Canex Energy Inc.

Canex Energy Inc.

October 27, 2005 17:20 ET

Canex Announces Updated Reserves Summary, Property Acquisition, and Increased Capital Budget

CALGARY, ALBERTA--(CCNMatthews - Oct. 27, 2005) - Canex Energy Inc (TSX VENTURE:CXO) ("Canex" or "the Company") is pleased to announce the results of an updated reserves evaluation report prepared by Trimble Engineering Associates Ltd. with an effective date of August 31, 2005 "Trimble Report".

Reserve Report Highlights:

- Proven reserves have increased 45% from Jan 1, 2005 to 2,641 mstboe

- Proven plus probable reserves have increased 59% to 3,486 mstboe

- Proven and Probable reserve replacement was 915%

- The Proven plus Probable Net Present Value at 10% discount increased 111% to $66,875,000.

- Based on August production of 1000 boepd, the Reserve Life Index is estimated at 7.2 years Proven and 9.6 years Proven plus Probable.

The Trimble Report has been prepared in accordance with National Instrument 51-101, "Standards of Disclosure for Oil and Gas Activities" (NI 51-101) and the "Canadian Oil and Gas Evaluation Handbook" (COGEH). The following tables summarize the results from the Trimble Report.

Table 1 Reserves Summary - Company working interest before royalties
using Trimble Report forecasted price as of August 31, 2005

Light Heavy
Oil Oil NGL's Gas BOE 6:1
mstb mstb mstb mmscf mstboe

Developed Producing 790 0 14 2,432 1,209
Developed Non Producing 490 0 0 1,737 780
Total Developed 1,281 0 14 4,169 1,989
Undeveloped 552 0 0 596 651
Total Proved 1,833 0 14 4,765 2,640
Probable 544 0 5 1,776 845
Total Proved + Prob 2,377 0 19 6,542 3,486

(1) Due to rounding, some columns may not add exactly.
(2) Gas convert to oil on the basis of 6 mscf gas is equivalent to 1

Table 2 Summary of Net Present Values of Future Net Revenue
Forecasted Prices and Costs
Before Income Taxes, Discounted at (%/year)

As at August 31, 2005
0% 5% 10%
M$ M$ M$
Developed Producing 38,496 33,792 30,393
Developed Non Producing 20,513 16,500 13,578
Total Developed 59,009 50,292 43,971
Undeveloped 14,503 12,090 10,197
Total Proved 73,512 62,382 54,169
Probable 22,738 16,571 12,706
Total Proved + Prob 96,249 78,953 66,875

(1) Due to rounding, some columns may not add exactly.

Table 3 Trimble Report forecasted price assumptions as of August 31,

Exchange WTI @ Edmonton AECO
Rate Cushing Light Spot
Year US/CDN US$/bbl CDN$/bbl $/mmbtu
2005 0.82 55.50 67.00 8.00
2006 0.82 55.50 67.00 8.00
2007 0.82 52.25 63.00 7.50
2008 0.82 49.00 59.00 7.00
2009 0.82 45.75 55.00 6.75
2010 0.82 42.50 51.00 6.50

Property Acquisition

The Company has signed a purchase and sale agreement to acquire interests in certain natural gas wells and undeveloped lands on the Peace River Arch for $5,450,000 subject to closing adjustments and a minor property ROFR. Current production is approximately 150 boepd of which 95% is operated. Almost 90% of the value is adjacent and complimentary to the Company's Mulligan property. An independent reserve report identifies Proven reserves of 190 mstboe and Proven plus Probable working interest reserves of 235 mstboe plus royalty interest reserves of 36 mstboe. These reserves are not included in the Trimble Report. Included in the package are varying interests in two field compressors, two generators, one sweetening unit, and one 600 hp compressor. The transaction is expected to close on or about November 15.

Corporate Update

The Company is continuing with its business plan focused primarily on development drilling at Worsley. For the year to date Canex has drilled 20 wells at Worsley. Currently eight wells are in various stages of completions, testing and equipping operations. During the fourth quarter the Company expects the focus to shift to a higher component of exploration drilling with multiple prospects at Clear Hills, Teepee, Pouce Coupe and Mulligan.

As a result of the property acquisition, higher overall industry costs and plans for accelerated drilling, Canex has increased its capital budget to $32,000,000 for 2005. The additional expenditures are not expected to add any significant production until next year.

To fund the expenditures, the Company has increased its credit line to $15,000,000. With stronger cash flow from higher commodity prices and the expanded bank line, the Company is well positioned to continue its exploration and development activities. Results of third quarter operations will be released on November 25th. An update on 2005 activity and preliminary 2006 plans will be provided at that time.

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.

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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