Cinch Energy Corp.
TSX : CNH

Cinch Energy Corp.

December 06, 2010 17:50 ET

Cinch Energy Corp. Provides Operational Update

CALGARY, ALBERTA--(Marketwire - Dec. 6, 2010) -

Cinch Energy Corp. ("Cinch" or the "Company") provides the following update of its operations.

Deep Basin Area, West Central Alberta

The Company has drilled and completed the Lator 13-22-62-2 W6M (100% working interest) horizontal well with a 13 stage fracture stimulation. Subsequent to the completion the well was swab tested for 60 hours and inflow rates at the end of the swab period were approximately 100 barrels per day. The well has been shut in for a pressure build up. These results are preliminary as over 3,000 bbl of load fluid has yet to be recovered. The well will be brought on production with a pump jack and initial productivity will be assessed.

Cinch has completed the Kakwa 12-34-61-6 W6M (20% working interest) vertical well that was drilled and cased in the third quarter. The well tested at rates in excess of 4 mmcf/d (gross) and is expected to be on stream in January.

The Company has reached total depth on the Kakwa 1-26-61-6 W6M (25% working interest) horizontal Falher gas test with excellent sand and gas shows throughout the horizontal section. This well is scheduled to be fracture stimulated in mid December allowing it to come on stream early in 2011.

Cinch is planning to spud the Kakwa 5-18-61-4 W6M (60% working interest) horizontal Dunvegan liquids rich gas well in mid December. This well is located next to existing facilities in a Cinch operated area and, if successful, would be brought on stream in the first quarter of 2011.

Dawson Area, North East British Columbia

The Company is currently drilling the eighth horizontal Montney well of the planned 12 well program. Due to excellent initial completion results the four remaining wells will not be required immediately. It is expected that these wells will be drilled after spring break up in 2011.

Four of these eight Montney wells (26% working interest) have been completed with flow rates between 8 and 10 mmcf/d (gross) per well. Landowner issues have been resolved for the pipelining activities, however, issues remain with the location of the planned compression facilities. It is still expected that the gas will be on stream during the first quarter of 2011.

The drilling of the Parkland 9-8-81-16 W6M (50% working interest) Wabamun test continues. After a number of delays it is now anticipated the well will reach total depth in December and, if successful, the well is planned to be completed early in 2011.

2011 Outlook

With a strong balance sheet Cinch is positioned for an active 2011 focusing on liquids rich gas and oil projects. As the Montney gas is expected to be on stream in the first quarter, production volumes are expected to increase to over 4,000 boe/d. Results from current activities at Lator, Kakwa and Dawson are needed to develop finalized plans for the balance of 2011. It is expected that capital spending, production and cash flow guidance for full year 2011 will be provided in March 2011.

Forward-looking Statements

Statements throughout this release that are not historical facts may be considered to be "forward-looking statements." These forward-looking statements sometimes include words to the effect that management believes or expects a stated condition or result. All estimates and statements that describe the Company's objectives, goals, or future plans, including management's assessment of future plans and operations, drilling plans, timing of completion, testing and commencement of production from new wells and timing of provision of 2011 guidance may constitute forward-looking statements under applicable securities laws and necessarily involve risks including, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, volatility of commodity prices, imprecision of reserve estimates, environmental risks, competition from other producers, incorrect assessment of the value of acquisitions, failure to complete and/or realize the anticipated benefits of acquisitions, delays resulting from or inability to obtain required regulatory approvals, the ability to access sufficient capital from internal and external sources, and changes in the regulatory and taxation environment. Consequently, the Company's actual results may differ materially from those expressed in, or implied by, the forward-looking statements.

Forward-looking statements or information is based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect. Although the Company believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because the Company can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this document, assumptions have been made regarding, among other things: the ability of the Company to obtain equipment and services in a timely and cost efficient manner; drilling results; the ability of the operator of the projects in which the Company has an interest to operate the field in a safe, efficient and effective manner; field production rates and decline rates; the ability to replace and expand oil and natural gas reserves through development or exploration; future oil and natural gas prices; interest rates; the regulatory framework regarding royalties; and the ability of the Company to successfully market its oil and natural gas products. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect the Company's operations and financial results are included elsewhere herein and in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com), or at the Company's website (www.cinchenergy.com). The forward-looking statements contained in this release are made as at the date of this release and the Company 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.

Barrel of Oil Equivalency

Natural gas volumes are converted to barrels of oil equivalent (BOE) on the basis of six thousand cubic feet (mcf) of gas to one barrel (bbl) of oil. The term "barrels of oil equivalent" may be misleading, particularly if used in isolation. A BOE conversion ratio of six mcf to one 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.

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