Magnus Energy Inc.
TSX VENTURE : MEI.A
TSX VENTURE : MEI.B

Magnus Energy Inc.

October 26, 2006 15:55 ET

Magnus Energy Announces Kakwa Farmin

CALGARY, ALBERTA--(CCNMatthews - Oct. 26, 2006) - Magnus Energy Inc. (TSX VENTURE:MEI.A) (TSX VENTURE:MEI.B) ("Magnus" or the "Company") is pleased to announce that it is participating with Vigilant Exploration Inc. ("Vigilant") in an exploration prospect in the Kakwa area in the deep basin of western Alberta. The Kakwa area is characterized by wells which have multi-zone potential with long life condensate-rich gas reserves.

Magnus will participate with Vigilant on a straight-up basis on a farmin arrangement involving two major producing companies with Magnus paying 50% of the costs to earn a 30% APO working interest. Magnus also earns a similar working interest in an offsetting section, together with the right to participate in follow-up opportunities. The first well is to be located at 01- 30-062-05 W6M. The location is built, a drilling rig move has been scheduled for today and the well will spud early next week. This well will take approximately 34 days to reach TD in the Nikanassin at 3200 metres and will target several prospective zones including the Cadomin, Gething, Bluesky, Fahler, Cadotte, Dunvegan, and Cardium, all of which are productive within a 10 kilometre radius of the target location. The typical reserves for a productive well in the area are 5 to 8 BCF on a proved plus probable basis. Average sales gas production from successful wells is 2.6 MMSCF per day (433 BOED) usually from two zones combined (with condensate rates up to 30 bbls per MMSCF for wells successful in the Bluesky). The success rate of Vigilant to date has been 92% (11 for 12 wells).

Gross capital costs are estimated to be $2.6 million to drill and case, $1.9 million to complete based on completion of three zones and $0.8 million to equip and tie-in. The costs for Vigilant's last four wells have been within 10% of the AFE'd amount. Infrastructure is readily accessible with a tie-in point 1.6 kilometres away which provides access to the Cutbank and Musreau gas plants. Processing costs are reasonable at $0.39 per MCF for dehydration, processing, compression and transportation.

"Magnus is pleased with this new joint venture with Vigilant that will allow the Company to pursue this exploration opportunity in the Kakwa area. This project enables Magnus to fulfill its flow-through obligations completely for the 2006 year in a fashion that has manageable risk and a high impact in terms of potential production and long life natural gas reserves," said Murray Stewart, President and CEO of Magnus.

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.

READER ADVISORY

This press release includes forward-looking statements and assumptions respecting the Company's strategies, future operations, expected financial results, financial sources, commodity prices, costs of production and quantum of oil and natural gas reserves and discusses certain issues, risks and uncertainties that can be expected to impact on any of such matters. By their nature, forward-looking statements are subject to numerous risks and uncertainties that can significantly affect future results. Actual future results may differ materially from those assumed or described in such forward-looking statements as a result of the impact of issues, risks and uncertainties whether described herein or not, which the Company may not be able to control. The reader is therefore cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any intention or obligation to update or revise these forward-looking statements, as a result of new information future events or otherwise. In addition, the term BOE or BOE's may be misleading, particularly if used in isolation. A BOE (barrel of oil equivalent) conversion ratio 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.

36,905,703 Class A Shares

1,044,000 Class B Shares


The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release and has neither approved nor disapproved the contents of this release.

Contact Information

  • Magnus Energy Inc.
    Murray M. Stewart
    President and Chief Executive Officer
    (403) 233-4963
    Email: stewartm@magnusenergy.ca
    or
    Magnus Energy Inc.
    Stewart Larsen
    Chief Financial Officer
    (403) 233-4963
    Email: larsen@magnusenergy.ca
    or
    Magnus Energy Inc.
    Suite 1650, AMEC Place
    801 - 6th Avenue S.W.
    (403) 233-4963
    (403) 262-9920 (FAX)
    Website: www.magnusenergy.ca