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

Magnus Energy Inc.

March 20, 2006 10:30 ET

Magnus Energy Sets Capital Budget for 2006

CALGARY, ALBERTA--(CCNMatthews - March 20, 2006) - Magnus Energy Inc. (TSX VENTURE:MEI.A) (TSX VENTURE:MEI.B) ("Magnus or the "Company") is pleased to announce that the Board of Directors has approved a capital budget of $24 million for development and exploration projects for 2006.

The Company will fund the 2006 budget from working capital, cash flow and bank facilities. Approximately 60% of the budget will be spent on development projects with 40% allocated to exploration. Magnus plans to drill 29 gross (20 net) wells in the Antler, Paradise Valley, Manitou Lake and North Esther areas, as well as in areas such as Richdale, Leahurst and Keho acquired in the purchase of KVR Resources Ltd. The Company has an inventory of more than 217 gross (143 net) drilling locations on a land base of approximately 120,000 gross acres. Magnus has exclusive access to an additional 40,000 gross acres of undeveloped land through various farmin and rolling option agreements.

In the year to date, Magnus has concentrated capital spending on low risk production projects to maximize capital efficiency and achieve production targets. Current production has reached 125 BOED comprised of 50% natural gas and 50% light oil.

An estimated 500 BOED, entirely gas and associated liquids, is behind pipe. These volumes relate to wells that have already been drilled, cased and tested at stabilized flow rates at producing pressures consistent with the infrastructure into which they will flow. Pipelining is currently underway and Magnus anticipates bringing these gas volumes onstream by the end of April, 2006. Based on the approved capital budget of $24 million, Magnus expects to exit 2006 with production greater than 900 BOED.

Magnus also announces that the Board of Directors has approved the granting of stock options to officers, directors and employees of the Company. Options to purchase 1,192,500 Class A Shares of Magnus were issued by the Company with an exercise price of $1.35 per share. The options are for a term of five years with vesting provisions.

About Magnus Energy Inc.:

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.

29,506,093 Class A Shares

1,044,000 Class B Shares

ADVISORY: Certain information regarding the Company including management's assessment of future plans and operations, may constitute forward-looking statements under applicable securities laws and necessarily involve risks associated with oil and gas exploration, production, marketing and transportation such as loss of market, volatility of prices, currency fluctuations, imprecision of reserve estimates, environment risks, competition from other producers and ability to assess sufficient capital from internal and external source. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements.

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
    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