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

Magnus Energy Inc.

November 07, 2006 19:06 ET

Magnus Energy Announces Updated Reserve Additions

CALGARY, ALBERTA--(CCNMatthews - Nov. 7, 2006) - Magnus Energy Inc. ("Magnus" or the "Company") (TSX VENTURE:MEI.A)(TSX VENTURE:MEI.B) is pleased to announce its updated reserve additions as of September 30, 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 an updated Reserve Report ("GLJ Report") which evaluated all of the Company's oil, natural gas and liquids reserves as at September 30, 2006. The GLJ price forecast at October 1, 2006 was used to determine all estimates of future net revenues.

Based upon the GLJ Report, the Company has 2,062 Mboe of proven plus probable reserves for Total Company Interest Reserves. This is an increase of 762 Mboe (+ 58%) since the Company's last reserve report dated March 31, 2006. The before tax present value discounted at 10% of the Total Company Interest Reserves is $35.275 million, an increase of $10.1 million (+ 40%) since the March 31, 2006 report. Total proven reserves account for 58% of the Company's total reserves. The proved plus probable reserve life index of Magnus is 6.9 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 September 30, 2006.



Escalating Price Case - Remaining Reserves at September 30, 2006

Proved Total
Developed Proved
MARKETABLE Proved Non- Proved Total Total Plus
RESERVES Producing Producing Undeveloped Proved Probable Probable
--------- --------- ----------- ------ -------- --------
Light/Medium Oil
(Mbbl)
Total Company
Interest 277 0 108 385 438 823
Working
Interest 277 0 108 385 438 822
Net After
Royalty 235 0 106 342 409 750

Gas (MMcf)
Total Company
Interest 3,918 645 73 4,635 2,447 7,083
Working
Interest 3,918 645 73 4,635 2,447 7,083
Net After
Royalty 2,832 587 68 3,488 1,909 5,396

Natural Gas Liquids
(Mbbl)
Total Company
Interest 30 9 - 39 20 58
Working
Interest 30 9 - 39 20 58
Net After
Royalty 20 6 - 27 13 40

Oil Equivalent
(Mboe)
Total Company
Interest 960 117 120 1,197 865 2,062
Working
Interest 959 117 120 1,197 865 2,061
Net After
Royalty 728 104 118 950 740 1,690



Proved Total
Developed Proved
BEFORE TAX Proved Non- Proved Total Total Plus
PRESENT VALUE ($M) Producing Producing Undeveloped Proved Probable Probable
--------- --------- ----------- ------ -------- --------

Discounted at 0% 25,559 2.759 3,051 31,369 23,398 54,766

Discounted at 5% 22,270 2,386 2,381 27,037 16,037 43,074

Discounted at 10% 19,818 2,089 1,870 23,776 11,499 35,275

Discounted at 12% 19,003 1,987 1,698 22,688 10,167 32,855

Discounted at 15% 17,918 1,849 1,470 21,236 8,526 29,762

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 October 1, 2006.



Bank of Light
Canada WTI Sweet
Exchange Cushing Oil @ AECO-C
Price Rate Oklahoma Edmonton Spot
Forecast Inflation % $US/$Cdn ($U.S./Bbl) ($Cdn/Bbl) ($/mmbtu)
-------- ----------- -------- --------- -------- -------
2006 2.3 0.885 67.00 74.50 6.75
2007 2.0 0.890 65.00 72.00 7.50
2008 2.0 0.890 60.00 66.50 8.00
2009 2.0 0.890 55.00 60.75 7.95
2010 2.0 0.890 52.00 57.50 7.55
2011 2.0 0.890 53.00 58.50 7.35


Shown below is a comparison of Total Proved plus Probable reserves as of September 30 and March 31, 2006 and December 31, 2005. Also shown below is a comparison of the before tax present value of reserves as of those same dates. Please note that for the March and December reports, GLJ used the commodity price assumptions in the escalated reserves and cost case as released by GLJ effective April 1 and January 1, 2006, respectively. These previous forecasts had significantly higher commodity prices in particular for AECO - C Spot prices for natural gas as compared to the above price assumptions for October 1, 2006. The management of Magnus notes that the lower price forecast used in the latest calculations makes the 40% increase in net present value as of September 30, 2006 even more significant compared with the calculations for March and December.



Escalating Price Case - Remaining Reserves

September 30, March 31, December 31,
2006 2006 2005
Total Proved Total Proved Total Proved
MARKETABLE RESERVES Plus Plus Plus
Probable Probable Probable
------------ ------------ ------------
Light/Medium Oil (Mbbl)
Total Company Interest 823 356 18
Working Interest 822 355 18
Net After Royalty 750 318 18

Gas (MMcf)
Total Company Interest 7,083 5,291 1,486
Working Interest 7,083 5,291 1,486
Net After Royalty 5,397 4,064 961

Natural Gas Liquids (Mbbl)
Total Company Interest 58 62 0
Working Interest 58 62 0
Net After Royalty 40 42 0

Oil Equivalent (Mboe)
Total Company Interest 2,062 1,300 266
Working Interest 2,061 1,299 266
Net After Royalty 1,690 1,037 178



September 30, March 31, December 31,
2006 2006 2005
Total Proved Total Proved Total Proved
BEFORE TAX Plus Plus Plus
PRESENT VALUE ($M) Probable Probable Probable
------------ ------------ ------------

Discounted at 0% 54,766 34,958 5,812

Discounted at 5% 43,074 29,283 5,075

Discounted at 10% 35,275 25,163 4,504

Discounted at 12% 32,855 23,814 4,310

Discounted at 15% 29,762 22,034 4,047

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


"Magnus has made significant progress adding value in the last twelve months," said Murray Stewart, President and CEO of Magnus. Mr. Stewart further remarked, "We have a large inventory of drilling locations on all of our core properties and look forward to further profitable growth through 2006 and into 2007."

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
    (403) 262-9920 (FAX)
    Email: stewartm@magnusenergy.ca
    or
    Magnus Energy Inc.
    Stewart Larsen
    Chief Financial Officer
    (403) 233-4960
    (403) 262-9920 (FAX)
    Email: larsen@magnusenergy.ca
    or
    Magnus Energy Inc.
    Suite 1650, AMEC Place
    801 - 6th Avenue S.W.
    Calgary, Alberta T2P 3W2
    Website: www.magnusenergy.ca