Candax Energy Inc.

Candax Energy Inc.

March 24, 2006 09:38 ET

Candax Increases Proven + Probable Reserves Value by 130%

TORONTO, ONTARIO--(CCNMatthews - March 24, 2006) -

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, 2005 with total proved plus probable reserves (2P) of 15.7 MMboe. Proven reserves are 35% higher at 4.0 MMboe compared to the reserves presented in Candax's IPO Prospectus dated August 22, 2005. In addition, the net present value (NPV) of future cash flows (after tax and discounted at 10%) attributable to 2P reserves has increased 130% to $125.2 million from $54.5 million.

Independent engineering reserves reports were prepared by Ryder Scott Petroleum Consultants for all of Candax's properties in Tunisia with the exception of reserves attributable to the Chaal Permit, which were prepared by Glendower International Limited, and are consistent with the reporting presented in the Company's IPO Prospectus. Both of these reports have been prepared in accordance with NI51-101 guidelines. It should be noted that the Chaal reserves and valuations summarized below are based on an 80% working interest, which was the working interest prior to the farm-out to Mitsubishi Corporation which was completed after December 31, 2005. The details of this farm-out were announced in the press release dated October 28, 2005.

Candax's reserve highlights for escalated prices and costs are as follows:

- Proved reserve increases are mainly due to the impending investment program and re-development of the El Bibane field offshore Tunisia, providing Candax with proved oil reserves of 2.4 MMbbl and 9.8 bcf of gas.

- Probable oil reserves are 29% higher at 3.1 MMbbl and probable gas reserves are approximately flat at 51.6 bcf. The increase in probable oil reserves is mainly attributable to the re-development of the El Bibane field.

- The Net Present Value (NPV) discounted at 10% for 2P reserves is $125.2 million, an increase of 130% over the $54.5 million valuation at the time of the IPO. The December 31, 2005 NPV under constant price and cost forecasts is $142.4 million.

- Candax will commence a pilot water-flood project on its onshore Ezzaouia field in April 2006 where, consistent with NI51-101 guidelines, no additional reserves have been added in the end-2005 audit. If the pilot project is successful, Candax anticipates that a full field water-flood project would be undertaken in 2007 and that significant reserve additions would be attributable at the end of 2006 following a successful pilot program.

Summary of Oil and Gas Reserves (Ryder Scott & Glendower)
as at December 31, 2005 (Escalated Prices and Costs)
Boe Oil Natural Gas
Reserves Category Gross Net Gross Net Gross Net
(Mboe) (Mboe) (Mbbl) (Mbbl) (MMcf) (MMcf)
Total Proved -
All Categories 7,744 3,988 5,064 2,361 16,083 9,765
Probable - All
Categories 17,234 11,670 5,890 3,062 68,063 51,645
Total Proved
Plus Probable 24,978 15,658 10,954 5,423 84,146 61,410

Summary of Net Present Value of Future Net Reserves
as at December 31, 2005 (Escalated Prices and Costs) - C$ Millions

Before Income Tax Discounted at
Reserves Category 0% 5% 10% 15% 20%
Total Proved 69.1 57.4 47.9 40.0 33.5
Probable 153.4 115.0 87.7 68.2 53.7
Proved and Probable 222.5 172.4 135.6 108.2 87.2

After Income Tax Discounted at
Reserves Category 0% 5% 10% 15% 20%
Total Proved 65.3 54.3 45.3 37.9 31.8
Probable 142.0 105.6 79.9 61.5 48.1
Proved and Probable 207.3 159.9 125.2 99.4 79.9

Candax's 2006 drilling program for the re-development of the El Bibane field is expected to result in 2006 net exit production of approximately 2,500 bopd and 4.5 MMcf/d. The Chaal 1 well which started drilling February 5, 2006 is currently at 3,182 meters in the Upper Nara Jurassic formation and 9 5/8 casing is being set. The well is targeted at the Lower Nara formation at 4,500 meters.

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
    (866) 544-9622 or (416) 581-0177