Candax Energy Inc.

Candax Energy Inc.

April 05, 2007 17:26 ET

Candax Increases Net Proved Oil Reserves by 8%

TORONTO, ONTARIO--(CCNMatthews - April 5, 2007) -

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

Candax Energy Inc. ("Candax") (TSX:CAX) is pleased to announce an update to its net reserves as of December 31, 2006, with total Proved plus Probable Reserves (2P) of 7.0 MMboe and Proved Reserves of 4.0 MMboe. The net present value (NPV) of future cash flows (constant pricing, after tax and discounted at 10%) attributable to these 2P reserves is valued at $106 million. Candax's cash position at year end was $51 million and thus the Company's Net Asset Value (using a 10% discount factor) equates to approximately $0.93 per share.

Independent engineering reports were prepared by Ryder Scott Company Petroleum Consultants (Ryder Scott) for all of Candax's properties in Tunisia. The Report gives an increase in net 2P oil reserves in the El Bibane and Ezzaouia fields of 18% compared with prior year reporting. With El Bibane reserves remaining the same, the increase is entirely attributable to a 44% addition to reserves at Ezzaouia, where Candax is currently undertaking an extensive work-over program on five wells and has contracted a rig to drill a two well, in-fill development program, due to commence drilling in the fourth quarter of 2007. These investments are designed to double production rates and increase recovery. A pilot water flood will also be initiated after that work program.

Technical work on the Chaal Block, onshore Tunisia, is ongoing and further evaluation is planned for later this year subject to suitable rig availability. This potentially significant gas discovery was unable to be effectively tested due to mechanical problems during the drilling of the Chaal 1 well in 2006. Ryder Scott completed an independent estimate of natural gas resource potential on the Chaal Permit in Tunisia, effective December 31, 2006. Ryder Scott has classified Chaal as a Contingent Resource with an un-risked, high case estimate of 1.7 Tcf gas in-place (GIIP), and recoverable Contingent Resources of 854 Bcf.

Chaal Exploration Permit
Gross Unrisked Estimates of Original Gas in Place and
Gross Lease Contingent Resources

Gas in Place Contingent Resources
Low Medium High Low Medium High
Natural Gas (Bcf) 150 1,088 1,708 75 544 854

The independent engineering reserves report was prepared by Ryder Scott for all of Candax's properties in Tunisia. The report was prepared in accordance with NI 51-101 guidelines, and more details on the reserves and valuations can be found in the Annual Information Form which has been filed and is available on SEDAR.

Candax has an exciting exploration portfolio with high potential prospects in both Tunisia and Madagascar. In Tunisia a re-mapping and modeling of the Triassic potential in the exploration prospects both onshore at Ezzaouia and offshore at El Bibane has been completed. The exploration potential of these prospects is very significant, with un-risked estimates of GIIP being greater than 3 Tcf. Candax is working with its partners to agree on certain commercial conditions and is also seeking a suitable drilling rig so that drilling on these high potential prospects can occur in late 2007 or early 2008.

In Madagascar, Candax signed a Production Sharing Contract (PSC) with the Government of Madagascar for Block 1101 on November 2, 2006. The PSC for Block 1101 is one of a number of PSC's that are awaiting final approval in the form of a Presidential ratification. Block 1101 represents a low cost, high potential, frontier exploration opportunity. Based on the regional work to date, Candax believes that the primary target is an oil play, since a number of multi-billion barrel heavy oil discoveries are located to the south of Block 1101.

Mike Wood, CEO, commented:

"The underlying net asset value of Candax is significantly greater than that reflected in the current share price. This disconnect is primarily due to past delays in the re-development of our offshore El Bibane field, and we expect Candax will be able to provide a separate announcement on the progress of this project in the very near future. A number of internal changes have been made in Candax in recent months, and a good deal of work is ongoing to deliver value to shareholders. In addition, Candax holds the potential for significant growth in its exploration portfolio, which provides our shareholders access to some world class potential energy resource plays. We believe these assets, together with the aggressive execution of our business development strategy is creating a platform for significant growth."

Candax Energy 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 and 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.
    Fred Cowans or Tracy Weslosky
    Managing Partners
    1-866-544-9622 or (416) 581-0177