Canadian Spirit Resources Inc. Announces 2010 Financial Results and Filing of Annual Disclosure Documents

CALGARY, ALBERTA--(Marketwire - April 28, 2011) - Canadian Spirit Resources Inc. ("CSRI" or the "Corporation") (TSX VENTURE:SPI) (PINK SHEETS:CSPUF) announces the release of its financial results and the filing of the audited Financial Statements, Management Discussion and Analysis, and Annual Information Form for the year ended December 31, 2010 (all amounts in Canadian dollars).

• Sproule Unconventional Limited ("Sproule") reconfirms a significant Montney resource estimate
  • Gross Discovered and Undiscovered Natural Gas Initially-in-Place ("GIIP") of 2.65 trillion cubic feet ("Tcf") and 2.37 Tcf respectively, an average 39% increase over 2009
    (see table under Resource Assessment)
  • Approximately 900 horizontal wells estimated to be required for full area development
• A 10 mmcf/d sweet gas processing facility was constructed with gas sales commencing in January 2011.
• Three horizontal wells currently tied-in and producing 5 mmcf/d (gross).
• Three additional horizontal wells to be fracture stimulated and tied-in during the third quarter 2011.
• CSRI's net acreage has grown to 22,000 acres (34.4 net sections).

• CSRI becomes operator and acquires 100% of pilot facilities.
• Gas facility was shut-in due to low natural gas prices.
• The Corporation is considering several options to further develop the Gething Rights.

• Capital expenditures of $19.5 million (net) in 2010 brought the Corporation to the threshold of de- risking the Montney play and commercial production.
• CSRI's first public financing closed in December 2010 providing gross proceeds of $26.2 million.
• A private placement of Flow-Through Shares closed in June 2010 for gross proceeds of $4.2 million.
• The exercise of warrants and stock options during 2010 added $6.1 million to the Corporation's cash position.
• Currently the Corporation has $18.6 million of net working capital ($0.25/share).
• No debt.

Commenting on the Corporation's results and financial position, Don Gardner, Chief Executive Officer stated "we are very pleased with the substantial progress achieved in 2010 which led to the first production revenue and cash from operations in the Corporation's history. We are confident that 2011 will build on this success".

Revenues during the year ended December 31, 2010 of $92,509 (2009: $45,809) represent interest on cash deposits and other miscellaneous income. The Corporation had no operating revenue in either 2009 or 2010.

The net loss and comprehensive loss decreased from $2.0 million in 2009 to $1.2 million in 2010 due primarily to a $993,821 recovery of future taxes recorded in the fourth quarter 2010 related to the June private placement of 3,000,000 Flow-Through Shares at $1.50 per share for total gross proceeds of $4.2 million.

At December 31, 2010, the Corporation had a net working capital balance of $21.0 million, consisting of cash in the amount of $33.9 million, accounts receivable and prepaids of $0.4 million, and net of accounts payable and accrued trade liabilities of $13.3 million. The accounts payable and accrued trade liabilities balance at December 31, 2010 relates primarily to horizontal drilling and completion activity in the Montney Project as well as facilities construction at Farrell Creek in conjunction with the Corporation's joint venture partner, Canbriam Energy BC Partnership ("Canbriam"). The Corporation has no bank indebtedness and has no credit agreements to borrow money in place at this time. Long-term financial liabilities of $445,066 as at December 31, 2010 represent the present value of the asset retirement obligation associated with the Corporation's land base and surface facilities, discounted from the total estimated future liability of $2.2 million.

For the year ended December 31, 2010, gross capital expenditures including land acquisitions totaled $19.5 million (2009: $0.7 million), compared to a budgeted capital expenditure of $19.7 million (2009: $1.2 million). Offsetting the Corporation's capital expenditures in 2009 were $0.2 million of reimbursements of previously expended drilling and completion costs from a joint venture partner in relation to the Gething operations at Farrell Creek. The recovery of these expenditures was recorded as a reduction of capitalized drilling and completion costs.

The Corporation's capital budget is reviewed and approved by the Board of Directors on a quarterly basis. The Corporation's Board of Directors has approved a revised total forecasted capital expenditure in 2011 of up to $16.2 million, including an estimated $0.5 million for capitalized overhead. The capital budget for the first half of 2011 has been approved for a total of up to $4.8 million, including $0.2 million for capitalized overhead.

Cash administration expenses (general and administration expenses excluding stock-based compensation) for 2011 are expected to total $2.6 million (2010: $2.1 million), before capitalization of exploration and development related overhead. Revenue from interest on cash balances is budgeted at $0.1 million for the 2011 year. The Corporation has budgeted for net cash flows from the Farrell Creek Montney operations of $2.2 million during 2011.

The Corporation's current net working capital position of $18.6 million is considered by management to be sufficient to cover its administrative costs and its forecasted capital expenditures through to the second quarter 2012. The capital required to complete the Corporation's share of the Montney joint venture program for the remainder of 2011 plus the first half of 2012, including horizontal drilling and completion activity together with related facilities enhancements and well tie-ins, will either be drawn from existing cash resources or generated internally from funds from operations and possible borrowings against reserves.

RESOURCE ASSESSMENT

Sproule was engaged to prepare an independent resource assessment of the Montney Formation on the Corporation's Farrell Creek lands in northeastern British Columbia as at December 31, 2010 in accordance with National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities ("Sproule Report" – see News Release dated April 7, 2011). The engagement was to assess the future development and resource potential of the Montney Formation and did not include the Doig and Doig phosphate intervals (fracture stimulated and tested by other Farrell Creek operators) or the adsorbed gas component associated with any formation. Further, the Sproule resource assessment did not include approximately 5 adjacent sections of Montney rights acquired by CSRI after December 31, 2010. CSRI currently holds 34.4 net sections (22,000 net acres) of Montney rights in the Farrell Creek area.

The following table summarizes certain information contained in the 2009 and 2010 Sproule Reports.

OPERATIONS REVIEW 2010

Montney Joint Venture

On March 19, 2008, the Corporation announced a joint venture and farmout agreement for the Deep Rights with Canbriam, to evaluate certain of the Corporation's lands for Montney and other deep formation plays covering approximately 34,000 gross acres. Through the joint venture, Canbriam committed to an initial expenditure of up to $28.6 million for exploration of the Deep Rights including the

drilling of at least two vertical wells into the Montney Formation in exchange for a 65% working interest. Canbriam also had the option to increase its working interest in the Deep Rights from 65% to 70% in return for increasing its gross capital commitment to $50.0 million. Canbriam has now fulfilled their $28.6 million initial funding commitment and in October 2010, advised that they would not exercise the option to increase their working interest. CSRI is now responsible for funding its 35% working interest of the Montney program.

Since conducting evaluation tests on two vertical Montney wells on the eastern block of Farrell Creek in late 2008, Canbriam focused its operations on the western portion of the Farrell Creek lands in close proximity to the Spectra Energy sales pipeline. Following a successful vertical well test into the lower portion of the Montney Formation at the b-17-I location, the joint venture drilled a horizontal well into the lower Montney at the c-A48-I location. This was the first known horizontal well targeting the lower Montney in the Farrell Creek area and the results significantly exceeded CSRI's expectations.

The c-A48-I well was stimulated in 8 stages of the lower portion of the Montney Formation. The initial production flow-tested at a rate of approximately 1 mmcf/d per stage. The positive results of this well are significant as it may be an indicator that the lower Montney Formation has the potential to increase ultimate resource estimates and to increase the total productivity of the play.

The joint venture also drilled and cased three upper Montney horizontal wells on the western block of the Montney lands at c-18-I/94-B-1, c-A18-I/94-B-1, c-45-I/94-B-1 and re-entered the b-17-I/94-B-1 well to drill a short horizontal leg in the lower Montney.

At the end of October 2010, Canbriam carried out a production test on the c-18-I well with initial flow rates of up to 4.7 mmcf/d with 8 stages being stimulated. The b-17-I re-entry horizontal well was fracture stimulated in 5 stages in the lower Montney in December with initial production in excess of 3.5 mmcf/d.

The joint venture recently drilled and cased a horizontal well in the upper Montney at the c-B18-I/94-B-1 location. This is the fourth horizontal well in the upper Montney Formation and the sixth well in the west block of lands.

Construction of the joint venture's gas processing facility with an initial capacity of 10 mmcf/d gross (3.5 mmcf/d net), and tie-in to the Spectra Energy sales pipeline, was completed in January 2011. Commissioning of the facility occurred in late January 2011 with gas sales commencing on January 28^th. The wells currently tied-in to the facility are the c-A48-I and b-17-I lower Montney horizontal wells and the c-18-I upper Montney horizontal well. Initial gas sales from these three wells were in excess of 10 mmcf/d gross (3.5 mmcf/d net). Subsequently, over the last three months, gas sales have declined to 5 mmcf/d gross (1.75 mmcf/d net) and appear to have stabilized. Subject to the availability of fracture crews and equipment, it is anticipated that the c-A18-I, c-B18-I, and c-45-I wells will be fracture stimulated and tied-in to the facility during the third quarter of 2011.

During the past year, other operators' drilling and development activity has significantly de-risked the Montney Formation adjacent to the western portion of the Corporation's Farrell Creek lands. Talisman Energy Inc. ("Talisman") moved its adjacent Montney shale play into commercial production and expects to be producing 100-120 mmcf/d on average in 2011. Talisman also announced that the capacity of their Farrell Creek Gas Plant will be increased from 120 mmcf/d to 180 mmcf/d during 2011. Talisman recently announced a strategic partnership with Sasol Limited ("Sasol") which is expected to accelerate the projected multi-billion dollar development of their Farrell Creek play. Total consideration from Sasol was $2.1 billion (combined, via two separate deals) for a 50% working interest in both of Talisman's Farrell Creek and Cypress A plays. These transactions are comprised of an initial 25% cash payment plus a 75% capital carry on Talisman's future expenditures. The partnership will also be examining alternative marketing options including the economic feasibility of constructing a gas-to-liquids ("GTL") project in western Canada using Sasol's GTL technology.

Gething Joint Venture

On July 17, 2008 the Corporation announced that it had entered into a joint venture with Shell to advance the development of the identified unconventional natural gas resource in the Gething Formation on a combined total of approximately 150 contiguous sections or 96,000 acres located in the Farrell Creek area. Shell's $50.0 million initial capital commitment included the acquisition of additional land, the drilling of five vertical wells and the construction of facilities to tie-in the Pilot Project. The pilot facility is scalable and currently has a capacity of up to 1.1 mmcf/d. Seven Gething wells were tied into the pilot facility and the facility produced its first gas in June 2009.

Pursuant to the joint venture agreement, Shell could elect to move to the development stage of the Gething joint venture which would include the pooling of the Shell and CSRI lands and an additional capital investment by Shell. On June 18, 2010, Shell elected not to continue to the development stage and as a result shut-in the gas facility in early July 2010. As per the joint venture agreement, the Corporation is now the operator of the Gething project and will retain 100% working interest in its 59 sections (37,760 acres) of Shallow Rights, the gas facility, the additional wells and the related infrastructure at no additional cost. The pilot facility has been properly suspended and winterized. Over the course of the joint venture, Shell invested approximately $32.0 million in development and infrastructure. As a result, CSRI was able to increase its understanding of the Gething Formation and expects to benefit from the future use of the facilities and infrastructure constructed at no cost to the Corporation. The gas facility is expandable and may be used for other purposes in the immediate area. CSRI holds a right-of-first-refusal on Shell's surrounding 95 sections of Gething lands. The Corporation is currently minimizing its expenditures on the Gething project and is considering several options that include a possible spin-out of this asset and seeking a new joint venture partner to further develop the Gething Rights.

Additional Information:

The Corporation's financial statements, management's discussion and analysis of operations and financial condition and annual information form ("AIF") have been filed on the System for Electronic Document Analysis and Retrieval ("SEDAR") and can be viewed at www.sedar.com or through the Corporation's website at www.csri.ca.

The AIF includes supplemental disclosure pursuant to National Instrument 51-101, Forms 51-101F1 and 51-101F3 including Other Oil and Gas Information.

CSRI is a natural resources company focusing on the identification and development of opportunities in the unconventional gas sector of the energy industry.

On behalf of the Board of Directors,

CANADIAN SPIRIT RESOURCES INC.

"Don Gardner"

Chief Executive Officer & Secretary

The corporate information contained in this news release may contain forward-looking forecast information. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonably accurate by CSRI at the time of preparation, may prove to be incorrect. The actual results achieved during the forecast period will vary from the information provided herein and the variations may be material. Consequently there is no representation by CSRI that actual results achieved during the forecast period will be the same in whole or in part as those forecast.