Canex Energy Inc.
TSX VENTURE : CXO

Canex Energy Inc.

May 26, 2006 15:51 ET

Canex Announces First Quarter Results

CALGARY, ALBERTA--(CCNMatthews - May 26, 2006) - Canex Energy Inc ("Canex" or "the Company") (TSX VENTURE:CXO) is pleased to announce its operating and financial results for the three months ended March 31, 2006.

The special meeting of Canex shareholders to consider the previously announced Plan of Arrangement with Crescent Point Energy Trust will be held on May 29, 2006 at 9:30 a.m. (MST) at Suite 200, 639 - 5th Ave SW, Calgary. Under the Plan Crescent Point will acquire the majority of the producing assets and a new exploration focused company ("Canext Energy Ltd." or "Canext") will be created.

First Quarter Highlights

- Drilled and cased 8 of 9 wells (4.8 of 5.3 net) for 90% success rate;

- Six (3.9 net) of the cased wells were exploration wells targeting new pools;

- Completed a 25 square mile 3D seismic shoot over Company interest lands at Clear Hills;

- Average daily production was 1,064 boepd up 81% from the same period last year and relatively unchanged from the fourth quarter of 2005;

- Regulatory restrictions caused the shut-in of an average 280 boepd during the quarter;

- Limited solution gas processing at Worsley prevented the Company from tieing in additional gas and NGL production potential of approximately 400 boepd;

- Cash flow from operations for the period was $2,375,000 up 98% from 2005 but down 30% from the fourth quarter of 2005;

- Operating costs continued to decline and averaged $8.12/boe down from $11.32 in the same period last year and $8.74 in the fourth quarter of 2005;

- Operating netback was $28.48/boe up 19% from the first quarter last year but down 16% from the fourth quarter 2005 high of $33.97/boe;


The following table summarizes some of the key financial results. Complete financial statements with accompanying notes along with management discussion and analysis have been filed on SEDAR ( www.sedar.com ).


Three Months Ended March 31
2006 2005 % Change
------------------------------------------------------------------------
Production (boe/d) 1,064 587 81%

Net Revenue (000's) 3,707 2,004 85%
Cash Flow (000's) 2,375 1,202 98%
Earnings (000's) 489 434 13%
Capital Spending (000's) 7,322 5,506 33%

Per Common Share Fully Diluted
Cash Flow $0.09 $0.06
Net Earnings $0.02 $0.02

Balance Sheet (000's)
Property & Plant 47,780 18,765
Working Capital Deficiency 17,498 6,343
including bank debt
Shareholders' Equity 25,294 9,850

Wt Avg Shares 24,515 19,665
Wt Diluted Shares 25,353 20,978

Revenue $/boe $55.23 $52.49 5%
Royalty $/boe $16.53 $14.58 13%
Opcost $/boe $ 8.12 $11.32 -28%
Transportation $ 2.10 $ 2.62 -20%
Operating Netback $/boe $28.48 $23.97 19%
G&A $/boe $ 2.21 $ 0.90 146%


Operational Highlights:

Production additions from new wells at Worsley were offset by the temporary shut-in of regulatory constrained wells. In addition, high solution gas/oil ratio wells could not be produced due to limited solution gas processing. The Company estimates this resulted in a reduction of an average 280 boepd in the first quarter. This does not include an estimated 400 boepd from additional gas wells not yet tied in at Worsley or potential from over 20 zones yet to be completed on the property.

During the first quarter Canex focused it efforts on exploration drilling in predominately winter access areas. The Company drilled and participated in 9 (5.3 net) wells of which 8 (4.8 net) have been successfully cased. Six (3.9 net) of the cased wells were exploration wells targeting new pools. Five of the exploration and one development well were drilled on assets which are being transferred to Canext. The 25 square mile 3D at Clear Hills will also be transferred to Canext.

Reader advisory:

The term "BOE" may be misleading, particularly if used in isolation. In accordance with NI 51-101, a BOE conversion ratio for natural gas of 6 mscf: 1 bbl has been used which is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Management uses cash flow or funds from operations (before changes in non-cash working capital) to analyze operating performance and leverage. Cash Flow or Funds from operations as presented does not have any standardized meaning prescribed by Canadian GAAP and therefore it may not be comparable with the calculation of similar measures for other entities.

Investors are cautioned that the preceding statement of the Company may include certain estimates, assumptions and other forward-looking information. The actual future performance, developments and/or results of the Company may differ materially from any or all of the forward-looking statements, which include current expectations, estimates and projections, in all or part attributable to general economic conditions and other risks, uncertainties and circumstances partly or totally outside the control of the Company, including natural gas/oil prices, reserve estimates, drilling risks, future production of gas and oil, rates of inflation, changes in future costs and expenses related to the activities involving the exploration, development and production of gas and oil hedging, financing availability and other risks related to financial activities.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

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