Candax Energy Inc.

Candax Energy Inc.

December 20, 2006 13:02 ET

Candax Announces 2007 Capital Expenditure Budget and Operational Update

TORONTO, ONTARIO--(CCNMatthews - Dec. 20, 2006) -

Not for distribution to United States newswire services or for dissemination in the United States.

Candax Energy Inc. ("Candax") (TSX:CAX) announces that the Board has approved a net capital expenditure budget for 2007 of US$25.4 million (firm plus contingent). The budget includes expenditures on the following projects, with the major portion dedicated to El Bibane:

- El Bibane Redevelopment Program
- Ezzaouia Existing well workovers and two development infill wells in
the Jurassic reservoir
- Ezzaouia Water flood project
- Ezzaouia Deep Triassic exploration well
- Chaal Appraisal well
- Madagascar New Production Sharing Contract - first year Phase 1

On the El Bibane Redevelopment Project (73.8% Working Interest), final preparation for drilling continues in Tunisia. The Alastair jack-up rig has safely arrived in Zarzis port and is awaiting arrival of certain key equipment required for safety and environmental considerations prior to final certification, including a jack-up support barge for mud handling to replace a floating support barge previously sourced. Management continues to evaluate all potential options to accelerate the timing of the drilling program.

Significant work is planned for the Ezzaouia Field (31.4% Working Interest) in 2007, including:

- The workover of five wells will begin in January 2007 which should add approximately 500 bbls/day (gross) to current production;

- Subject to rig availability, two infill wells are planned for mid to late 2007 to maximize primary production in the field in areas not being efficiently drained by the current wells;

- Following the completion of ongoing reservoir simulation studies, a water flood program will be implemented in the Jurassic reservoir, which should significantly increase reserves; and

- Subject to final agreement with the Government of Tunisia and rig availability, Candax plans to test the multi-Tcf Deep Triassic exploration prospect at Ezzaouia in the second half of 2007

On the Company's Chaal-1 well (60% Working Interest), a project team is being established by the partners (Candax, Mitsubishi and SMIP) in early 2007 to further evaluate the results of the Chaal-1 well. The team's goal will then be to design a well program that can minimize the formation damage experienced during the drilling of Chaal-1 and maximize the flow capability through a sidetrack or new deviated well. Subject to the team's agreement, contingent capital expenditures have been included in the budget for a well in the second half of 2007.

Candax is also pleased to report that in preparation for the drilling and development programs in 2007, several important additions have been made to the operational management team in Tunisia. New drilling and project management teams have already been established, as well as a permanent Health, Safety & Environmental Manager starting in January. These changes are designed to enhance and strengthen the operating capability of Candax.

In other news, Candax is pleased to announce that on November 2nd 2006, the Company signed a Production Sharing Contract for Block 1101 onshore Madagascar with OMNIS (Office des Mines Nationales et des Industries Strategiques), which is awaiting Presidential ratification. The Company has a working interest of 60% and will operate the Permit, whilst its partner EAX, a Dubai company, holds 40%. The Block measures approximately 15,000 square kilometers and the Company's commitment in Phase I (two year period) includes geological and geochemical studies, 2D seismic and one well for a commitment of US$1.5 million.

Candax Energy Inc. is an international energy company with its head office in Toronto, Ontario, Canada and management offices in London, Dubai and Tunis. The Company holds a number of concessions in Tunisia through its subsidiary companies and is involved in the exploration and production of oil, gas and power generation in the country. Candax was formed through the combination of a highly experienced executive management team with successful Canadian founders and financiers, to develop an international upstream oil and gas project portfolio. Candax is initially focusing its growth activities on production and development projects in the Middle East and North Africa, where the group has strong relationships as well as extensive management experience.

This press release includes "forward looking statements", within the meaning of applicable securities legislation, which are based on the opinions and estimates of Management and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "budget", "plan", "continue", "estimate", "expect", "forecast", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar words suggesting future outcomes or statements regarding an outlook. Such risks and uncertainties include, but are not limited to, risks associated with the oil and gas industry (including operational risks in exploration development and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections in relation to production, costs and expenses; the uncertainty surrounding the ability of Candax Energy Inc. to obtain all permits, consents or authorizations required for its operations and activities; and health safety and environmental risks), the risk of commodity price and foreign exchange rate fluctuations, the ability of Candax Energy Inc. to fund the capital and operating expenses necessary to achieve the business objectives of Candax Energy Inc., the uncertainty associated with commercial negotiations and negotiating with foreign governments and risks associated with international business activities, as well as those risks described in public disclosure documents filed by Candax Energy Inc. Due to the risks, uncertainties and assumptions inherent in forward-looking statements, prospective investors in securities of Candax Energy Inc. should not place undue reliance on these forward-looking statements. Statements in relation to "reserves" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described can be profitably produced in the future.

Contact Information

  • Candax Energy Inc.
    John Clarke
    Executive Vice President, Corporate
    (416) 361-2824
    (416) 364-5400 (FAX)
    Pro-Edge Consultants Inc.
    Tracy Weslosky or Fred Cowans
    Managing Partners
    1-866-544-9622 or (416) 581-0177