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

December 20, 2010 02:15 ET

Cougar Oil and Gas Canada Inc. Operations Update, Financing for Seismic Program and the Addition of VP Finance

CALGARY, ALBERTA--(Marketwire - Dec. 20, 2010) - Cougar Oil and Gas Canada Inc. ("Cougar" or the "Corporation") (OTCBB:COUGF) is pleased provide an update to the previously announced a 23.8Km2 high resolution 3D seismic program in the Corporation's Trout Core area and the previously announced Q1, 2011 multi-well drilling program, targeting the Keg River light oil play, in the Corporation's Trout Core area.

The 3D seismic program will include 79km of source lines and 111Km of receiver lines over an adjacent prospect area which was acquired in July, 2010. The permitting process has moved forward and the project consultations with the stakeholders in the area were completed. We have submitted licensing documentation and are currently finalizing all of the contract services for the seismic program, which, is scheduled for early February, 2011. The 3D seismic program, which will take place on 85% working interest Cougar leases, is anticipated to take a total of 25 days in the field. The seismic program has an estimated cost of $1,000,000 and will be primarily financed by the exercise of warrants by some of the existing investors in Cougar Energy, Inc. Approximately $440,000 of warrants have been exercised to date, and the balance of the project funds are expected prior to the start of the seismic program.

The 3D seismic program is one of the critical information sources needed to identify the drilling locations on the Corporation's leased lands. The seismic will provide Cougar with the confirmation of structural features that are required to form an effective trap of the oil and natural gas prospects in the Trout core area. The seismic information along with the detailed geological mapping, core analysis and production data that are available as a result of the significant well control in the area is part of the risk management that is completed prior to selecting a drilling location.

The 3D seismic program will provide Cougar with the detailed information required to identify multiple vertical and horizontal Keg River and Granite Wash drilling locations. These locations will be the foundation of the Corporations planned work programs to increase production, reserve value and cash flow.

From the 3D seismic purchased in September 2010, and detailed geological review on the lands purchased in October 2009, the Corporation has identified five (5) drilling targets and will proceed with the permitting for a three (3) well Keg River light oil drilling program. These wells will be step out development wells. As was discussed in the November 8, 2010 press release – The Corporation conducted an extensive internal review of the regional producing Keg River oil wells as part of the preparation for the proposed drilling program. There were 71 producing Keg River oil wells within a four (4) mile radius of the Cougar main production facility. From the 71 wells reviewed there has been an average of 250,000 barrels of light oil produced from each well and an average production rate of 164 barrels of oil per day per well for the first four producing months. There have only been six (6) wells drilled in the study area within the past fifteen (15) years with most of the wells drilled from 1987 to 1993.

As a result of the technological advances in seismic processing and drilling technology the Cougar management anticipates the proposed multi-well drilling program will achieve results consistent with the averages defined above in the regional study. With those average numbers we would expect a payback of less than 5 months at current commodity prices.

One of the significant advantages we have over other active tight oil resource plays is that the Keg River oil prospects we are targeting do not require any type of high cost completion techniques. This results in a much more favourable F&D cost and quicker payout than many of the other currently popular resource plays which require multi-stage fracs or other high cost completion techniques.

The surveying of the surface leases and the project consultation with the stakeholders in the area was completed. . Additional permitting work including environmental assessments, lease acquisition and well licencing, is underway and will take approximately 45 days and the drilling program, pending financing, is scheduled for February, 2011. The drilling program, which will take place on 85% working interest Cougar leases, is anticipated to take a total of 30 days.

In addition - Richard Carmichael will join Cougar Oil and Gas Canada on January 3, 2011 as Vice President, Finance. Richard is a registered Chartered Accountant who graduated with a Bachelor of Commerce from the University of Calgary. He has over 22 years of oil and gas experience with both Canadian and US reporting - most recently with Steen River Oil and Gas.

Mr. William Tighe, CEO and Chairman of the Board for Cougar stated, "We continue to be pleased with the progress this past several weeks of the financing and permitting components of the upcoming drilling and seismic programs. We have also recently started some additional field optimization work programs to increase production and cash flow. The addition of Richard as VP Finance will strengthen the Corporation's financial reporting going into the previously announced application for a main board stock exchange listing and work program financingsas we continue towards our corporate goal of achieving 2000 barrels of oil production per day by the end of 2011. "

About Cougar Oil and Gas Canada Inc.:

Cougar Oil and Gas Canada Inc. (OTCBB:COUGF) 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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