C1 Energy Ltd.

C1 Energy Ltd.

March 09, 2005 08:57 ET

C1 Energy Ltd: Operations and Production Update


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: C1 ENERGY LTD.

TSX SYMBOL: CTT

MARCH 9, 2005 - 08:57 ET

C1 Energy Ltd: Operations and Production Update

CALGARY, ALBERTA--(CCNMatthews - March 9, 2005) - C1 Energy Ltd.
(TSX:CTT) ("C1") pleased to provide the following operational update
with respect to the results from its first quarter drilling and
operations program.

C1 has now completed over 70% of the planned Q1 drilling and operations
program. Production additions related to the tie-in of new discoveries
will result in C1 exceeding its previous announced Q1 exit production
target of 1200 boe/d. As a result C1 will be reviewing its 2005 exit
production guidance of 1600 boe/d after the completion of the Q1 program.

Blueberry

C1 has completed the drilling of the first two exploration wells in the
2005 Blueberry area program subsequent to closing of the acquisition of
Extreme Energy in December 2004. These wells have been cased and are
currently being completed in multiple zones.

The first well has been production tested at a combined stabilized rate
of 2.0 mmcf/d at expected pipeline pressures of 550 psi. Tie-in
operations will commence in March with production anticipated to begin
at an initial rate of 2.0 mmcf/d (331 boe/d net sales), C1 has a 100%
interest in this well. Increased production from this well is planned
later in the second quarter when compression facilities are installed.
The second well, at a 50% interest to C1, is scheduled for completion
and potential tie-in during the second quarter depending on field access
following spring breakup.

Both of these wells encountered multiple zones and are part of a 5 to 8
well program to be drilled during 2005. Drilling of a third well in this
program is expected to commence prior to the end of March. Additional
drilling is planned after spring breakup in this multi zone gas prospect
area that has year round access to established infrastructure with
abundant available capacity. C1 is the operator of all of the wells and
lands in this area to which it holds an interest.

Gift Lake

C1 now received Good Production Practice (GPP) approval from regulatory
authorities for the Granite Wash "G" Pool. In December 2004, C1
completed the implementation of a water injection project that is now
providing pressure support to the pool.

Prior to receiving GPP approval, the maximum production from the pool
was restricted by a regulatory Maximum Rate Limitation (MRL). This
restriction had previously been applied as a result of inadequate
pressure support in this high quality light oil pool. Production is
being increased by 75 to 110 bbls/d net to C1 under GPP as the water
injection project is now supporting the "G" pool reservoir pressure and
increasing its production capability. C1 anticipates that production
rates will further increase from this pool over the remainder of 2005 as
pressure support from water injection gradually stimulates higher
production rates.

With GPP approval C1 has commenced a development drilling program in the
"G" pool to enhance oil recovery. The first development well is
currently drilling and is expected to be finished drilling prior to the
end of Q1. A second development well is scheduled to be drilled in Q3
pending evaluation of the first well.

C1 estimates an original oil in place oil resource of 3 million to 5
million barrels in the "G" pool and anticipates an initial 25% to 30%
recovery factor under waterflood. The independent reserve evaluation by
Sproule Associates Limited for year-end 2004 recognized approximately
2.8 million barrels of original oil in place with a 40% recovery factor
on a proven plus probable basis. Given the excellent rock quality and
strong initial response from the waterflood, management believes that
the ultimate recovery factor from this pool under full development could
be up to 50%. C1 is the operator of the "G" pool with a 75% working
interest.

C1 is completing a new pool discovery to the south of the "G" pool.
Subject to completion operations this well will potentially be brought
on production early in Q2. C1 will have a 75% to 100% interest in this
well depending upon casing point election by partners. We currently have
an additional 3 to 5 wells scheduled in 2005 for this area, including
the development wells in the "G" pool. Additional drilling is planned
after spring breakup. C1 is the operator of the Gift Lake property with
a 75% working interest.

Chipmunk

We have completed the tie-in operation of the two Elkton gas discoveries
made in Q1 of 2004. These wells have a current productive capacity of
over 4.0 mmcf/d (2,490 mmcf/d, 415 boe/d net sales to C1), and together
with the existing producing well, results in overall field productive
capacity of over 5.0 mmcf/d (3.1 mmcf/d, 519 boe/d net sales to C1).

Current production from this field will in the near term be restricted
to 2.5 mmcf/d gross (1.6 mmcf/d, 260 boe/d net sales to C1) due to third
party facilities constraints. C1 is actively working with the facility
operators and depending on completion of facilities modification expects
production to increase to approximately 4.0 mmcf/d gross (2.5 mmcf/d,
415 boe/d net sales to C1) in the third quarter.

C1 is currently drilling two development wells in this area that could
provide additional productive capacity. While facility constraints will
limit our production from this area, C1 expects to be able to maintain
constant production from this property over the balance of 2005. C1 is
the operator of the Chipmunk property with a 75% to 100% working
interest.

C1 has drilled and cased a deep exploration well in this area that
encountered multiple pay zones which are being evaluated. This area is
restricted to winter access and final completion operations and
potential production is planned for Q1/2006. C1 has 100% working
interest in this well and 23 sections (14,720 acres) of lands associated
with the project area.

Haro

C1 has completed a five well program that resulted in C1 earning a 50%
interest in this project, including 29 sections (9280 net acres to C1)
of land, 8 standing cased and tested gas wells, as well as 3D and 2D
seismic data covering the lands.

C1 has an additional 8 to 12 drilling locations identified on these
lands. Tie-in and production of this new field will commence in Q1/2006
when either pipeline capacity in existing systems becomes available or
C1 and its partner build a new pipeline to commence field production.

Operating Summary

C1 has now completed the drilling of the first 9 wells in its 2005
drilling program at a 100% success rate. Production from these
discoveries will begin to be realized through the end of Q1 and continue
over the balance of 2005/2006 as the wells are completed and production
rates are determined. Within the completed drilling program 8 of the 9
wells are expected to result in the addition of new reserves. Four
additional wells are planned to be drilled prior to the end of the
quarter, one at Blueberry, two at Chipmunk and one at Gift Lake.

The following table summarizes C1's current production and projected
productive capability from our new wells drilled to date:



---------------------------------------------------------------------
Production Category Gas (mcf/d) Oil (bbls/d) BOE Equivalent
---------------------------------------------------------------------
Current Production 2,120 397 750
---------------------------------------------------------------------
Q1 Production
Additions (1) 2,250 120 495
---------------------------------------------------------------------
Total Q1 Exit Production 4,370 517 1,245
---------------------------------------------------------------------
2005 Behind Pipe
Capacity (2) 1,860 70 380
---------------------------------------------------------------------
2005 Total Capacity 6,230 587 1,625
---------------------------------------------------------------------
---------------------------------------------------------------------

(1) Includes additions from Blueberry, Chipmunk and Gift. Additions
include only wells that have completed production testing and
have tie-in operations planned prior to the end of Q1/2005
(2) Includes production capability curtailed by C1 controlled
facilities projects at Chipmunk, Blueberry and Gift. Production
capability related to third party constraints is not included.


C1 also announces that in accordance with the TSX rules governing stock
options that came into effect on January 1, 2005, C1 will be
implementing its 10% rolling stock option plan which was approved by
C1's shareholders at the annual and special meeting held on May 18, 2004.

C1 currently has an inventory of approximately 60 drilling locations on
an undeveloped land base of approximately 136,000 net acres. C1 has
exclusive access to an additional 168,000 acres of undeveloped land
bringing the company's total undeveloped land inventory to 304,000
acres. C1 currently has approximately 27.5 million common shares
outstanding.

Boe(s) may be misleading, particularly if used in isolation. A boe
conversion ratio of 6 mcf:1 bbl is based on an equivalency conversion
method primarily applicable at the burner tip and does not represent a
value equivalency at the well head.

The estimates of reserves for individual properties may not reflect the
same confidence level as estimates and future net revenues for all
properties, due to effects of aggregation.

Certain information set forth in this press release contains
forward-looking statements. All statements other than historical fact
contained herein are forward-looking statements, including, without
limitation, statements regarding the future financial position, business
strategy, production rates and plans and objectives of or involving C1
Energy Ltd. By their nature, forward-looking statements are subject to
numerous risks and uncertainties, some of which are beyond C1's control,
including the impact of general economic conditions, industry
conditions, governmental regulation, volatility of commodity prices,
currency fluctuations, imprecision of reserve estimates, environmental
risks, competition from other industry participants, the lack of
availability of qualified personnel or management, stock market
volatility and ability to access sufficient capital from internal and
external sources. Readers are cautioned that the assumptions used in the
preparation of such information, although considered reasonable at the
time of preparation, may prove to be imprecise and, as such, undue
reliance should not be placed on forward-looking statements. C1's actual
results, performance or achievement could differ materially from those
expressed in, or implied by, these forward-looking statements and,
accordingly, no assurance can be given that any of the events
anticipated by the forward-looking statements will transpire or occur,
or if any of them do so, what benefits that C1 will derive there from.
C1 disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.

-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    C1 Energy Ltd.
    Hugh Pattillo
    President & CEO
    403) 232-1115
    or
    C1 Energy Ltd.
    Gary Lobb
    VP Finance & CFO
    403) 232-1115
    (403) 232-1130 (FAX)
    Website: www.c1energy.ca
    or
    C1 Energy Ltd.
    500, 521-3rd Avenue S.W.
    Calgary, AB T2P 3T3
    Canada