Culane Energy Corp.
TSX VENTURE : CLN

Culane Energy Corp.

March 23, 2011 12:43 ET

Culane Energy Releases 2010 Reserves

CALGARY, ALBERTA--(Marketwire - March 23, 2011) - Culane Energy Corp. (TSX VENTURE:CLN) ("Culane" or the "Company") announces results of its independent reserves evaluation as at December 31, 2010. The Statement of Reserves has been filed with Canadian securities regulatory authorities on SEDAR at www.sedar.com and posted on the Company's website at www.culaneenergycorp.com

Reserves

All of the reserves of the Corporation were evaluated by McDaniel & Associates Consultants Ltd. ("McDaniel") as at December 31, 2010 and have been prepared in accordance with National Instrument ("NI") 51-101. The reserves evaluation has been approved by the Board of Directors of Culane.

Company share of remaining reserves – forecast prices and costs

Reserves category   Medium Oil (Mbbl )   Heavy Oil (Mbbl )   Sales Gas (MMcf )   Natural Gas Liquids (Mbbl )   Total (MBOE )
    Company
Share
  Net     Company
Share
  Net     Company
Share
  Net     Company
Share
  Net     Company
Share
  Net  
Proved producing   26.9   22.5     1632.3   1250.2     661.1   565.9     0.5   0.4     1769.9   1367.4  
Proved non-producing   0.0   0.0     911.4   611.6     183.2   147.8     0.0   0.0     941.9   636.2  
Proved undeveloped   0.0   0.0     815.5   636.0     73.5   57.9     0.0   0.0     827.8   645.6  
Total proved   26.9   22.5     3359.3   2497.8     917.8   771.6     0.5   0.4     3539.6   2649.3  
Probable   11.3   9.4     1280.9   936.0     496.2   419.5     1.2   1.0     1376.2   1016.3  
Total proved plus probable   38.2   31.9     4640.2   3433.8     1414.0   1191.0     1.7   1.4     4915.7   3665.6  
Possible   0.0   0.0     4648.9   3276.0     289.9   223.7     0.0   0.0     4697.2   3313.3  
Total proved plus probable plus possible   38.2   31.9     9289.1   6709.8     1703.9   1414.8     1.7   1.4     9612.9   6978.9  
                                                   

Company Share reserves means working-interest plus royalty-interest reserves, before deduction of royalties.

Forecast prices   Company share of Net Present Value Before Income Taxes ($M )
Reserves category       Discounted (per year) at:  
    Undisc   5 %   10 %   15 %   20 %
Proved producing   65,528.1   53,815.0     45,420.9     39,308.2     34,714.7  
Proved non-producing   35,857.9   24,348.7     17,941.9     13,964.1     11,292.9  
Proved undeveloped   30,788.2   22,027.8     16,242.0     12,298.8     9,512.5  
Total proved   132,174.3   100,191.5     79,604.8     65,571.1     55,520.1  
Probable   57,377.2   30,161.5     17,715.4     11,243.7     7,531.5  
Total proved plus probable   189,551.5   130,353.0     97,320.2     76,814.8     63,051.6  
Possible   182,082.3   64,684.1     30,692.7     17,160.9     10,523.4  
Total proved plus probable plus possible   371,633.8   195,037.0     128,012.9     93,975.7     73,575.0  
McDaniel's forecast pricing assumptions   WTI Cushing Oklahoma ($U.S./bbl)   Edmonton Par Price 40 ° API ($Cdn./bbl)   Alberta Bow River Hardisty Crude Oil ($Cdn/bbl)   Alberta AECO spot price ($Cdn/MMBtu)   US / Cdn Exchange
2011   85.00   84.20   72.80   4.25   0.975
2012   87.70   88.40   75.00   4.90   0.975
2013   90.50   91.80   75.10   5.40   0.975
2014   93.40   94.80   77.50   5.90   0.975
2015   96.30   97.70   80.00   6.35   0.975

Beyond year 2015, the price escalates on average 2% per year. A foreign exchange rate of $0.975 US to $1.00 Cdn was used beyond 2015.

In 2010, company share proved reserves increased by 37.1%, company share proved plus probable reserves increased by 23.8%, and company share proved plus probable plus possible reserves increased by 24.1% from 2009, even after accounting for production of 341.5 MBOE. The net present value before income tax (discounted at 10%) of gross proved reserves at December 31, 2010 was $79.6 million, an increase of 25.6% from December 31, 2009. At December 31, 2010, the net present value before income tax (discounted at 10%) of gross proved plus probable reserves was $97.3 million, an increase of 19.4% year over year. At December 31, 2010, the net present value before income tax (discounted at 10%) of gross proved plus probable plus possible reserves was $128.0 million, an increase of 29.9% from December 31, 2009. The reserve increases are mainly attributable to increased reserve recognition for secondary and tertiary recovery at Killam, Alberta. 

The reserves have been assigned as Proved, Probable and Possible. McDaniel has assigned Possible reserves (3P) to improved Killam waterflood recovery and to the Killam surfactant polymer flood. The Proved, Probable and Possible reserves assigned at this time to Killam combine for a 29.4% oil recovery factor. The "Discovered Petroleum Initially-in-place" at Killam net to Culane is estimated by McDaniel at 42.4 million barrels of 24 degree API oil. Culane maintains 100% ownership in this asset and is the operator.

About Culane Energy Corp.

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

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements. More particularly, this press release contains statements concerning the Company's oil and gas reserves. The forward-looking statements contained in this document are based on certain key expectations and assumptions made by Culane, mainly with respect to oil recoverability from its waterflood and surfactant polymer flood projects, the royalty framework and other oil and gas industry factors. Although Culane believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Culane can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the failure to obtain necessary regulatory approvals, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price and exchange rate fluctuations and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Certain of these risks are set out in more detail in Culane' Annual Information Form for the year ended December 31, 2009, which has been filed on SEDAR and can be accessed at www.sedar.com.

The forward-looking statements contained in this document are made as of the date hereof and Culane undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

The term "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.

NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

Contact Information

  • Culane Energy Corp.
    Donald D. Staus
    President and Chief Executive Officer
    (403) 263-2773
    dstaus@culaneenergycorp.com
    or
    Culane Energy Corp.
    Stewart Larsen
    Vice President of Finance and Chief Financial Officer
    (403) 263-2773
    slarsen@culaneenergycorp.com
    or
    Culane Energy Corp.
    Thomas H. Field
    Vice President, Engineering and
    Operations, and Chief Operating Officer
    (403) 263-2773
    tfield@culaneenergycorp.com
    or
    Culane Energy Corp.
    420, 333 - 5th Avenue S.W.
    Calgary, Alberta T2P 3B6
    (403) 263-2773
    :(403) 263-2776 (FAX)
    www.culaneenergycorp.com