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

Canadian Spirit Resources Inc.

April 30, 2012 06:00 ET

Canadian Spirit Resources Inc. Announces Significant Liquids Volume in Latest Resource Assessment- Montney Formation

CALGARY, ALBERTA--(Marketwire - April 30, 2012) - Canadian Spirit Resources Inc. ("CSRI" or the "Corporation") (TSX VENTURE:SPI) (OTCBB:CSPUF) is pleased to announce the results of an independent Montney resource assessment of CSRI's Farrell Creek lands in northeastern British Columbia. These results include a significant volume of natural gas liquids being identified within the Corporation's Montney Formation lands. The resource assessment was prepared by GLJ Petroleum Consultants ("GLJ") as at February 29, 2012.

HIGHLIGHTS:
NATURAL GAS LIQUIDS
  • GLJ's best estimate (P50) of natural gas liquids content is 20 barrels per million cubic feet ("Bbls/MMcf") within CSRI's eastern lands (high and low estimates of 40 and 5).

  • GLJ's best estimate (P50) of company interest Economic Contingent Liquids Resource is 766 thousand barrels ("Mbbls") (high and low estimates of 6,711 and nil).

  • GLJ's best estimate (P50) of company interest Prospective Liquids Resource is 15,908 Mbbls (high and low estimates 57,949 and 1,256).

  • The liquids resource estimate by GLJ is contained within the eastern lands at Farrell Creek where the Corporation has 17.3 net sections.

NATURAL GAS
  • Gross Discovered and Undiscovered Natural Gas Initially-In-Place ("GIIP") of 5,035 billion cubic feet ("Bcf") and 5,754 Bcf respectively.

  • Company Gross Discovered and Undiscovered Natural Gas Initially-In-Place of 1,928 Bcf and 3,622 Bcf respectively.

  • GLJ's best estimate (P50) of company interest Economic Contingent Resources is 35 Bcf (high and low estimates 710 Bcf and nil Bcf).

  • GLJ's best estimate (P50) of company interest Prospective Resources is 1,201 Bcf (high and low estimates 2,146 Bcf and 316 Bcf).

  • CSRI's net acreage at Farrell Creek, B.C. has grown to 26,100 net acres (40.8 net sections).

  • Approximately 1,100 horizontal wells estimated to be required for full area development.

The GLJ resource assessment was based on well data provided by the Corporation and using a 3% porosity cutoff.

CSRI's interim Chief Executive Officer, Alfred Sorensen, commented "we are extremely pleased with the significant volume of natural gas liquids that GLJ has estimated within the eastern lands at Farrell Creek. These liquids are material to the Corporation and have the potential to act as a game-changer for CSRI. The Corporation is currently working with the operator, Canbriam Energy, in planning activities which will further develop these liquids. The first activity will be the fracture stimulation and testing of an existing well at 12-7-83-24W6. Positive results will be followed by the drilling and tie-in of additional horizontal wells."

MONTNEY FORMATION RESOURCE ASSESSMENT

GLJ 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 February 29, 2012 in accordance with National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities ("GLJ Report"). 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.

The following table summarizes certain information contained in the 2009, 2010 and 2012 resource reports.

SUMMARY OF ANNUAL CHANGES
GROSS AND COMPANY GROSS
NATURAL GAS INITIALLY-IN-PLACE
Resource Classification Gross GIIP
Bcf
Company Gross GIIP
Bcf
2009 2010 2012 (3 ) 2009 2010 2012 (3 )
DISCOVERED GIIP (1) 1,378 2,654 5,035 478 1,028 1,928
UNDISCOVERED GIIP (2) 2,243 2,370 5,754 648 1,294 3,662
NOTES:
(1) There is no certainty that it will be commercially viable to produce any portion of this resource.
(2) There is no certainty that any portion of this resource will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resource.
(3) 3% porosity cutoff used.

The following tables summarize certain information contained in the resource assessment prepared by GLJ. The GLJ Report was prepared in accordance with definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook").

SUMMARY OF NATURAL GAS AND LIQUIDS WITHIN THE MONTNEY FORMATION
IN THE FARRELL CREEK AREA OF BRITISH COLUMBIA
Company Gross* Economic Contingent (1) Total Recoverable Natural Gas Liquids
(Mbbls
) Company Gross* Economic Contingent (1) Gas Resources
(Bcf)
(Sales
) Company Gross* Prospective
Total Recoverable
Natural Gas Liquids
(Mbbls
) Company Gross* Prospective
Gas Resources
(Bcf)
(Sales
)
Low Estimate nil nil Low Estimate 1,256 316
Best Estimate 766 35 Best Estimate 15,908 1,103
High Estimate 6,711 710 High Estimate 57,949 2,146
* Company working interest (operating or non-operating) share before deduction of royalties.
NOTE:
1. The contingencies that prevent the Economic Contingent Resources from being classified as reserves are associated with the early evaluation stage of these development opportunities. Additional drilling, completion and testing data is generally required before the Corporation can commit to development of the contingent resources.

TOTAL GAS INITIALLY-IN-PLACE ("TGIIP") SENSITIVITY

The GLJ resource assessment used a 3% porosity cutoff. Based on the Corporation's and other operators' well evaluation work in lower average porosity portions of the Montney Formation, CSRI requested that GLJ calculate the TGIIP using a 0% porosity cutoff. Using this cutoff, the TGIIP was calculated by GLJ to be 13,549 Bcf of natural gas on the Corporation's lands at Farrell Creek compared to the 10,789 Bcf using a 3% cutoff.

A 0% porosity cutoff indicates that all of the gas bearing reservoir has been included in the gas-in-place calculation. GLJ considers the calculation of gas-in-place using a 0% cutoff to be a sensitivity and that the 3% cutoff should be used for reserves and resource calculations.

Definitions (as defined in the COGE Handbook):
1. Total Petroleum (Gas) Initially-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.
2. Discovered Petroleum (Gas) Initially-In-Place is that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production. The recoverable portion of discovered Petroleum (Gas) Initially-In-Place includes production, reserves, and contingent resources; the remainder is unrecoverable.
3. Undiscovered Petroleum (Gas) Initially-In-Place is that quantity of petroleum that is estimated, on a given date, to be contained in accumulations yet to be discovered. The recoverable portion of undiscovered Petroleum (Gas) Initially-In Place is referred to as prospective resources; the remainder is unrecoverable.
4. Contingent Resources are defined as those quantities of natural gas and natural gas liquids estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors 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.
5. Economic Contingent Resources are defined as those contingent resources that are currently economically recoverable.
6. Prospective Resources are defined as those quantities of natural gas and natural gas liquids estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development.
7. Low estimate (P90) is a classification of estimated resources as being considered to be a conservative estimate of the quantity that will be actually 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% probability that the quantities actually recovered will equal or exceed the low estimate.
8. Best estimate (P50) is a classification of estimated resources as being considered to be the best estimate of the quantity that will be actually recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. If probabilistic methods are used, there should be at least a 50% probability that the quantities actually recovered will equal or exceed the best estimate.
9. High estimate (P10) is a classification of estimated resources as being considered to be an optimistic estimate of the quantity that will be actually recovered. If probabilistic methods are used, there should be at least a 10% probability that the quantities actually recovered will equal or exceed the high estimate.

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

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

On behalf of the Board of Directors,

CANADIAN SPIRIT RESOURCES INC.

Alfred B. Sorensen, Interim Chief Executive Officer

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.

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