Culane Energy Corp.
TSX VENTURE : CLN

Culane Energy Corp.

November 26, 2008 11:52 ET

Culane Energy Releases Third Quarter Results

CALGARY, ALBERTA--(Marketwire - Nov. 26, 2008) - Culane Energy Corp. ("Culane") (TSX VENTURE:CLN) announces its financial and operating results for the three and nine months ended September 30, 2008. The unaudited Financial Statements and related Management's Discussion and Analysis have been filed with Canadian securities regulatory authorities on SEDAR at www.sedar.com and posted on the Company's website at www.culaneenergycorp.com.

2008 Highlights

- Gross revenues were $58.4 million for the first nine months of 2008 compared to $26.9 million for the same period in 2007, a 117% increase. Third quarter 2008 gross revenues were $20.6 million.

- Production averaged 2,486 BOE/d for the first nine months of 2008 compared to 1,988 BOE/d for the same period in 2007, a 25% increase. Q3/08 production was 2,409 BOE/d. The current production mix is 70% oil and 30% natural gas.

- Prices for the first nine months of 2008 averaged $98.95 per bbl for oil and $9.02 per Mcf for natural gas compared to 2007 interim prices of $54.25 per bbl for oil and $6.55 per Mcf of natural gas.

- Cash flow was $33.4 million or $1.47 per share for the first nine months of 2008 compared to $13.8 million or $0.67 per share for the same period in 2007, a 142% increase in cash flow and 119% increase in cash flow per share.

- Earnings were $11.9 million or $0.52 per share for the first nine months of 2008 compared to $0.9 million or $0.04 per share for the 2007 interim period.

- A total of 22 wells (net 20.2) were drilled in the first nine months of 2008 (23 in the same period of 2007) resulting in 9 producing multi-leg horizontal oil wells, 3 producing gas wells, 1 suspended gas well, 5 standing cased wells, 2 water injection wells, and 2 abandoned wells. Four wells were drilled in the third quarter.

- Capital expenditures of $17.4 million were invested in 2008, (98% at Killam) for the drilling and equipping of 22 wells. Another $21.5 million was spent on June 30, 2008 for the acquisition of additional oil and gas properties at Killam.

- On April 3, 2008 the Company issued 2,860,000 class A common shares at $7.00 per share for gross proceeds of $20,020,000.

- Bank debt plus working capital deficit (net debt) at September 30, 2008 is $10.4 million, down from $18.3 million at June 30, 2008. Debt to annualized cash flow is 0.22 to 1, while debt to equity is 0.19 to 1.

- The Company has a credit facility of $30 million.

During the third quarter of 2008, Culane focused its efforts on its ongoing horizontal drilling program at Killam. As of today's date, Culane is nearing completion of its horizontal oil well drilling program and is in the process of licensing 4 vertical water injector wells. To date at Killam, Culane has drilled 38 multi-leg horizontal oil wells, 8 producing gas wells, 16 standing cased or suspended wells, 2 disposal wells and 2 drilled and abandoned wells.

For the first nine months of 2008, Culane's gross revenues were $58.4 million compared to $26.9 million for the same period in 2007, a 117% increase. Production averaged 2,486 BOE/d for the first nine months of 2008. Culane produces 70% oil and 30% natural gas. At Killam, the two main Lloydminster oil pools potentially have a combined 'Discovered Petroleum Initially-in-place' of 55 million barrels and are ideal candidates for secondary water-flooding. A feasibility study on a portion of the Killam North pool has been completed and the results indicate that these oil reservoirs are also very conducive to tertiary enhanced oil recovery through an Alkali Surfactant Polymer flood ("ASP"). Water-flooding and ASP flooding can dramatically increase the amount of recoverable oil reserves above the 10% oil recoveries resulting from primary production. Analogous oil pool case histories have established that water-flooding similar oil reservoirs has the potential to recover up to 25% of the original oil resource and ASP flooding has the potential to recover up to 40% of the original oil resource. The initial feasibility study on the Killam oil pools indicates the potential for these recoveries. The full field reservoir study for the Killam water-flood has now been finalized.

Culane is in the process of making application to Government regulators to allow it to implement the water flood. With the commencement of the water-flood, horizontal wells that have been declining are expected to gradually increase, approaching initial oil production levels. Over the past two years Culane has spent approximately $98 million on land, 3D seismic, drilling, infrastructure, water-flood and ASP studies along with two strategic acquisitions at Killam. Culane's bank debt plus working capital deficit (net debt) at September 30, 2008 is $10.4 million, down from $18.3 million at June 30, 2008. Culane controls a 100% working Interest in the Lloydminster oil resource at Killam.

Culane has carefully reviewed Alberta's new Royalty Regime being brought in for January 2009. At Killam, Culane produces oil and gas from a mix of Freehold and Alberta Crown lands. In January 2009, Royalties are increasing on oil and gas production from all Alberta Crown lands. This is offset by the fact that oil and gas Royalties on Culane's Freehold lands remain substantially lower and unchanged.

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: This release contains forward looking statements. Forward-looking statements are based on current expectations that involve a number of risks and uncertainties which could cause actual events or results to differ materially from those reflected in this release. Forward-looking statements are based on the estimates and opinions of management as at the date of this release.

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.

23,872,354 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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