Cygam Energy Inc.
TSX VENTURE : CYG

Cygam Energy Inc.

March 08, 2010 09:00 ET

Cygam Energy Inc. Announces Independent Reserve and Contingent Resource Assessment Results for the "TT" Structure on the Sud Remada Permit, Onshore Tunisia

CALGARY, ALBERTA--(Marketwire - March 8, 2010) - Cygam Energy Inc. ("Cygam" or the "Corporation")(TSX VENTURE:CYG) is pleased to announce that it has received an independent assessment of reserves and an independent assessment of contingent oil and gas resources for the "TT" structure on the Sud Remada permit ("the Permit") which is located onshore Tunisia and encompasses an area of 1,173,215 acres (4,748 km2).

DeGolyer and MacNaughton Canada Limited ("D&M"), a worldwide petroleum and engineering consulting firm, has determined that the total Petroleum Initial in Place (PIIP), expressed as oil, attributable to the central portion of the "TT' structure around the TT2 discovery well (approximately 24 drilling spacing units) is 105.7 million barrels of oil. Petroleum Initial in Place is that quantity of petroleum that is estimated to exist originally in naturally occurring accumulations. It includes that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations, prior to production, plus those estimated quantities in accumulations yet to be discovered.

Total recoverable proved, probable and possible reserves before production attributed to the same central portion of the "TT" structure were assessed at 15.85 million barrels.

Cygam's 14% gross working interest proved, probable and possible reserves before, expressed in barrels (bbl) and millions of cubic feet (MMcf) for sales gas, are summarized as follows:



Gross Working Interest
Remaining Reserves
--------------------
Reserve Category Light Crude Oil Natural Gas
----------------- ----------------- -------------
Bbl MMcf

Proved Developed Producing 51,132 -
Proved Undeveloped 59,991 -
-------- ---

Total Proved 111,123 -

Probable 909,079 453
--------- -----

Total Proved + Probable 1,020,202 453

Possible 1,061,280 668
----------- -----

TOTAL 2,081,482 1,121


Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.

Reserve and future net revenue estimates contained herein assume development of the portion of the "TT" structure for which estimates are given, without regard to the availability of the funding required for that development.

The estimated future net revenue and net present value of future net revenue before royalties and taxes attributable to Cygam's 14% net interest in total proved, probable, and possible reserves are summarized in the following table, expressed in thousand of Canadian dollars (M$). The estimated net present value of future net revenues attributed to the reserves disclosed below does not represent the fair market value of the reserves.



Company Share - Future Net Revenue Before Royalties and Taxes as of
December 31, 2009

Discounted
-----------------------------
Reserve Category Undiscounted at 5% at 10% at 15%
----------------- -------------- ------- -------- --------
M$ M$ M$ M$
Proved Developed Producing 3,005 2,555 2,205 1,928
Proved Undeveloped 3,148 2,489 1,981 1,587
------- ------- ------ -------
Total Proved 6,153 5,044 4,186 3,515
Probable 71,050 49,641 35,987 26,892
Possible 89,487 53,810 34,418 23,140
-------- -------- -------- --------
Total 166,690 108,495 74,591 53,547


Cygam's share of net future revenue after royalty and deemed taxes, expressed in thousand of Canadian dollars (M$), was assessed as follows:



Company Share - Future Net Revenue After Royalties and Taxes as of December
31, 2009

Discounted
-----------------------------
Reserve Category Undiscounted at 5% at 10% at 15%
----------------- -------------- ------- -------- --------
M$ M$ M$ M$
Proved Developed Producing 1,297 1,118 976 861
Proved Undeveloped 1,092 818 604 438
------- ----- ----- -----
Total Proved 2,389 1,936 1,580 1,299
Probable 28,713 21,405 16,209 12,420
Possible 19,230 12,169 8,108 5,606
-------- -------- ------- -------
Total 50,332 35,510 25,897 19,325


Cygam's share of net future revenue may be higher should the Corporation be able to utilize certain tax planning opportunities including the transfer of future exploration expenses from Cygam's other permits in Tunisia to the Sud Remada permit.

In addition, D&M also provided a separate report for the contingent resources of crude oil and natural gas potentially recoverable from the balance of the "TT" structure. The entire "TT" structure is approximately 67 km2.

The Petroleum Initial in Place (PIIP), expressed as oil, for the balance of the "TT" structure was estimated by D&M at approximately 216 million barrels for the best case scenario (150 million for the low case and 341 million for the high case). D&M also estimated the Original gas cap Gas in Place (OGIP) plus the Total Solution Gas, expressed in million of cubic feet (MMcf), at 465,114 MMcf for the best case scenario (280,919 MMcf for the low case and 713,928 MMcf for the high case).

The D&M resource estimates were prepared in accordance with the requirements of the Canadian National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). Capitalized terms relating to resource classifications used in this press release are based on the definitions and guidelines in the Canadian Oil and Gas Evaluation Handbook ("COGEH").

D&M's independent estimates of the gross pool contingent oil and gas resources quantities, as of December 31, 2009, expressed in thousands of barrels (mbbl) for oil and in billions of cubic feet (Bcf) for gas, are summarized as follows:



Balance of "TT" structure - Gross Contingent Resources (1)
----------------------------------------------------------------------
Low Best High
Estimate Estimate Estimate
(2) (3) (4)
----------------------------------------------------------------------
Oil - thousand barrels 14,992 26,992 51,180
----------------------------------------------------------------------
Gas - billion cubic feet 65,355 131,421 272,851

----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total Oil and Gas
Thousand BOE 25,885 48,896 96,655


Estimates of Cygam's gross working interest (14 percent interest) contingent oil and gas resources quantities, as of December 31, 2009, expressed in thousands of barrels (mbbl) for oil and in billions of cubic feet (Bcf) for gas, are summarized as follows:



Low Best High
------- ------- -------
Gross Working Interest Contingent 2,099 3,779 7,165
Oil Resources, mbbl
Gross Working Interest Contingent 9,150 18,399 38,199
Gas Resources, Bcf

----------------------------------------------------------------------------
Total Oil and Gas
Thousand BOE (5) 3,624 6,846 13,532


Notes:

(1) Contingent Resources are those quantities of petroleum estimated, as of
a given date, to be potentially recoverable from known accumulations
using established technology or technology under development, but which
are not currently considered to be commercially recoverable due to one
or more contingencies. Contingencies may include factor such as
economic, legal, environmental, political, and regulatory matters or a
lack of markets. It is also appropriate to classify as contingent
resources the estimated discovered recoverable quantities associated
with a project in the early evaluation stage.

The contingencies identified in this report are (1) the need to drill
additional appraisal wells on the structure and (2) implementation of a
full field development. The contingencies will be removed with the
drilling of additional wells and implementation of the full
development plan.

Estimates of resources always involve uncertainty, and the degree of
uncertainty can vary widely between accumulations/projects and over the
life of a project. Consequently, estimates of resources should
generally be quoted as a range according to the level of confidence
associated with the estimates. The range of uncertainty of estimated
recoverable volumes may be represented by either deterministic
scenarios or by a probability distribution. Resources should be
provided as low, best, and high estimates as follows:

(2) Low Estimate: This is considered to be a conservative estimate of the
quantity that will actually be recovered. It is likely that the actual
remaining quantities recovered will exceed the low estimate. If
probabilistic methods are used, there should be at least a 90
percent probability (P90) that the quantities actually recovered will
equal or exceed the low estimate.

(3) Best (Median) Estimate: This is considered to be the best estimate of
the quantity that will actually be recovered. It is equally likely that
the actual remaining quantities recovered will greater or less than the
best estimate. If probabilistic methods are used, there should be at
least a 50 percent probability (P50) that the quantities actually
recovered will equal or exceed the best estimate.

(4) High Estimate: This is considered to be an optimistic estimate of the
quantity that will actually be recovered. It is unlikely that the
actual remaining quantities recovered will exceed the high estimate.
If probabilistic methods are used, there should be at least a 10
percent probability (P10) that the quantities actually recovered will
equal or exceed the high estimate.

(5) BOEs 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.


For deterministic estimates of petroleum resources, a range of values is selected for each parameter in the volumetric calculation. This range encompasses a conservative value, or Low case, a Best case value, and a High case value, which represents an upside case for the accumulation. The selection of these values is based on data available in the basin and within the prospective assessment area. The values may be supported by statistical distributions or may be the best judgement of the evaluator. The reader is cautioned that there is no certainty that it will be commercially viable to produce any portion of the resources.

The TT2 discovery well has been flowing light gravity oil (43 degrees to 44 degrees API) since March 22, 2009, at average rates of 200-220 barrels of oil per day and approximately 250 mcf per day. The well has already produced in excess of 65,000 barrels of oil. A recent (third) pressure survey shows no appreciable decline in reservoir pressure.

While existing seismic data on the Permit clearly shows several large structures, with closure, D&M was asked to evaluate only the "TT" structure at this time. The Corporation believes that additional potential also exists in the other structures and may ask D&M to evaluate them at a future time.

Cygam has been advised by the operator of the Sud Remada permit that, following the final interpretation of a large 3D seismic program conducted on the "TT" structure in November, 2009, a first appraisal well is expected to commence drilling in the second quarter of 2010, subject to rig availability, and a second appraisal well is planned for the last quarter of 2010. An exploratory well may also be drilled in late 2010 or in early 2011 on a separate untested 70 km(2) structure (El Bell), located approximately 15 km north-east of the "TT" structure.

CYGAM is a Calgary based exploration company with producing exploration properties in Canada and Tunisia plus extensive international exploration permits. The main focus of the Corporation is the acquisition, exploration and development of international oil and gas permits, primarily in Italy, Tunisia and the Mediterranean Basin. CYGAM currently holds various interests in six exploratory permits in Italy and four exploratory permits in Tunisia encompassing approximately over 3.5 million gross acres (approximately 1.8 million net acres before pending farm-outs).

Certain statements contained in this release constitute forward-looking information. These statements relate to future events or the Corporation's future performance. The use of any of the words "could", "expect", "believe", "will", "projected", "estimated" and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on current beliefs or assumptions as to the outcome and timing of future events. Actual future results may differ materially. In particular, statements with respect to oil and gas reserves and estimates of future net revenue attributable to reserves, oil and gas resources attributable to the Permit, potential geological structures within the Permit and exploration and development activity relating to the Permit contain forward looking information. The Corporation's Annual Information Form and other documents filed with securities regulatory authorities (accessible through the SEDAR website at www.sedar.com) describe the risks, material assumptions and other factors that could influence actual results and which are incorporated herein by reference. The Corporation disclaims any intention or obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities laws.

Neither 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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