Canext Energy Ltd.
TSX VENTURE : CXZ

Canext Energy Ltd.

October 27, 2009 16:52 ET

Canext Announces Corporate and Reserves Update

CALGARY, ALBERTA--(Marketwire - Oct. 27, 2009) - Canext Energy Ltd. ("Canext" or "the Company") (TSX VENTURE:CXZ) announces that the Board of Directors have initiated a process to evaluate various strategic alternatives for the Company. These alternatives may include a sale, merger, major asset disposition, major financing, or any other alternative to assist in unlocking additional value for the benefit for all shareholders.

Canext has retained National Bank Financial Inc. to act as its financial advisor to assist in the review process.

The Company does not expect to update its progress with respect to the review of the alternatives until the Board of Directors authorizes any transaction or if required by applicable disclosure requirements. There can be no assurances that any transaction will occur or, if one is undertaken, any certainty with regard to its terms or timing.

In conjunction with the review, the Company has updated its reserve information. The following tables summarize the Company's reserve information as prepared in accordance with National Instrument ("NI") 51-101 by Trimble Engineering Associates Ltd ("Trimble Report") with an effective date of September 30, 2009.

Reserves Summary – Company working interest before royalties using forecasted prices as at September 30, 2009

  Light and    
  Medium Oil NGL's Gas BOE 6:1
  mstb mstb mmscf mstboe
      
Proved Developed Producing            370           126 6,787         1,628
Proved Developed Non Producing              36        13   1,591   313
 Total Proved Developed            406      139  8,378   1,941
Proved Undeveloped            227    58  5,835   1,258
 Total Proved            633   197 14,213   3,199
Probable             419  132 13,515   2,804
 Total Proved + Probable         1,052   329 27,728    6,002

(Tables may not add due to rounding.)

The Company's Proved plus Probable reserves are down from 6,554 mstboe at the start of the year due to production of 279 mstboe, property dispositions of 149 mstboe and revisions to previous estimates of 123 mstboe. The revisions to previous estimates for Proved reserves were positive 1.1 % while the revisions for P + P reserves were negative 1.9 %. The revisions to oil and NGL estimates were positive for both the Proved and Proved plus Probable cases while revisions to natural gas estimates were negative for both cases.

Summary of Net Present Values of Future Net Revenue
Forecasted Prices and Costs
Before Income Taxes, Discounted at (%/year)
As at September 30, 2009

  0% 10% 15%
  M$ M$ M$
     
Proven Developed Producing 50,53933,406 28,903
Proven Developed Non Producing 4,2752,401 1,834
 Total Developed 54,81435,807 30,737
Undeveloped 30,98714,783 10,919
 Total Proved 85,80150,590 41,657
Probable 84,13833,160 23,437
 Total Proved + Probable 169,93983,750 65,093

Note: NI 51-101 disclosure requires Canext to provide the following warning: It should not be assumed that the present value of estimated future net cash flows shown above are representative of the fair market value of the reserves.

Forecasted price assumptions used in the Trimble Report as at September 30, 2009

 Exchange WTI Edmonton AECO
 Rate @ Cushing Light Spot
YEAR US$/CDN$ US$/bbl CDN$/bbl $/MMbtu
     
2009 Forecast 0.94 71.25 75.00 4.50
2010 Forecast 0.95 76.75 80.00 6.00
2011 Forecast 0.96 82.25 85.00 6.75
2012 Forecast 0.97 88.00 90.00 7.25
2013 Forecast 0.98 93.75 95.00 7.75
     
Prices escalating at 2.0 percent annually thereafter.  

Operations Update

Canext has recently brought on-stream two new wells at its Sweeney oil property. These wells are producing at a combined rate of approximately 190 bopd (115 bopd net). The production rates are currently restricted due to facility constraints and pending regulatory approval. The Company has applied for and received a license to construct the first phase of a new multi well oil battery at Sweeney. Construction has started with a target completion date prior to December 31, 2009. The battery will be capable of 2,600 barrels of fluid per day and up to 1,000 mcf/d of natural gas. The first phase will include 4,000 barrels of fluid storage. Costs are estimated as $2,900,000 ($1,740,000 net) which includes pipeline tie-ins and solution gas conservation for several wells. 

Canext estimates November production at Sweeney will average 500 - 550 boepd (300 – 330 boepd net). Upon completion of the battery and regulatory approval for good production practice, the Company estimates increasing production for the pool by 300 – 400 boepd (180 – 240 boepd net). 

Third quarter financial information should be released on or about November 16, 2009.

Reader advisory:

The term "BOE" may be misleading, particularly if used in isolation. In accordance with NI 51-101, a BOE conversion ratio for natural gas of 6 mscf: 1 bbl has been used which is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
Investors are cautioned that the preceding statement of the Company may include certain estimates, assumptions and other forward-looking information. The actual future performance, developments and/or results of the Company may differ materially from any or all of the forward-looking statements, which include current expectations, estimates and projections, in all or part attributable to general economic conditions and other risks, uncertainties and circumstances partly or totally outside the control of the Company, including natural gas/oil prices, reserve estimates, drilling risks, future production of gas and oil, rates of inflation, changes in future costs and expenses related to the activities involving the exploration, development and production of gas and oil hedging, financing availability and other risks related to financial activities. The Company's forward looking statements are expressly qualified in their entirety by this cautionary statement. Except as required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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