Canadian Spirit Resources Inc.

Canadian Spirit Resources Inc.

November 28, 2007 06:00 ET

Canadian Spirit Resources Inc. Announces Third Quarter 2007 Financial Results

CALGARY, ALBERTA--(Marketwire - Nov. 28, 2007) - Canadian Spirit Resources Inc. ("CSRI" or the "Company") (TSX VENTURE:SPI) announces the release of its financial results and Management Discussion and Analysis for the three and nine month periods ended September 30, 2007.

CSRI is a natural resources company focusing on the identification and development of opportunities in the unconventional gas sector of the energy industry. The mission of the Company is to develop 1 tcf of natural gas from unconventional resource plays in western Canada. The Company has identified a 1.8 tcf resource play, assembled a unique, high working interest land position in approximately 40,000 gross acres in northeast British Columbia and is currently evaluating the productive capability of its principal resource property at Farrell Creek, British Columbia.

Highlights to-date in 2007 include:

- Announcement of 2% Net Profit Royalty Program in B.C.;

- Successful fracture stimulation of d-093 well;

- New appointment enhances engineering staff;

- Appointment of Rudy Cech to Board; and

- Approval of Experimental Scheme covering pilot project area at Farrell Creek, B.C.

Selected Financial Data ($ CDN)

Selected Financial Data
For the nine month periods ended and as at
September 30 2007 2006

Total revenue $ 71,112 $ 235,760
Net loss $ (473,118) $ (770,189)
Net loss per share (basic & diluted) $ (0.01) $ (0.03)
Working capital $ 1,941,138 $ 4,972,578
Total assets $ 38,779,223 $ 38,686,923
Total long term financial liabilities $ 449,677 $ 809,662

For the three month periods ended
September 30 2007 2006

Total revenue $ 31,620 $ 36,970
Net earnings (loss) (42,936) 174,092
Net earnings (loss) per share (basic &
diluted ) - 0.01

The Company recorded a net loss of $473,118 or $0.01 per share for the first nine months of 2007 compared to a net loss of $770,189 or $0.03 per share for the same period in 2006. The Company had no operating revenue in either period. Interest and other revenue declined to $71,112 during the first nine months of 2007 from $235,760 in the comparative 2006 period due principally to lower average cash balances in 2007.

Cash administrative expenses after the capitalization of costs directly related to exploration activity for the nine month periods ended September 30, 2007 and 2006 were $781,013 and $889,828 respectively. Overhead amounts capitalized in the first nine months of 2007 were $490,156, up slightly from $454,480 in the comparable period of 2006. Total salaries and benefits before capitalization for the two comparative nine month periods decreased by $142,498 or 20 percent.

Stock-based compensation for the nine month period ended September 30, 2007 was comprised of stock option compensation recovery of $11,234 (2006: expense of $498,052), stock appreciation rights recovery of $288,000 (2006: $486,000) and Performance Units expense of $Nil (2006: $6,301) resulting in a net recovery of $299,234 in the first three quarters of 2007 (2006: expense of $18,353).

Long-term financial liabilities at September 30, 2007 include $246,000 representing the accrued contingent liability for cash payments to key employees pursuant to stock appreciation rights granted in 2003. Payments under these agreements are conditional upon the achievement of specified production targets or profit thresholds. The additional $203,677 represents the present value of future reclamation obligations associated with the Company's properties in British Columbia and Alberta.

Following the July 18, 2007 private placement of Units and Flow-through Shares raising a total of $3.5 million, the Company currently has 32,333,082 shares outstanding.

Capital expenditures in the first nine months in each of the past two years are detailed in the following table:

($ CDN)
For the nine month periods ended
September 30 2007 2006

Lease acquisitions and retentions $ 72,294 $ 70,399
Geological and geophysical 18,990 17,593
Drilling and completion 2,725,177 7,972,259
Capitalized overhead 490,156 454,480
-------------- ---------------
Total petroleum and natural gas 3,306,617 8,514,731
Office equipment and furnishings 3,251 15,640
-------------- ---------------
Total capital expenditures $ 3,309,868 $ 8,530,371
-------------- ---------------
-------------- ---------------

Operations during the first three quarters of 2007 involved production testing and improvements in equipment and facilities at the Farrell Creek pilot project. This resulted in progressively higher and more stable production rates of natural gas, enhanced reliability of pumping equipment and reduced operating costs. During the third quarter of 2007 the Company re-completed two wells compared to the comparative period in 2006 when one well was drilled and two wells were completed.

The Company continued its active capital program through the third quarter of 2007. Field operations to complete the first phase of the Gething Formation pilot program at Farrell Creek began in late June and included workovers and further production testing of three of the four wells currently comprising the pilot project. An additional operation to fracture stimulate the upper portion of the Gething Formation in the b-003 well was also undertaken. The planned fracture stimulation of the d-093 well was moved into October 2007 and has since been completed and is now under production testing. The Company has employed a more controlled flow-black approach to dewatering this well and early results are in line with expectations. Dewatering and production testing will continue into 2008. Capital expenditures for the third quarter of 2007 were $1,742,211, down from $4,040,306 during the third quarter of 2006.

On July 31, 2007 the Government of British Columbia announced a Net Profit Royalty Program to primarily encourage development of unconventional gas (coalbed, shale and tight sand gas) or remote conventional gas resources in the province. This program, with low initial royalty and capital recovery features, will significantly enhance the economic threshold of unconventional natural gas projects such as Farrell Creek and is expected to result in accelerated capital investment in the province. Applications for approval under this program are expected to be accepted beginning in the Fall of 2007. The Company believes that the Farrell Creek project will qualify under this program.

Effective December 1, 2007, Paul Smolarchuk, P.Eng. has agreed to join the Company as Operations Manager. Paul has worked with the Company since May 2007 in a consulting capacity during which time he has made a significant contribution to the effectiveness of the Company's operations. Prior to joining CSRI, Paul has worked on the exploitation of unconventional natural gas resources for over 15 years.

Additional Information:

The Company's interim financial statements and management's discussion and analysis of operations and financial condition ("MD&A") have been filed on the System for Electronic Document Analysis and Retrieval ("SEDAR") and can be viewed through the Company's website at and on

On behalf of the Board of Directors, CANADIAN SPIRIT RESOURCES INC.

Phillip D.C. Geiger, President & Chief Operating Officer

OTC Bulletin Board Symbol (Foreign) "CSPUF"

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.

The TSX Venture Exchange has neither approved nor disapproved the information contained herein and does not accept responsibility for the adequacy or accuracy of this release

Contact Information

  • Canadian Spirit Resources Inc.
    Phil Geiger
    (403) 539-5005
    (403) 262-4177 (FAX)
    Canadian Spirit Resources Inc.
    Don Gardner
    (403) 539-5005
    (403) 262-4177 (FAX)
    BRISCO Capital Partners Corp.
    Gordon W. Aldcorn
    Investor Relations
    (403) 262-9888
    (403) 263-1339 (FAX)