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Message: Culane Provides Operational Update
| January 29, 2009 |
| Culane Provides Operational Update |
| CALGARY, ALBERTA--(Marketwire - Jan. 29, 2009) - Culane Energy Corp. ("Culane") (TSX VENTURE:CLN) is pleased to provide an operational update. Culane continued its drilling program in the second half of 2008, including four more horizontal wells which commenced production in the fourth quarter. Culane maintains a 100% working interest in 24 sections of land at Killam. Based on field estimates, production for the month of December averaged approximately 1,900 BOE/d (1,800 BOE/d for the fourth quarter), 70% oil and liquids, and 30% gas. As was previously announced July 3, 2008 the horizontal wells at Killam typically average a 20% oil production decline rate. Culane has an additional estimated 475 BOE/d behind pipe. A portion of this behind-pipe production is comprised of wells which were shut-in in late September due to a regulatory issue and are expected to resume oil production following regulatory approval. Some of the horizontal wells shut-in by Culane were producing at lower rates and will be likely be converted to water injectors as a result of Culane's full field waterflood study. Two of the horizontal wells have just been brought back on production test after receiving regulatory approvals. As previously reported, Culane has conducted laboratory studies and reservoir simulation studies on the Killam oil reservoirs with a view to implementing secondary recovery (waterflood) projects. Culane has staged these projects. Culane was granted approval for water disposal into the first two wells in Killam North in the third quarter of 2008, and subsequently applied for facilities licenses and constructed those facilities, leading to first injection this month. At this time, it is premature to provide any report, but this project is proceeding as expected. Culane is currently drilling 4 vertical injection wells at Killam North. After these wells are drilled and logged, Culane will submit applications for the full field waterflood program. Culane has completed its full field reservoir simulation study. Culane is continuing to conduct studies on the feasibility of tertiary recovery ASP flooding (alkali surfactant polymer) on the Killam reservoirs and all results to date are encouraging. Culane has spent approximately $70 million on land, 3D seismic, drilling and infrastructure, water-flood and ASP flood studies developing the Killam oil pools. Culane has also expended approximately $30 million on strategic acquisitions over the past two years, in addition to strategic farm-ins. To date, Culane has received net cash flow from Killam field operations of $62.5 million. Culane's available credit line is $30 million which is up for review by its banker on May 31, 2009. Culane's net debt as of December 31, 2008 is approximately $13.5 million. The Company is currently buying back stock under its previously announced normal course issuer bid. To date 425,300 shares have been acquired and following their return to treasury the outstanding shares of Culane will number 23,447,054. Over the next two years, Culane is well positioned financially to weather the economic storm that currently exists in the oil and gas industry and over the same period continue to grow its reserve base and production base. During the recent period of high oil prices, Culane aggressively carried out its development drilling program at Killam which included the construction of single well batteries that allowed Culane to fully benefit from high oil prices during the initial flush oil production period of its horizontal wells. With the current economic environment, Culane still anticipates being able to fund its 2009 and 2010 capital projects from cash flow. As was previously announced, Culane has fully delineated two main Lloydminster oil pools at Killam that contain a combined "Discovered Petroleum Initially-in-Place" of approximately 55 million barrels of oil and are ideal candidates for secondary water-flooding as determined by an independent reservoir engineering consulting firm. Culane defines the Killam Lloydminster oil play as an oil reserve based play rather than a daily production growth play. However with the full field implementation of the waterflood program, daily oil production rates are expected to increase. Culane maintains 100% ownership in this asset and is the operator. Fourth quarter highlights will be released in the second half of February when they become available. Audited financial results for 2008 along with a new reserve report will be released at the end of April 2009, along with an update on any results from the injection of water into the reservoir currently underway. About Culane Energy Corp. Culane Energy is a junior oil and gas company engaged in the exploration, development and production of oil and natural gas in Alberta. ADVISORY: Certain information regarding Culane in this news release including management's assessment of future plans and operations, timing of drilling and tie-in of wells, productive capacity of the new wells, expected production rates, drilling success rates, dates of commencement of production, may constitute forward-looking statements under applicable securities laws and necessarily involve risks including, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, unexpected decline rates in wells, wells not performing as expected, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements. Readers are cautioned that the foregoing list of factors is not exhausted. Additional information on these and other factors that could effect Culane's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). Disclosure provided herein in respect of barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf: 1 Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. 23,846,254 Class A Shares The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release. |
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