Canoro Resources Ltd.

Canoro Resources Ltd.

June 20, 2008 08:00 ET

Canoro Updates Drilling and Production

CALGARY, ALBERTA--(Marketwire - June 20, 2008) - Canoro Resources Ltd. (TSX VENTURE:CNS) began drilling operations, following extensive rig repairs, at the Borkathani exploration location on the AA-ON/7 exploration block in northeast India. Borkathani is planned to be drilled to basement at a depth of 1,600 meters. This location will test Cretaceous sands approximately eight km and 200m structurally up-dip from the Dergaon gas discovery well.

Our second drilling rig is being set up at Amguri 12. As this is a brand new rig requiring additional time to commission, drilling operations are not expected to begin until the end of June or early July. This rig will be positioned on a large drilling pad designed for multiple wells.

Production Update

We have completed our evaluation of the main pool at Amguri 10B and 11 and have determined that the best reservoir management technique, which also provides the greatest economic value, is the cycling of the produced natural gas in combination with a gas plant. The benefits of this analysis and approach are many-fold:

- increased liquids (condensate and liquid petroleum gas) recovery factors from the reservoir offsetting lost natural gas production

- receive world price for all liquids production, rather than the current below world price for gas

- fewer wells required for ultimate recovery, reducing overall capital expenditures

- when the gas is no longer required to be cycled for reservoir management, it is anticipated that the gas markets should be significantly improved in terms of price, demand and infrastructure

We are evaluating the construction of a modular gas plant that will strip out propane and heavier liquids from the Amguri natural gas stream. Work on the front end engineering for this plant has already begun.

Since Amguri 10B and 11 were put on production in January, gross production from Amguri has been increasing to between 6.0 - 7.0 mmcf/d and 500 to 550 bbl/d of condensate. Canoro's share of production is currently between 900 - 1,000 boe/d. Production from Amguri 6, 10B and 11 is planned to be maintained at this level until completion of the gas plant, expected to take approximately two years. Liquids production at Amguri should increase in the third quarter from Amguri 5 and Amguri 13B, depending on testing results. We also anticipate additional production from new wells drilled and on stream when facilities are completed.

Canoro is continuing discussions with the Government of Assam and their state-owned Assam Gas Company Limited to increase the price for the natural gas being sold from Amguri.

Canoro has been able to secure a seven year Indian tax holiday on production from Amguri beginning from April 2006. In addition, any new revenue streams associated through the gas plant will also be subject to further tax holidays beginning from the date of plant commissioning.

Drilling Update

Canoro initiated its 20 well drilling program with success at Amguri 13B, not yet tested, in April. The entire program is expected to be completed over the next 18 months, based on our drilling schedules for Amguri and AA-ON/7 and that of the operator for AA-ONN-2003/2. This program is equally split between low risk appraisal and development drilling and higher risk exploration drilling. Drilling activity will increase significantly over the coming months with three rigs expected to complete the Canoro portion of the 2008-09 program.

Seismic Update

On AA-ON/7, we have acquired and now processed the additional 40 km of 2D seismic obtained over the foothills to delineate and confirm prospects identified earlier. Interpretation is now complete, with at least one well planned to begin drilling in the first quarter of 2009.

On AA-ONN-2003/2, the 100 km2 3D seismic acquisition is nearing completion. Drilling is expected to begin on this block in the fourth quarter of 2008.

Financial Results Update

We expect to release our year-end financial information on June 27, 2008. The Annual General and Special meeting is scheduled for September 3, 2008. The release will include the annual financial statements and the annual reserves evaluations.

Canoro is a Canadian-based international oil and gas company operating in the Assam/Arakan basin of northeast India. Canoro is the operator of Amguri field with a 60% working interest. Canoro is the operator with a 65% working interest in the AA-ON/7 exploration block. Canoro also has a 15% non-operated working interest in the AA-ONN 2003/2 exploration block.

Common shares of Canoro trade on the TSX Venture Exchange under the symbol 'CNS'. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this News Release.

This news release contains certain forward-looking statements, including management's assessment of future plans and operations, and capital expenditures and the timing thereof, that involve substantial known and unknown risks and uncertainties, certain of which are beyond Canoro's control. Such risks and uncertainties include, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, the impact of general economic conditions in Canada, the United States and overseas, industry conditions, changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof, and obtaining required approvals of regulatory authorities. Canoro's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits, including the amount of proceeds, that Canoro will derive therefrom. Readers are cautioned that the foregoing list of factors is not exhaustive. All subsequent forward-looking statements, whether written or oral, attributable to Canoro or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and Canoro does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Contact Information

  • Canoro Resources Ltd.
    Rob McInnis
    Vice President, Business Development and Corporate Affairs
    (403) 543-5748
    (403) 543-5740 (FAX)
    Canoro Resources Ltd.
    700, 717 - 7th Ave SW
    Calgary, Alberta
    Canada T2P 0Z3