Cougar Oil and Gas Canada Inc.
OTC Bulletin Board : COUGF

February 14, 2011 02:06 ET

Cougar Oil and Gas Canada Inc. Announces Operations Update, and Farm in on Heavy Oil Project

CALGARY, ALBERTA--(Marketwire - Feb. 14, 2011) - Cougar Oil and Gas Canada Inc. ("Cougar" or the "Corporation") (OTCBB:COUGF) is pleased to announce (1) the 23.8Km2 high resolution 3D seismic program was successfully completed on budget and field work ahead of schedule. (2) In addition all regulatory permits have been approved for the previously announced multi-well drilling program. (3) A two section heavy oil farm-in has been signed. (4) Financing for Seismic and Drilling completed.

(1) The data recording portion of the program was recently completed and all equipment has been demobilized from the project area. The Corporation's geophysicist was at the project site in early February and confirmed the data being recorded is very good to excellent quality. The first drafts of the processed seismic data are expected within 4 to 6 weeks. This seismic data will provide the Corporation with the detailed geophysical information needed to support the geological selection of the horizontal and vertical drilling programs which will be executed over the next 18 to 24 months. After the seismic processing is completed the data will be used with our baseline geological information to verify and select fifteen to twenty horizontal and vertical drilling locations. Cougar will high grade the top four to five locations and begin licencing them immediately in anticipation of a summer drilling program.

(2) The previously announced multi-well drilling program has received all regulatory permits including the ERCB drilling licences. Field operations including well lease and access construction has started and all construction is expected to be completed this week. Cougar is currently involved in extensive negotiations with several drilling rig contractors regarding drilling rig selection and timing. Spud date information will be provided when available. There will be two wells drilled including a horizontal Keg River oil well and a directional well which will evaluate Keg River and Granite Wash prospects.

(3) Cougar has also finished negotiations on a two section heavy oil farm-in with a private company in the Manning area of north western Alberta. The farm-in includes a commitment for Cougar to drill one well to a minimum contract depth of 500m by the end of Q3, 2011 in order to earn a 100% working interest. Upon successful completion of the farm-in the private company retains a 3% royalty interest on the two sections. Cougar has completed the initial review of this farm-in acreage and selected two possible drilling locations for the commitment well.

(4) The 23.8Km2 high resolution 1.1 million dollar 3D seismic program was financed by the exercise of warrants by some the original investors in Cougar Energy, Inc. The 3.5 million multi-well drilling programs have been financed with two convertible notes. The first note of $900,000 Cdn from Kodiak Energy, Inc. The 18 month term unsecured note with an interest rate of prime plus 3%, and no early payment penalties is convertible by Kodiak at the higher share price of $3.00 or the 5 day volume weighted average at day of funding which was February 1, 2011. Kodiak also earns a 1% Gross Override Royalty on the production from the two wells drilled with these funds. The second unsecured convertible note of up to 5 million Cdn is for an 18 month term with prime plus 3% and no early payment penalties from Zentrum Energie Trust SA. The note is convertible at $3.00 USD. The conversion also comes with a warrant at 130% of signing price if converted and a forced conversion if the share price trades at 200% above signing for 20 days. Additional details are available in our filings.

Mr. William Tighe, CEO and Chairman of the Board for Cougar stated, 'It is great news that the seismic program was completely finished on schedule and on budget. The work crews from the local communities and all other areas did exceptional work for us in tumultuous weather conditions. Throughout the program we had temperature variations of over 40 degrees Celsius, challenging ice rain storms and blizzards which kept the slashers busy keeping the seismic lines clear for the recording crew. The project was completed in a very safe and organized manner and we would like to thank all the crews that worked for us this winter. The multi-well drilling program continues to move forward and we were very pleased to receive our drilling licences. The field construction activities have been proceeding very quickly and the leases will be ready for a drilling rig by the end of this week. The heavy oil farm-in marks the beginning of a new secondary project area for Cougar. The commitment is not onerous to the Corporation and the potential benefit is tremendous. The target resource has been mapped out through the extensive well information available in the area. With the strengthening of oil commodity prices we felt this was a very positive project to start working on and we believe will lead to other opportunities in that area.

The anticipated success of the seismic, drilling and production projects will allow Cougar to continue towards the previously stated corporate production objective of 2000 bbl/d. 

For those interested in the seismic and drilling projects we have added and will continue to add pictures to the web site"

About Cougar Oil and Gas Canada Inc.:

Cougar Oil and Gas Canada Inc. (COUGF:BB) is based in Calgary, Alberta, Canada and a publicly traded oil and gas exploration and production company. The focus is on the exploration and development of Canadian based onshore oil and gas properties. The current projects are the Trout light oil production area in north central Alberta, Lucy in the Horn River Basin in northeast British Columbia and First Nation Joint Venture and area projects located in north central Alberta.

Cougar's strategy is to increase shareholder value building on the existing infrastructure and production as the foundation and a large contiguous land base with multiple opportunities to grow through the drill bit with targets supported by 2D and 3D seismic and excellent well control.

Additional information is at http://www.cougaroilandgascanadainc.com. or http://www.cougarenergyinc.com.

Forward-looking Statements:
This press release contains forward-looking statements. The words or phrases "would be," "will" "intends to," "will likely result," "are expected to," "will continue," "is anticipated," "estimate," or similar expressions are intended to identify "forward-looking statements". The Company's business is subject to various other risks and uncertainties, which may be described in its corporate filings (www.sec.gov) or (SEDAR in Canada). Statements made herein are as of the date of this press release and should not be relied upon as of any subsequent date. The Company cautions readers not to place reliance on such statements. Cougar Oil and Gas Canada Inc. undertakes no obligation to update or publicly revise forward looking statements or information unless so required by applicable securities laws.

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