Cinch Energy Corp.

Cinch Energy Corp.

January 16, 2006 23:59 ET

Cinch Energy Corp. ("Cinch" or "The Company") Is Pleased to Provide Its First Quarter Drilling Plans and Guidance for the 2006 Year

CALGARY--(CCNMatthews - Jan. 16) - The Company has approved a capital budget of $44.7 million for 2006, most of which is allocated to the core Chime/Kakwa/Musreau areas. Capital expenditures are planned to be incurred primarily on drilling 23 gross (9.7 net) wells. Cinch plans a very active first quarter with 11 wells expected to commence drilling, subject to rig and service availability and weather conditions.

For the month of December 2005, Cinch's production averaged approximately 1250 boepd with an additional 100 boepd behind pipe in the Musreau area. The Company currently estimates an average production rate of 1700 boepd in 2006 and to exit the year between 2000-2300 boepd. The foregoing estimates are based on estimated decline rates, and the drilling and tie in of successful wells being completed on schedule. Very tight service industry conditions and unseasonably warm weather may impact the Company's planned timing of capital expenditures and this guidance.

Currently, Cinch is drilling three wells. At Cutpick, the Company is operating the 7-24-60-7W6 Falher test which is expected to reach total depth of 3400 metres at the end of January. Cinch will earn a 27% interest in 6 sections of land after completing the 07-24 well. An offset to this location is being surveyed and may be drilled in mid summer.

The Company anticipates that the Musreau 2-34-61-6W6 well, a 3400 metre Nikanassin test in which the Company will have a 30% interest before payout and a 28% interest after payout, will spud in approximately three weeks. This well offsets the Musreau 7-3-62-6W6 multi-zone well, currently capable of producing at rates between 4 mmcf/d and 5.5 mmcf/d, in which Cinch has a 12% interest. Cinch is also participating for 10% in the non-operated Musreau 6-17-62-5W6 well which is currently drilling and is expected to reach total depth of 3227 metres at the end of January. Currently, two additional Musreau wells are also being prepared for drilling. A location has also been surveyed at Musreau 14-7-62-5W6, which is expected to commence drilling during March.

In Resthaven, the Company has farmed out its interest in two sections of land. The non-operated 9-25-60-3W6 well, a 3420 metre Nikanassin test, is currently drilling. Cinch will retain a 33% working interest in this well after its completion.

At Kakwa, the Company has prepared two locations in which the Company has a 50% working interest, Kakwa 13-13-61-5W6 and Kakwa 15-12-61-4W6, both of which will commence drilling upon rig availability. Two other locations are currently being surveyed and are scheduled to be drilled during breakup.

At Chime East, the Company is preparing the 12-24-60-4W6 exploratory location, a 3200 metre Nikanassin test which is anticipated to spud during March. Cinch owns a 45% interest in the mineral rights below the base of the Cardium in this location and the 12 section land block that this well is located on.

In Dawson, British Columbia, Cinch was successful in acquiring a 40% interest in an additional 3 sections of land at the December land sale. The Company currently holds working interests between 20% and 40% in 31 sections of land in this area. The Company is performing additional geological and geophysical appraisals with the anticipation that a well will be drilled on these lands during the second or third quarter of 2006.

Effective December 1, the Company acquired a 25% working interest in 7 wells and 7.25 sections of land in the Kakwa area for $4 million at a public property auction. Production from this property, primarily oil from the Cardium zone, is forecast to average approximately 85 boepd in 2006. Additional drilling and recompletion opportunities exist on these lands.

The Company is in a strong financial position and has an unused line of credit of $26.5 million. This facility, combined with cash flow, will allow our Company to execute its most active drilling program to date.

Barrel of Oil Equivalency

Natural gas reserves and volumes contained herein are converted to barrels of oil equivalent (BOE) on the basis of six thousand cubic feet (mcf) of gas to one barrel (bbl) of oil. The term "barrels of oil equivalent" may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 mcf to 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.

Forward Looking Statements

Statements throughout this release that are not historical facts may be considered to be "forward looking statements". These forward looking statements sometimes include words to the effect that management believes or expects a stated condition or result. All estimates and statements that describe the Company's objectives, goals, or future plans are forward looking statements, including management's assessment that future plans and operations, drilling inventory and wells to be drilled, timing of drilling and tie in of wells, productive capacity of new wells, production estimates and capital expenditures and the timing thereof. Since forward looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to any number of factors, including 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, delays resulting from or inability to obtain required regulatory approvals and the ability to access sufficient capital from internal and external sources. Readers are cautioned that the foregoing list of factors is not exhausted. Additional information on these and other factors that could effect the Company's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (, at the Company's website ( Furthermore, the forward looking statements contained in this news release are made as at the date of this news release and the Company does not undertake any obligation to update publicly or to revise any of the included forward looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

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