Canadian Energy Partners

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December 13, 2010

VANCOUVER, BRITISH COLUMBIA - Canada Energy Partners Inc. ("Canada Energy" or the "Company") (TSX VENTURE: CE) has completed a one day retest of the Portage c-20-E Upper Montney well, at a restricted end-of-test rate of 8.9 million cubic feet per day, with no water, and 2758 psi flowing pressure.  The well had peak rates during the test of 14.4 million cubic feet while still restricted. The test was cut short due to safety concerns stemming from extreme cold caused by high, dry gas rates and high flowing pressures. These results are very encouraging in light of the fact that the horizontal length of the c-20-E is 50% of typical Montney horizontal lengths with only 50% of the typical stimulated reservoir volume.  A pressure survey also confirmed that the Upper Montney is 41% over-pressured.

The c-20-E was drilled in the first quarter of 2010 and initially completed in June 2010 (see Company announcement dated July 6, 2010).

The Portage c-20-E was retested for two reasons:

  1. The Company thought the original flow-back test kept the rates below ‘critical’ velocity (the velocity necessary to efficiently lift water from the well).  Significant fluid loading was confirmed by a pressure survey run in the well between June and November 2010.
  2. Anecdotal observations from other shale gas plays have indicated significant improvement in well flows subsequent to an extended shut-in period.  The Company believes the re-test of the c-20-E confirms that both of these factors resulted in the improved test performance.

Shale gas well performance improvements after an extended shut-in may be related to:

  1. dispersal/sorption/breakdown of frac water alleviating fluid blocking and resulting in higher relative permeabilities to gas. 
  2. Gravitational separation of frac water and gas in the sand packs in the fractures resulting in higher relative permeabilities to gas. 
  3. Gas re-saturation resulting in higher relative permeability to gas.
  4. Re-pressured reservoir energy. 
  5. Fracture stress relief resulting in competent sand packs in the fractures and better near-wellbore connectivity. 
  6. Reduced fines movement due to lower water yields.

The Company also reports the completion of the fracturing and production testing on its Portage 3-12-82-26.  The Operator performed a 5-stage fracture treatment comprised of 25 perforated intervals over the 1826m lateral and placement of 1500 tonnes of sand.  This is 2.2 times the volume of sand and 2.2 times the perforated intervals as were conducted on the first horizontal well at Peace River, the c-20-E. The Operator reduced the number of frac stages from the original design by expanding the treated interval per frac stage. Over a 16 day flow test period, the well had a peak flow-rate of 4.5 million cubic feet per day and an end rate of 1.2 million cubic feet per day.  The Company believes that this end rate was adversely affected by persistent water and sand production and that improved long-term performance is possible.

The Company is evaluating the results of these tests in concert with the Operator.  We expect to have a reserve study completed by the end of January 2011.

The Company believes that the initial drilling program conducted by the Operator has confirmed a large in-place gas resource at Peace River, has significantly de-risked the play, and that further refinements to drilling and completion practices will progressively result in improved flow-rates and cost efficiencies.  It is also notable that there remain three untested formations (Doig Siltstone, Doig Phosphate, and Lower Montney) that have been deemed commercial by adjacent operators in the area with large confirmed in-place gas resources. 

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

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

John Proust

John Proust

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

Attention: John Proust, Chairman
Email: [email protected]
Direct Phone:  (604) 696-9020

Attention: Ben Jones, President and CEO
Email: [email protected]
Direct Phone:  (225) 388-9900

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.


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