a combination of value growth via lower risk development of additional oil reserves and production on its current lands and pays a quarterly dividend. Shoreline has 7,430,093 Common Shares outstanding and convertible debentures in the aggregate principal amount of $17,000,000 outstanding. The Common Shares are currently listed on the TSX under the trading symbol “SEQ” and the debentures under the trading symbol “SEQ.DB”. Additional information regarding Shoreline is available under the Company’s profile at www.sedar.com or at the Corporation’s website, www.shorelineenergy.ca.

Forward Looking and Cautionary Statements

This news release contains forward-looking statements relating to the Corporation’s plans and other aspects of the Corporation’s anticipated future operations, strategies, financial and operating results and business opportunities. These forward-looking statements may include opinions, assumptions, estimates, management’s assessment of value, reserves, future plans and operations.

Forward-looking statements typically use words such as “will,” “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “project,” “should,” “plan,” and similar expressions suggesting future outcomes, and include statements that actions, events or conditions “may,” “would,” “could,” or “will” be taken or occur in the future. The forward-looking statements are based on various assumptions including expectations regarding the success of current or future drill wells; the outlook for petroleum and natural gas prices; estimated amounts and timing of capital expenditures; estimates of future production; assumptions concerning the timing of regulatory approvals; the state of the economy and the exploration and production business; results of operations; business prospects and opportunities; future exchange and interest rates; the Corporation’s ability to obtain equipment in a timely manner to carry out development activities; and the ability of the Corporation to access capital and credit. While the Corporation considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.

Forward-looking statements are subject to a wide range of assumptions, known and unknown risks and uncertainties and other factors that contribute to the possibility that the predicted outcome will not occur, including, without limitation: risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation; loss of markets; volatility of commodities prices; currency fluctuations; imprecision of reserves estimates; environmental risks; competition from other producers; inability to retain drilling rigs and other services; incorrect assessment of the value of acquisitions; failure to realize the anticipated benefits of acquisitions; general economic conditions; delays resulting from or inability to obtain required regulatory approvals and to satisfy various closing conditions; and ability to access sufficient capital from internal and external sources. Readers are cautioned that the foregoing list of factors is not exhaustive.

Although Shoreline believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will be realized. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements and you should not rely unduly on forward-looking statements. The forward-looking statements contained in this news release are made as of the date of this news release. Except as required by applicable law, Shoreline does not undertake any obligation to publicly update or revise any forward-looking statements.

Non-GAAP Financial Measures

This press release contains references to measures used in the oil and natural gas industry such as “netback” and “net debt”. These measures do not have any standardized meanings within International Financial Reporting Standards (“IFRS“) and, therefore, reported amounts may not be comparable to similarly titled measures reported by other companies. These measures have been described and presented in this press release in order to provide shareholders and potential investors with additional information regarding Shoreline’s liquidity and its ability to generate funds to finance its operations.

Netback, as used in this press release, denotes net earnings plus non-cash items, including future income taxes expense (less any recovery), depletion, depreciation and accretion expense and non-cash stock-based compensation expense.

Shoreline uses net debt as a measure to assess its financial position. Net debt includes current liabilities (including Shoreline’s credit facility and excluding the current portion of decommissioning obligations) less current assets (excluding property, plant and equipment, held for sale and risk management contracts).

Note Regarding BOEs

The term barrel of oil equivalent (“boe“) may be misleading, particularly if used in isolation. A conversion ratio for gas of 6 mcf:1 boe is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly equivalency conversion ratio of 6:1, utilizing a conversion on a 6:1 basis is misleading as an indication of value.

Shoreline Energy Corp.
Mr. Trevor Folk
Chief Executive Officer
(403) 398-4070
tfolk@shorelineenergy.ca
Shoreline Energy Corp.
Mr. Kevin Stromquist
President & Chief Operating Officer
(403) 398-4075
kstromquist@shorelineenergy.ca
Shoreline Energy Corp.
Mr. Gary Lobb
Chief Financial Officer
(403) 398-4080
globb@shorelineenergy.ca
Shoreline Energy Corp.
Calgary Office
Suite 400, 209-8th Ave SW
Calgary, Alberta, T2P 1B8
(403) 767-9066
www.shorelineenergy.ca