Candax Energy Inc.

Candax Energy Inc.

August 28, 2006 08:26 ET

Candax Suspends Current Operations on Chaal-1 Well

TORONTO, ONTARIO--(CCNMatthews - Aug. 28, 2006) -

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

Candax Energy Inc. ("Candax") (TSX:CAX) announces that current operations have been suspended on the Chaal-1 well. The current program was designed to utilize a coiled-tubing unit to displace the remaining heavy mud in the well which had adversely affected the initial tests, and then to re-perforate and perform an acid squeeze on prospective zones. Candax planned to re-perforate the zone that was first perforated in the original drill stem test DST-2, and then also perforate across an untested higher interval, originally planned as DST-3.

While the well was being flowed back after an acid injectivity test on part of the DST-2 zone, a sudden loss of annulus pressure was observed, which on examination was clearly due to the development of a leak between the annulus and the tubing. In order to resolve the communication problem, the completion would need to be pulled, and this operation would require a rig. As no rig was immediately available, the completion of the perforating, acidizing and testing operations on the well could not be safely undertaken, and the decision to suspend operations on the well was made. Going forward, Candax and its partners will review all options and decide on the best plan for the appraisal of the discovery.

Michael Wood, President & CEO commented, "We were hopeful that the coiled tubing intervention could provide us with the information required to determine the economic viability of the well. Although we were encouraged by the continuous flow of gas at sub-economic rates during the operations, the failure to be able to complete our anticipated program is very disappointing. Although we have confirmed that the Chaal structure contains significant gas and condensate reserves potential, and that the quality of the gas is excellent, we have yet to achieve our third objective - namely a test flow at economic rates. Candax and its partners, Mitsubishi and SMIP, will undertake a thorough technical review of all options for further appraisal, which will be announced once agreed to."

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