Canadian Spirit Resources Inc.
TSX VENTURE : SPI
OTCBB : CSPUF

Canadian Spirit Resources Inc.

May 31, 2012 06:00 ET

Canadian Spirit Resources Inc. Announces First Quarter 2012 Financial Results

CALGARY, ALBERTA--(Marketwire - May 31, 2012) - Canadian Spirit Resources Inc. ("CSRI" or the "Corporation") (TSX VENTURE:SPI)(OTCBB:CSPUF) announces the release of its interim financial results and Management Discussion and Analysis ("MD&A") for the three month period ended March 31, 2012.

This news release summarizes information contained in the unaudited interim condensed financial statements and MD&A for the three month period ended March 31, 2012 and should not be considered a substitute for reading these full disclosure documents which are available on SEDAR at www.sedar.com or the Corporation's website at www.csri.ca.

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

SUMMARY QUARTERLY DATA
(all amounts are presented in Canadian dollars)
For the three months ended, and as at, March 31 2012 2011
Average sales volumes of natural gas (Mcf/d) 1,934 1,917
Average sales price of natural gas ($/Mcf) $ 2.11 $ 3.35
Natural gas sales, before royalties $ 372,252 $ 407,013
Operating netbacks, after royalty credits applied $ 87,174 $ 364,631
Cash flow from operating activities $ (271,242 ) $ (64,335 )
Net loss and comprehensive loss $ (942,567 ) $ (702,752 )
Loss per share, basic & diluted $ (0.01 ) $ (0.01 )
Net working capital $ 1,885,895 $ 18,176,642
Total assets $ 62,118,639 $ 77,574,080
Shareholders' capital $ 58,554,046 $ 74,900,078
Common shares outstanding 76,238,661 74,561,061
Total capital expenditures $ 359,732 $ 2,761,743

PRODUCTION

CSRI's natural gas sales volume averaged 1.9 MMcf/d (net) during the three months ended March 31, 2012. The Corporation has 5 (1.75 net) Montney wells being produced through its 10 MMcf/d (3.5 net) gas plant located on its western lands at Farrell Creek. Due to the depressed state of natural gas prices, and the fact that the natural gas being produced has no associated natural gas liquids, the Corporation has no immediate plans for further development activity on its western lands.

FARRELL CREEK NATURAL GAS & LIQUIDS RESOURCE REPORT

A Montney resource assessment of the Corporation's Farrell Creek lands in northeastern British Columbia was prepared by GLJ Petroleum Consultants ("GLJ") as at February 29, 2012. As previously announced (News Release April 30, 2012), GLJ determined that gross discovered and undiscovered natural gas initially-in-place was 5 Tcf and 5.7 Tcf, respectively. GLJ had also provided an estimate of associated natural gas liquids within its eastern lands at Farrell Creek with best estimates of company interest economic contingent natural gas liquids resource of 0.77 million barrels and company interest prospective natural gas liquids resource of 15.9 million barrels.

FARRELL CREEK OUTLOOK

CSRI continues to focus on its eastern lands due to their prospectivity for natural gas liquids. Along with the operator, Canbriam Energy, the Corporation intends to frac and test the previously drilled vertical well at 12-7 in the third quarter 2012. This well will be used to help optimize where future horizontal wells will be placed into the Montney Formation (upper, middle, lower) such that natural gas and natural gas liquids production can be maximized.

With a successful test at 12-7, the Corporation intends to drill and frac one, or possibly two, horizontal wells on its eastern lands with a view to adding incremental reserves and production. Production would require access to Talisman's nearby gas gathering system. At this point, discussions with Talisman indicate that they would be amenable. Frac water for the above activities would be supplied by the water pipeline (25% owned by CSRI) that the operator had constructed from the Williston Reservoir. This water pipeline will be commissioned within the next few months and will be fully operational by that time.

FINANCIAL RESOURCES

The Corporation currently has no debt, and has C$1.9 million of working capital as at March 31. 2012. CSRI intends to fund any additional capital required for the program outlined above through equity raises in the capital markets.

Information regarding CSRI is available on SEDAR at www.sedar.com or the Corporation's website at www.csri.ca.

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.

Neither the 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 news release.

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