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CANADA ENERGY PARTNERS ANNOUNCES SUCCESSFUL HORIZONTAL MONTNEY TEST

July 6, 2010

VANCOUVER, BRITISH COLUMBIA - Canada Energy Partners Inc. ("Canada Energy" or the "Company") (TSX VENTURE: CE) is pleased to announce, the successful results of the horizontal Montney test located on its Peace River Project in northeast British Columbia.

Highlights

  • The Portage c-20-E was completed with four fracture stimulations over a 1000 meter horizontal section and tested at 1.7 to 2.7 million cubic feet per day with 579-1450 psi flowing casing pressure over an eleven day test;
  • The c-20-E results of 420 mcf/d per frac treatment compares very favourably with the Talisman completions on their Farrell Project 5 miles to the north where the fracture treatments from the Upper Montney have averaged 540 mcf/d per fracture treatment;
  • Sproule Associates Limited have estimated 171 BCF per section total-gas-initially-in-place (“TGIIP”) in the Upper Montney and Doig formations combined in the c-20-E well and 207 BCF per section in the Company’s Portage 9-23-81-26 well;
  • The Company’s Joint Venture Partner on the Peace River Project has licenced the next horizontal well and the spud date is expected by mid-July; 
  • The Company has expanded its deep rights land base by 14 gross and 7 net sections via recent land sales.  This increased the Company’s deep rights land base by 20%.

Operations Review

The Portage c-20-E well on the Peace River Project was drilled and completed in the Upper Montney formation.  The well tested at variable rates of 1.7 – 2.7 million cubic feet per day, with 579-1450 psi flowing casing pressure, over an 11 day period from a 4-stage, non-energized (without nitrogen or carbon dioxide) frac in a 1000 metre horizontal section.  The well had not fully cleaned up nor was critical flow (the minimum gas velocity required to efficiently lift water from the well) up the 114.5 millimeter casing achieved prior to the end of the test.  Both the Doig and Montney formations exhibited elevated formation pressures characteristic of most shale gas plays.

The Joint Venture Partner and the Company believe that the test results of the c-20-E compare very favorably to the Talisman Farrell Project wells on a per-frac basis.  When projected onto a typical development well of 1400-2400 metre lateral length and a 10-18 stage frac treatment, the Company believes the c-20-E has the reservoir characteristics to yield similar results.  The average fracture treatment of a Montney horizontal well in northeast British Columbia is 14 stages (Oilweek, March 2010).

In addition to the Upper Montney, the Doig formation has logs and cores indicating pay with significant, open-hole, drilling gas flows (see photo 1 below). 

The Doig Phosphate is thickest in the Peace River Project area and Talisman has demonstrated its productivity at Farrell.  There are four (4) wells in the Peace River/Farrell area that have yielded positive gas tests from the Doig Phosphate. 

The Lower Montney also yielded significant gas flows (see photo 2 below) while drilling and exhibits resource potential. 

The Company engaged Sproule Associates Limited (“Sproule”) to estimate the total-gas-initially-in-place (“TGIIP”) in both the c-20-E and the previously drilled Portage 9-23-81-26W6 wells.  Sproule has estimated the c-20-E and the 9-23 wells to contain a gross TGIIP of 171 and 207 BCF per section respectively from the Doig Siltstone, Doig Phosphate, and Montney zones combined.  The Company would have a 50% interest, assuming the Joint Venture Partner completes their earn-in.  In accordance with NI 51-101 guidelines, Sproule has classified these resources as follows:

                                    c-20-E  9-23-81-26

  • Doig Siltstone      63        59       BCF/section undiscovered resources;
  • Doig Phosphate   75       110       BCF/section discovered unrecoverable resources;
  • Upper Montney   33         38       BCF/section discovered resources;          
  • Total TGIIP       171       207       BCF/section

See definitions and cautionary statements below.

Sproule has not yet been asked to estimate the recoverable portion of these in-place resources, and the Company will continue working with Sproule toward an estimate of recoverable volumes of gas as more data is acquired.

The Joint Venture Partner has committed to drilling a minimum of 1400 metre horizontal lateral in the next well (Portage 3-12-82-26), which is anticipated to be spud by July 15th, with completion expected in early Q4, 2010.

The results of the c-20-E testing were the primary driver in the Company’s acquisition of additional acreage on the Peace River Project (see the Company’s prior announcement dated June 25th 2010).  The Company was successful in acquiring 14 gross and 7 net sections in the May and June lease sales which increased the Company’s net deep rights land base by 20%.

The Company expects the Joint Venture Partner will await the results of the 3-12 well before initiating a pipeline connection.

The Company has 42 net sections of Montney rights in northeast British Columbia, representing 168 potential net Montney drilling locations.

Canada Energy is an active oil and gas exploration and development company with approximately    $4.2 million of working capital. The Company possesses a large concentrated land position in a high-impact, multi-zone, natural gas-bearing area in northeast British Columbia.

Definitions & Cautionary Statements

Total Petroleum Initially-In-Place (PIIP) is that quantity of petroleum that is estimated to exist originally in naturally occurring accumulations. It includes that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations, prior to production, plus those estimated quantities in accumulations yet to be discovered (equivalent to “total resources”).

Discovered Petroleum Initially-In-Place (equivalent to discovered resources) is that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production.  A recovery project cannot be defined for this volume of discovered petroleum initially-in-place at this time.  There is no certainty that it will be commercially viable to produce any portion of the resources.

Undiscovered Petroleum Initially-In-Place (equivalent to undiscovered resources) is that quantity of petroleum that is estimated, on a given date, to be contained in accumulations yet to be discovered.  There is no certainty that nay portion of the resources will be discovered.  A recovery project cannot be defined for this volume of discovered petroleum initially-in-place at this time.  There is no certainty that it will be commercially viable to produce any portion of the resources.

Unrecoverable is that portion of Discovered or Undiscovered PIIP quantities which is estimated, as of a given date, not to be recoverable by future development projects. A portion of these quantities may become recoverable in the future as commercial circumstances change or technological developments occur; the remaining portion may never be recovered due to the physical/chemical constraints represented by subsurface interaction of fluids and reservoir rocks.

Conference Call

Canada Energy Partners will host a conference call and webcast to
discuss its horizontal Montney test results
 
Tuesday, July 06 at 1:30 pm PDT (3:30 pm CDT / 4:30 pm EDT)
Toll-free 1-888-789-9572 (participant code 5084645
) or webcast at www.canadaenergypartners.com

Mr. John Proust, Chairman and Mr. Benjamin Jones, President & CEO will host the call. Access to the call may be obtained by calling the toll-free number above or by accessing the webcast up to fifteen minutes prior to the scheduled start time. For those who are unable to participate, a digital playback of the conference call will be available through to July 20, 2010 by dialing 1-800-408-3053 (local access 416-695-5800) (passcode: 8484351).

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

John Proust

John Proust
Chairman

CANADA ENERGY PARTNERS INC.
1500 – 885 West Georgia St.
Vancouver, BC   V6C 3E8
Main Phone: (604) 909-1154 / Facsimile: (604) 488-0319

Attention: John Proust, Chairman
Email: info@canadaenergypartners.com
Direct Phone:  (604) 696-9020

Attention: Ben Jones, President and CEO
Email: info@canadaenergypartners.com
Direct Phone:  (225) 388-9900
www.canadaenergypartners.com

The TSX Venture Exchange has neither approved or disapproved of the contents of this press release.  Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.

Forward Looking Statements: This news release contains forward looking statements relating to expected or anticipated flow rates,  timing for drilling and completion operations, future events and operations, number of wells to be drilled, timing of projects and anticipated 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 future plans.  Actual results achieved may vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors.  There is no representation by the company that actual results achieved during the forecast period will be the same in whole or in part as that forecast.


Photo 1 – Doig Drilling Gas Flow

 


Photo 2 – Lower Montney Drilling Gas Flow

 


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