Magnus Energy Inc.

Magnus Energy Inc.

March 15, 2007 17:18 ET

Magnus Energy Announces 2006 Reserve Additions

CALGARY, ALBERTA--(CCNMatthews - March 15, 2007) - Magnus Energy Inc. ("Magnus" or the "Company") (TSX VENTURE:MEI.A) (TSX VENTURE:MEI.B) is pleased to announce its reserve additions for the fiscal year ended December 31, 2006. In accordance with National Instrument 51-101 - Standards for Disclosure for Oil and Gas Activities ("NI 51-101"), GLJ Petroleum Consultants ("GLJ") have independently prepared the Magnus GLJ Report ("GLJ Report") which evaluated all of the Company's oil, natural gas and liquids reserves as at December 31, 2006. The GLJ price forecast at January 1, 2007 was used to determine all estimates of future net revenues.

Based on the GLJ Report, the Company has 1,659 Mboe of proven plus probable reserves for Total Company Interest Reserves. The total proven reserves at December 31, 2006 increased by 328% to 916 Mboe up from 214 Mboe recorded at December 31, 2005. Additionally, total proven plus probable reserves increased by 524% to 1,659 Mboe at December 31, 2006 up from 266 Mboe at December 31, 2005. The before tax net present value discounted at 10% of the Total Company Interest Reserves is $31.2 million, an increase of $27.2 million (+ 675%) since the December 31, 2005 report. Total proven reserves account for 55% of the Company's reserve base. The total proved plus probable reserve life index of Magnus as of December 31, 2006 was 7.6 years.

Total Company Interest Reserves are the total of the Company's working interest share before the deduction of royalties. Net reserves are the total of the Company's working interest reserves after deducting amounts attributable to royalties owned by others, plus the Company's royalty interest reserves. The following tables set out selected reserve information for the Company as at December 31, 2006. The summary of the GLJ Report is available for public viewing on SEDAR (

Escalating Price Case - Remaining Reserves at December 31, 2006

Proved Total Plus
MARKETABLE RESERVES Producing Proved Probable
------------ -------- ----------

Light/Medium Oil (Mbbl)
Total Company Interest 196 273 718
Working Interest 195 272 716
Net After Royalty 181 257 680

Gas (MMcf)
Total Company Interest 1,444 3,481 5,158
Working Interest 1,444 3,481 5,158
Net After Royalty 1,138 2,751 4,095

Natural Gas Liquids (Mbbl)
Total Company Interest 29 63 82
Working Interest 29 63 82
Net After Royalty 20 43 56

Oil Equivalent (Mboe)
Total Company Interest 465 916 1,659
Working Interest 464 915 1,658
Net After Royalty 390 758 1,418

VALUE ($M) Producing Proved Probable
------------ -------- ----------
Discounted at 0% 14,704 25,203 53,079

Discounted at 5% 12,012 20,178 39,463

Discounted at 10% 10,297 16,816 31,212

Discounted at 12% 9,770 15,763 28,768

Discounted at 15% 9,097 14,405 25,716

Note: future net revenue does not represent fair market value.

GLJ used the following price assumptions in the escalated reserves and cost case as released by GLJ effective January 1, 2007.

Bank of
Canada WTI Light Sweet
Exchange Cushing Oil @ AECO-C
Price Inflation Rate Oklahoma Edmonton Spot
Forecast (%) ($US/$Cdn) ($U.S./Bbl) ($Cdn/Bbl) ($/mmbtu)
-------- ---------- ----------- ----------- ------------ ---------
2007 2.0 0.870 62.00 70.25 7.20
2008 2.0 0.870 60.00 68.00 7.45
2009 2.0 0.870 58.00 65.75 7.75
2010 2.0 0.870 57.00 64.50 7.80
2011 2.0 0.870 57.00 64.50 7.85
2012 2.0 0.870 57.50 65.00 8.15

In the past twelve months, Magnus has increased its total proved reserves by over 300%, increased its total proved plus probable reserves by more than 500% and increased the before tax net present value (discounted at 10%) of the Company by more than 600%.

About Magnus Energy

Magnus is a junior oil and gas company focused on the acquisition, exploration, exploitation and development of oil and natural gas properties in Western Canada.


This news release contains certain forward-looking statements, including management's assessment of future plans and operations, and capital expenditures and the timing thereof, that involve substantial known and unknown risks and uncertainties, certain of which are beyond the Company's control. Such risks and uncertainties include, 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, 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. The Company'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, including the amount of proceeds, that the Company will derive therefrom. Readers are cautioned that the foregoing list of factors is not exhaustive. All subsequent forward-looking statements, whether written or oral, attributable to the Company 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 the Company 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 BOE or BOEs may be misleading, particularly if used in isolation. A BOE (barrel of oil equivalent) conversion rate of 6 Mcf per one (1) BOE is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

37,836,353 Class A Shares

1,044,000 Class B Shares

The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved of the contents of this news release. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Magnus Energy Inc.
    Murray M. Stewart
    President and Chief Executive Officer
    (403) 233-4963
    (403) 262-9920 (FAX)
    Magnus Energy Inc.
    Stewart Larsen
    Chief Financial Officer
    (403) 233-4960
    (403) 262-9920 (FAX)
    Magnus Energy Inc.
    Suite 1650, AMEC Place
    801 - 6th Avenue S.W.
    Calgary, Alberta T2P 3W2