Candax Energy Inc.
TSX : CAX

Candax Energy Inc.

September 21, 2009 09:09 ET

Candax Operations Update

TORONTO, ONTARIO--(Marketwire - Sept. 21, 2009) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.

Candax Energy Inc. ("Candax") (TSX:CAX) reports that the work-over intended to reduce water production from the El Bibane 4 (EBB-4) well has been completed. In addition, a down-hole investigation into the production cessation that occurred at El Bibane 3 (EBB-3) has also been completed and the barge, coiled tubing unit and other related equipment have been de-mobilized.

The objective of the EBB-4 work-over was to substantially reduce the level of water production from the well. However, flow testing over the last five days has demonstrated that water production has not been reduced and that the work-over was not successful. The investigation on the EBB-3 well has determined that a failure in the production tubing near the top of the well is the cause for the loss of production. The technical team is putting together remedial work programs for both EBB-4 and EBB-3 wells and the scope and timing of these programs will be disclosed in due course.

As a short-term interim measure, Candax is continuing the gas lift operations on the EBB-4 well using gas from the EBB-5 well on a 1/4" choke. The Company is producing limited volumes of condensate and gas from the field at approximately 250 bopd and 7.5 mmcf/d respectively and the gas is being supplied to the SEEB power plant. This is an interim measure pending review of the logs and other aspects of the production performance, which will be kept under close review. These measures may be subject to further change pending additional reservoir management assessment and the timing and scope to implement the remedial work plan referred to above.

Although the mechanical problems identified in both the EBB-3 and EBB-4 wells are significantly affecting the Company's oil production in the short term, the Company does not believe that the problems have any material impact on previously reported estimates of the remaining reserves in El Bibane.

Candax currently has approximately US$4 million of cash reserves but, as disclosed in the Company's second quarter Financial Statements, there continue to be concerns relating to the Corporation's liquidity and working capital position and thus going concern issues, as previously reported, continue to be relevant. The Company is continuing to work closely with its professional advisors and with its bankers to develop the best forward strategy to address these matters.

Candax Energy Inc. is an international energy company with its head office in Toronto and offices in London, Tunis, and Madagascar. The Candax group is engaged in exploration and the production of oil and gas and power generation in Tunisia and holds an interest in an exploration permit in Madagascar.

This press release includes "forward looking statements", within the meaning of applicable securities legislation, which are based on the opinions and estimates of Management and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "budget", "plan", "continue", "estimate", "expect", "forecast", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar words suggesting future outcomes or statements regarding an outlook. Such risks and uncertainties include, but are not limited to, risks associated with the oil and gas industry (including operational risks in exploration development 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 in relation to production, costs and expenses; the uncertainty surrounding the ability of Candax Energy Inc. to obtain all permits, consents or authorizations required for its operations and activities; and health safety and environmental risks), the risk of commodity price and foreign exchange rate fluctuations, the ability of Candax Energy Inc. to fund the capital and operating expenses necessary to achieve the business objectives of Candax Energy Inc., the uncertainty associated with commercial negotiations and negotiating with foreign governments and risks associated with international business activities, as well as those risks described in public disclosure documents filed by Candax Energy Inc. Due to the risks, uncertainties and assumptions inherent in forward-looking statements, prospective investors in securities of Candax Energy Inc. should not place undue reliance on these forward-looking statements. Statements in relation to "reserves" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described can be profitably produced in the future.

Contact Information

  • Candax Energy Inc.
    John Clarke
    Executive Vice President, Corporate
    416.361.2824
    416.364.5400 (FAX)
    jclarke@candax.com
    or
    CHF Investor Relations
    Lindsay Carpenter
    Account Manager
    416.868.1079 x. 239
    lindsay@chfir.com