Culane Energy Corp.

Culane Energy Corp.

January 26, 2011 15:27 ET

Culane Provides Operational Update

CALGARY, ALBERTA--(Marketwire - Jan. 26, 2011) - Culane Energy Corp. ("Culane") (TSX VENTURE:CLN) is pleased to provide an operational update:



On December 27, 2010 Culane commenced drilling operations on its Kerrobert property. The well, at 16-10-34-22w3, reached total depth of 1,463m and was logged on January 13, 2011. The Kerrobert well is a vertical stratigraphic test well with two target formations in the Devonian. First, an 18 meter drill core was retrieved from the Devonian Birdbear formation and sent for analysis. Results of this analysis were encouraging with oil saturation, permeability, and porosity better than expected. [Over a 5 meter dolomite interval, porosities ranged from 20 to 26 percent and oil saturations ranged from 40 to 77 percent. Permeabilities in this interval ranged from 34 millidarcies with a 40 percent oil saturation to 545 millidarcies with a 69 percent oil saturation.] These permeability and oil saturations exceed core results published on the A12-4-39-27 W3M vertical test well located in the center of the oil producing Hallam North Birdbear pool located in S.W. Saskatchewan. Culane is currently applying for an HWP (Horizontal Well Project) approval to drill horizontal wells into the Birdbear formation.

A deeper Devonian formation was also tested in the Kerrobert well and although the formation structure increased by 7 meters from what was anticipated, the zone proved to be uneconomic.

At Coleville, a stratigraphic vertical test well into the Birdbear formaton was drilled in the third week of January and although the structure had increased by 6 meters from a previous vertical test well, the zone did not warrant further testing.

In Saskatchewan, Culane will pay a 2.5% Crown royalty on the first 100,000 barrels (16,000 m3) of oil produced from any horizontal wells drilled in the Birdbear Formation on Saskatchewan Crown lands. Culane owns a 100 percent working interest on approximately 44 sections of land in Kerrobert.



Water injection rates are now approximately 5,800 barrels of water per day, and are expected to rise to approximately 6,500 bbls/d with the tie-in of the latest water source well. In the third quarter of 2010, Culane drilled, cased and completed two new water source wells at Killam. The two new water source wells have been equipped, and tied in to the newly constructed water pipeline to the Killam water injection facility. As a result of water injection into the Killam pool, Culane is now observing increasing production rates in the field in the last two months, along with comparable decreasing daily natural gas rates. The new increases in water injection rates into the Killam reservoir are expected to have a positive impact, further increasing oil production rates across all the wells in the pool.

Culane has 31 multi-leg horizontal producing oil wells at Killam, 13 water injectors that are a combination of vertical and horizontal wells and 12 water source wells.

Culane's independent engineering evaluator completed its most recent evaluation of the Company's reserves as of December 31, 2009. The reserves have been assigned as Proved, Probable and Possible. The evaluator has assigned Possible reserves to the surfactant polymer flood. The Proved, Probable and Possible reserves assigned at this time combine for a 22.5% oil recovery factor. The "Discovered Petroleum Initially-in-place" at Killam net to Culane is estimated at approximately 42 million barrels of 24° API oil. Culane maintains 100% ownership in this asset and is the operator. A new independent engineering reserve report for December 31, 2010 is expected by late April 2011.

Water-flooding and Surfactant Polymer flooding can dramatically increase the amount of recoverable oil reserves above the estimated 10% oil recovery resulting from primary production. Analogous oil pool case histories have established that water-flooding similar oil reservoirs has the potential to recover up to 25% of the original oil in place and Surfactant Polymer flooding has the potential to recover up to 40% of the original oil in place. The initial feasibility study on the Killam oil pools indicates the potential for these recoveries.

Culane's current production is 1,021 barrels of oil equivalent per day, 76 percent oil.

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 and Saskatchewan.

Reader Advisories

Forward-Looking Statements: This news release contains certain forward-looking statements, including management's assessment of drilling results, future plans and operations that involve substantial known and unknown risks, uncertainties and assumptions, certain of which are beyond Culane's control. Such risks, uncertainties and assumptions include, without limitation, those associated with oil and gas exploration, development, exploitation, production, marketing, processing 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, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, the impact of general economic conditions in Canada, the United States and overseas, industry conditions, changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof, and obtaining required approvals of regulatory authorities. Culane's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that Culane will derive there from. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect Culane's operations and financial results are included in reports, including Culane's annual information form for the financial year ended December 31, 2009, on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website ( All subsequent forward-looking statements, whether written or oral, attributable to Culane or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. 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. 

The term "barrels of oil equivalent" or "BOE" may be misleading, particularly if used in isolation. A BOE conversion 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.

27,189,754 Common Shares

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Contact Information

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