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CANADA ENERGY PARTNERS INC. TO SIGNIFICANTLY INCREASE ITS WORKING INTERESTS IN THE PEACE RIVER PROJECT

March 26, 2007

Canada Energy Partners Inc. (“Canada Energy” or the “Corporation”) is pleased to announce that its offers to purchase have been signed (collectively the “Acquisition”) by Peace River Limited Partnership, Peace River Corporation, Eagle Oil & Gas Canada LP, CAN-GAS Limited Partnership and GFR Canada Ltd. (collectively the “Vendors”) to acquire additional working interest in the Peace River Project (the “Project”).  The Corporation currently owns, or has the rights to earn, a 21% working interest in the Peace River Coalbed Methane (“CBM”) Project (“shallow rights”); and a 14.5% working interest and 0.8% overriding royalty in the deep conventional petroleum and natural gas rights (“deep rights”) on the lands covered by the Project.  Upon completion of the Acquisition, the Corporation will increase its ownership of the Peace River CBM Project to a 49% working interest and an additional 3.71% after payout working interest for a total interest of 52.71% after payout.  In addition, the Corporation will increase its ownership in the deep rights to a 21.5% working interest and a 5% overriding royalty payable on 74% of the production, convertible on payout into an additional 23% working interest for a total interest of 44.5% after payout. 

The Peace River Project consists of approximately 36,687 acres of prospective acreage located in the Peace River Plains area near Hudson’s Hope, British Columbia.  GeoMet Inc. (“GeoMet”) (Nasdaq: GMET), an experienced coalbed methane producer, is the operator and 50% working interest owner in the shallow rights.  Triumph Pacific Oil & Gas Corporation is the operator and a 53% after payout working interest owner in the deep rights.

Under the terms of the Acquisition, the Corporation has agreed to issue to the Vendors an aggregate of 24,197,512 common shares (the “Shares”) in the capital of the Corporation and pay to the Vendors an aggregate of Cdn$2,650,076 cash in consideration for the acquisition of 28% working interest and a net 3.71% after-payout working interest in the shallow rights and an additional 7% working interest, a net 0.1% after-payout working interest and a net 4.2% overriding royalty payable on 74% of production, convertible on payout into an additional 19% working interest in the deep rights.  The Shares will be subject to resale restrictions as required by applicable securities laws and the TSX Venture Exchange (the “Exchange”).  In addition, the Vendors have agreed that all Shares issued on the closing of the Acquisition will be subject to a pooling arrangement, whereby a percentage of the total number of Shares will be released in stages over a period of approximately 31 months from the date of the closing of the Acquisition.  The completion of the Acquisition will not result in a change of control of the Corporation under the policies of the TSX Venture Exchange.  The Vendors are at arm’s length to the Corporation.  The Acquisition is subject to acceptance of the Exchange.  The completion of the Acquisition is subject to certain conditions for the benefit of Canada Energy including, among others, the receipt of regulatory approval to the acquisition, completion of due diligence, the execution of a definitive agreement, and completion of a financing to be conducted by Canada Energy to cover the cash portion of the purchase price.  The closing of the Acquisition is scheduled for April 18, 2007, or such other date as is mutually agreed upon by the parties.

Mr. Pat S. Bolin has been appointed as a Senior Advisor to the board of directors of Canada Energy.  Mr. Bolin is Chairman, President and Chief Executive Officer of EagleCorp. and Eagle Oil & Gas Co., which have production activities from over 600 wells in ten states.  Mr. Bolin, attended Southern Methodist University where he graduated with a BA degree in 1973.  Upon graduation he was employed by Mitchell Energy Co. as a Landman, a position he left in 1976 to co-found Eagle Oil & Gas Co.  Mr. Bolin is also the Chairman of Beacon National Insurance Corporation, an advisory director of Compass Bank and a director and member of the executive committee of Fidelity Bank, Wichita Falls.

The Corporation has also granted incentive stock options to its directors, advisors and consultants to purchase a total of up to 1,000,000 common shares of the Company.  The stock options are exercisable at a price of $1.00 per share for a period of 5 years.  The grant of the stock options is subject to regulatory approval.

On behalf of the Board of Directors of
Canada Energy Partners Inc.

John Proust

John Proust
Director

Canada Energy Partners Inc.
1500 – 885 West Georgia Street,
Vancouver, BC V6C 3E8 Canada
Telephone: 604-909-1154 Fax: 604-488-0319

www.canadaenergypartners.com

The TSX Venture Exchange does not accept responsibility for the adequacy or the accuracy of this release.

Forward-looking statements: This document may contain statements about expected or anticipated future events and financial results that are forward-looking in nature and, as a result, are subject to certain risks and uncertainties, such as general economic, market and business conditions, the regulatory process and actions, technical issues, new legislation, competitive and general economic factors and conditions, the uncertainties resulting from potential delays or changes in plans, the occurrence of unexpected events, and the Company’s capability to execute and implement its future plans.  Actual results may differ materially from those projected by management.  For such statements, we claim the safe harbour for forward-looking statements within the meaning of the Private Securities Legislation Act of 1995.

 


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