Culane Energy Corp.
TSX VENTURE : CLN

Culane Energy Corp.

April 24, 2008 13:01 ET

Culane Energy Releases 2007 Results

CALGARY, ALBERTA--(Marketwire - April 24, 2008) - Culane Energy Corp. (TSX VENTURE:CLN) ("Culane") announces its financial and operating results for the year ended December 31, 2007. The audited Financial Statements and related Management's Discussion and Analysis, and Statement of Reserves at December 31, 2007 have been filed with Canadian securities regulatory authorities on SEDAR at www.sedar.com and posted on the Company's website at www.culaneenergycorp.com.

2007 Highlights

- Gross revenues were $38.8 million in 2007 compared to $12.7 million for 2006, a 206% increase.

- Production averaged 2,116 BOE/d in 2007 compared to 633 for 2006, a 234% increase with 68% oil and 32% natural gas.

- Funds from operations were $19.4 million or $0.94 per share for 2007 compared to $7 million or $0.37 per share for 2006, a 175% increase in cash flow and 154% increase in cash flow per share.

- A total of 27 wells (net 26.3) were drilled in 2007 (13 in 2006) resulting in 21 producing multi-leg horizontal oil wells, 1 producing gas well, 2 suspended gas wells, and 3 standing cased wells.

- Capital expenditures of $46.5 million were invested in 2007 ($15.8 in 2006) including $10.4 million in acquisitions of partners' and other interests at Killam, the drilling of 27 wells, the addition of a 7 Km - 6" gas pipeline at Killam to increase capacity, and a 3D seismic program shot over 19 sections at Killam. Ninety-six percent of the 2007 capital expenditures were at Killam, in east central Alberta.

- Increased land base at Killam, Alberta from 4 to 19 sections with multi-section farm-in and five section acquisition.

- Initiated Killam waterflood project.

- The Company's credit facilities were increased to $26.5 million in the fourth quarter of 2007, which was drawn to $22 million at December 31, 2007. Total bank debt and working capital deficit at December 31, 2007 was $23.7 million.

- The Company acquired its partners' 50% interest in one producing section at Killam, increasing Company interests in all its areas to 93%.

- The new proposed Alberta crown royalty rates for 2009 are not expected to have a material impact on the Company (less than 3% of current cash flows, or 1.5% of gross revenues).

- Total proved gross working interest reserves at December 31, 2007 are 2,643.0 MBOE (an increase of 134% over 2006) for a net present value of $72.5 million at 10% DCF (an increase of 245% over 2006). Total proved plus probable gross working interest reserves are 4,460.7 MBOE (an increase of 90% over 2006) for a value of $108.2 million (an increase of 165% over 2006).

Culane remained very active during the fourth quarter of 2007. The main focus during this quarter was the processing and interpretation of 30 square miles of 3D seismic over its newly increased land base. Existing and new well control was incorporated in the seismic interpretation resulting in 7 vertical stratigraphic test wells, 10 vertical water injector wells and 30 new horizontal wells being proposed for drilling. This drilling program commenced on December 28th 2007 with Culane commissioning two drill rigs to carry out the work. During 2007 the costs of drilling, facilities and acquisitions was approximately $47 million. These costs were paid out of existing cash flow, the credit facility, and a $10 million equity financing from December 2006. During the fourth quarter of 2007 and the first quarter of 2008, the cost of the 3D seismic and the resulting drilling program was paid for out of existing cash flow. Culane acquired its partner's interest at Killam North for $8.0 million effective October 1, 2007, increasing its working interest to 100% in all producing lands. Culane also closed the swap of lands at Killam North and South with another company for $1.1 million. During the second and third quarters, Culane increased its land exposure in the Killam South and Killam North areas from 4 sections (2,560 acres) to approximately 19 sections (12,000 acres) of land. The land base consists of 100% working interest on 15 sections, and interests ranging from 50% to 92% on the remaining 4 sections. These activities resulted in the Company's debt increasing to $23.7 million at year end or a debt to cash flow ratio of 0.87 to 1. On April 3rd, 2008 the Company issued 2,860,000 class "A" common shares at $7.00 per share for gross proceeds of $20,020,000, bringing the Company's outstanding number of shares to approximately 23.7 million. The April financing has allowed the Company to eliminate almost all its debt and move forward with a clean balance sheet. Gross revenues are estimated to have recently increased to in excess of $6 million per month in March, up from $4 million per month in January and February.

A total of 27 wells (net 26.3) were drilled in 2007 resulting in 21 producing multi-leg horizontal oil wells, 1 producing gas well, 2 suspended gas wells and 3 standing cased wells. Operating costs per well increased to $8.65/BOE in 2007 compared to $6.24/BOE for 2006. In the first quarter of 2008 an additional 18 wells were drilled comprised of 7 vertical stratigraphic test wells, 2 water injector wells, and 9 multi leg horizontal wells. As of today's date the Company has equipped and is currently in the initial stages of production testing 9 multi-leg horizontal wells and two vertical test wells, and has completed injectivity testing on 2 water injector wells. The Company is awaiting approval from the ERCB to begin injecting water into the Lloydminster Formation in the Killam area.

During the fourth quarter of 2007 and going forward into 2008, Culane continued its program of evaluating lands in the Killam area. The Company has constructed an extensive natural gas pipeline infrastructure and is committed to increasing its land holdings through strategic acquisitions and land sales in the Killam area. Culane will be continuing its Killam drilling program after spring breakup.

About Culane Energy Corp.

Culane Energy is a junior oil and gas company engaged in the exploration, development and production of oil and natural gas in Alberta.

ADVISORY: Certain information regarding Culane in this news release including management's assessment of future plans and operations, timing of drilling and tie-in of wells, productive capacity of the new wells, expected production rates, drilling success rates, dates of commencement of production, 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, 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, unexpected decline rates in wells, wells not performing as expected, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements. Readers are cautioned that the foregoing list of factors is not exhausted. Additional information on these and other factors that could effect Culane's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and Culane 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.

Disclosure provided herein in respect of barrels of oil equivalent (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.

23,670,854 Class A Shares

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information