Canadian Superior Sees Record 2005 Results

Canadian Superior Energy announced record 2005 operating results, with Revenues up 41%, Cash Flow up 50% and Net Earning of $3.1 million, up 201%, and is poised to commence drilling two back-to-back wells on its "Intrepid" Block 5(c) offshore Trinidad and Tobago on or before September/October 2006.


It is a pleasure to present to you the operating results of Canadian Superior Energy Inc. for the year ending December 31, 2005, an overview of our excellent results and a view into the our future activities.

Highlights of 2005 include:

  • Revenues of $54.5 million, up 41% compared to 2004.
  • Cash Flow from operations of $30.3 million, up 50% compared to 2004.
  • Net Income of $3.1 million, up 201% compared to 2004.
  • Record year end production rate of 3,470 boe/d, up 21% compared to year end 2004.
  • Proved Reserves valuation up $38.3 million from 2004 (with a discounted cash flow of 10%).
  • Proved Reserves of 4,707 mboe, up 8% compared to 2004.
  • Proved plus Probable Reserves valuation up $48.5 million from 2004 to approximately $138 million (with a discounted cash flow of 10%).
  • Signed Production Sharing Contract ("PSC") on July 20, 2005 with Government of Trinidad and Tobago for Block 5(c), with drilling back-to-back two (2) of the deepest wells to be drilled offshore Trinidad in the Columbus Basin, which is truly a "World Class" Basin, on our "Intrepid" Block 5(c) commencing on or before September/October 2006 as announced on March 20,2006; with at least 5 wells planned for drilling offshore Trinidad and Tobago over the next 3 years. Canadian Superior will soon be bringing the Kan Tan IV Semi-Submersible Drilling Rig to Trinidad and Tobago, managed by A. P. Moller - Maersk A/S ("Maersk"), of Copenhagen, Denmark and owned by Beijing Zhiyuan Industries Company Limited ("Beijing Zhiyuan"), of Beijing, China. Canadian Superior is very pleased and honoured to be working with Maersk, and Beijing Zhiyuan, a member of the SINOPEC Group of companies, who are truly world class companies. Canadian Superior will be bringing this rig into Trinidad and Tobago with no other oil and gas companies involved in contracting of this offshore drilling rig at a very favorable day rate, honoured by Maersk and Beijing Zhiyuan, negotiated by Canadian Superior several months ago, as compared to current day rates which have gone up considerably. Also, Trinidad and Tobago is very economic and a very important source of North America's natural gas supply, supplying approximately 80% of North America's LNG, as well as being an important source of European and Asian natural gas supply.
  • Also, we are also very pleased to have opened our regional office in Port of Spain to facilitate our drilling in Trinidad and Tobago with our new Country Manager, Roger De Freitas, a former Vice President of Santa Fe Drilling Co., with over 30 years of offshore drilling experience, which will be working with our experienced exploration and offshore drilling team located in Halifax, Nova Scotia and Calgary, Alberta, Canada who are all working hard on the logistics and supplies for our upcoming Trinidad and Tobago wells.
  • Through our focused efforts Canadian Superior has become the largest public company oil and gas exploration acreage holder Offshore Nova Scotia, Canada.
  • Also during 2005, we have successfully drilled and placed on production several conventional oil and gas wells and we have also successfully completed our first Coal Bed Methane (CBM) drilling and production program centered on the Corporation's core Drumheller, Alberta, Canada area. Drumheller is one of Western Canada's best shallow conventional drilling and production areas and also one of Western Canada's best Coal Bed Methane (CBM) drilling and production areas where Canadian Superior has a large strategic land position and has one of the largest land positions in the area.
  • The year was topped-off and further highlighted by Canadian Superior raising $28.7 million of committed equity financings and commitments, in addition to mid-year financings where we successfully completed equity financings of $11 million, for a total 2005 committed financings of $39.7 million.


Canadian Superior would like to thank the Government of Trinidad and Tobago for the privilege of having the opportunity to obtain some of the best exploration acreage in the world. Canadian Superior would also like to thank, along side the Government of Trinidad and Tobago, the people of Trinidad and Tobago who are supportive of Canadian Superior's oil and gas strategy in Trinidad and Tobago. On July 20, 2005, we were very honoured and privileged to sign the Production Sharing Contract ("PSC") for our 100% working interest 80,041 acre "Intrepid" Block 5(c), offshore Trinidad and Tobago, with the Government of Trinidad and Tobago. This provides Canadian Superior the right to explore on Block 5(c) which covers 80,041 gross acres and has significant natural gas exploration and development potential off the east coast of the island of Trinidad in this "World Class" basin.

Offshore Trinidad is one of the most coveted oil and gas basins in the world today and we are very excited about commencing drilling on our "Intrepid" Block 5(c). "Intrepid" was the code name of a famous Canadian spy during World War II, and some historians have argued he was one of the most important factors in the Allies winning the war. The famous Canadian spy's name was (Sir) William Stephenson. The name "Intrepid" in Webster's Dictionary is defined as "outstandingly courageous" or "fearless"; this has been our strategy in acquiring and working towards early development of this Block against some of the largest oil and gas companies in the world. Offshore Trinidad is a "World Class" basin with multiple large exploration and development opportunities as evidenced by recent drilling successes in the Columbus Basin, as well as having well developed, and developing LNG facilities and capacity, and ready access to international markets. 80% of North America's LNG is supplied from Trinidad, and some of the largest producing wells in the world are located in Trinidad close to our acreage. For example, 15 of the top 25 British Petroleum (BP) producing wells world-wide are located in Trinidad. Also, now in Trinidad and Tobago natural gas at the wellhead is currently selling near Henry Hub pricing.

The "Intrepid" Block 5(c) is comprised of 80,041 acres located about 96 kilometers (60 miles) off the east coast of the island of Trinidad with water depths in the range of 150m to 450m (500 to 1,500 feet) and all wells in Block 5(c) will be drilled from a semi-submersible drilling rig, with the first two wells in water depths of about 245m (800 feet). During 2005, the Corporation actively pursued various rig options for the "Intrepid" drilling and was pleased to announce on March 20, 2006 that the Corporation has entered into firm multi-well drilling contract 100% on its own to contract the Kan Tan IV Semi-Submersible Drilling Rig, managed by A. P. Moller - Maersk A/S ("Maersk"), of Copenhagen, Denmark and owned by Beijing Zhiyuan Industries Company Limited ("Beijing Zhiyuan"), of Beijing, China to drill its first two exploration wells on Canadian Superior's "Intrepid" Block 5(c) offshore Trinidad. These two back-to-back wells will evaluate two large separate potential hydrocarbon bearing structures that are delineated by extensive 3D seismic that Canadian Superior has evaluated, with the first well of the two back-to- back wells to commence drilling shortly after the Kan Tan IV has completed a scheduled refurbishment currently underway in Brownsville, Texas. These prospects have been estimated to contain over 4 TCF of natural gas and condensate. Structures of similar size are located in the immediate vicinity of our "Intrepid" Block 5(c).

Once the retrofit is completed which is to be in August 2006 and the drilling rig is tested, it will be towed to a harbour in Trinidad and then directly to Canadian Superior's first Block 5(c) well site with spudding expected to be on or before September/October 2006. Each of these offshore exploration wells will be High Pressure ("HP") and will be drilled to a depth of approximately 5,000 m (16,400 feet) and each is expected to take between 80 - 100 days to drill and evaluate.

To assist Canadian Superior in going forward with its drilling in Trinidad, the Corporation has entered into a participation agreement with a non-competitive industry financial partner Challenger Energy Corp. ("Challenger"). Challenger will participate on a promoted basis paying 1/3 of Canadian Superior's Block 5(c) exploration program to obtain 25% of Canadian Superior's revenue share of these prospects.

Also, along side our experienced drilling team in Halifax, Nova Scotia, Canadian Superior has been fortunate enough to hire Mr. Roger De Freitas, a Trinidadian National as Country Manager in July, 2005. Roger is a former Vice President with Santa Fe Drilling Co., now Global Santa Fe, one of the major drilling contractors in the world. Roger has been involved in the oil and gas offshore drilling business for over 30 years and has held several senior management positions throughout the world, including work in Trinidad early in his oilfield career. We opened our country office in Port of Spain, Trinidad in August, 2005.

Throughout 2005, Canadian Superior's experienced Calgary, Alberta, Canada exploration team has been very active interpreting our extensive 3D coverage of Block 5(c) and has recently completed the detailed reprocessing of the 3D seismic data over Block 5(c) and several major offsetting natural gas fields.

We also have obtained from the Trinidad and Tobago Ministry of Energy and Energy Industries ("MEEI") extensive offsetting well technical data in the area and in combination with our detailed seismic interpretation we have been able to identify several excellent drilling locations, two of which will be drilled in due course as outlined above. Canadian Superior has also finished the geohazard surveys for the two drilling sites on the two prospects we are about to drill, and we have hired local Trinidadians to work on our drilling projects to enable drilling on or before September/October 2006.

Also, we have been in the process of purchasing the necessary pipe, wellheads and long lead items to facilitate drilling on these exciting plays.

In addition, in Trinidad and Tobago, we continued to prepare for the first phase of operations on our Mayaro/Guayaguayare (M/G) "Tradewinds" project, a joint venture with the National Oil Company, the Petroleum Company of Trinidad and Tobago Limited ("Petrotrin"). This joint venture encompasses securing two near-shore Blocks (55,000 gross acres) off the east coast of Trinidad where we have the potential to establish significant oil reserves in the heart of a known producing hydrocarbons-bearing structural trend. On the M/G Block Land, the Corporation is working on the design of a seismic program to evaluate the near-shore block and is planning this program to be shot in the near future where we intend to drill 2 offshore wells.

As a result of finalizing the "Intrepid" Block 5(c) acquisition and our ongoing Mayaro/Guayaguayare (M/G) "Tradewinds" Joint Venture with the Petroleum Company of Trinidad and Tobago Limited ("Petrotrin"), Canadian Superior will be drilling at least five new offshore wells over the next 36 months off the east coast of Trinidad on our extensive strategic lands.


Canadian Superior has evolved as the largest public company holder of exploration acreage offshore Nova Scotia with 100% interests in six exploration licneses totaling 1,293,946 acres and is one of the few active operators involved in all three main play types in the basin. The Sable Island area gas supply is very important and strategic for the North Eastern United States gas supply, and we are confident that being the public company holding the largest exploration acreage position in this area will be very rewarding to Canadian Superior's shareholders.

Canadian Superior has proven that it has the geological and technical experience and capabilities to evaluate, drill and operate some of the most complex and technically challenging wells in the world, whether offshore Nova Scotia or in Trinidad and Tobago. Further drilling is planned by Canadian Superior Offshore Nova Scotia off the East Coast of Canada in due course, most likely first on our "Mariner" Block where front end geological and geophysical analysis is complete. Two new prospective locations have been identified, geohazard well site survey work has been completed and the necessary environmental approvals are in place. In 2004, the results of an independent petrophysical evaluation of the "Mariner" I-85 exploration well, the first exploration well drilled on the "Mariner" Block, was released. Amongst other considerations, Reserve Estimates were also addressed in the report, and although the "Mariner" I-85 well was not flow tested, the report states, "Potential reserve estimations can be generated based on well log data, and maps based on seismic interpretation" and has resulted in potential recoverable gas reserve estimates between 211 bcf and 632 bcf on this one "Mariner" structure on which the "Mariner" I-85 well was drilled and evaluated which are not included in our year end 2005 reserve report.

Also, in regard to the "Mariner" Block, in 2005 we were advised by the Canada-Nova Scotia Offshore Petroleum Board ("CNSOPB") that the consolidation of our deepwater "Mayflower" exploration licnese (EL 2406) and the shallower water "Mariner" exploration licnese (EL 2409) had been approved by the Government of Canada and the Province of Nova Scotia. This consolidation will come into effect upon the drilling of the next "Mariner" exploration well and will allow the work commitments and related work commitment deposits for these two exploration licneses (EL 2406 and EL 2409) to be combined, allowing the existing work deposit for our deepwater "Mayflower Project", approximately $10 million, to be applied directly against the costs of drilling Canadian Superior's next "Mariner" well; in effect, this provides Canadian Superior with $10 million of additional capital to be applied to drilling the next "Mariner" well.

The "Mariner" Project lands are located approximately nine kilometers northeast of Sable Island, offshore Nova Scotia, encompassing an offshore area of 101,800 acres (100% Canadian Superior), and directly offsets five significant discoveries near Sable Island, including the ExxonMobil Venture natural gas field. The first exploration well, "Mariner" I-85, was drilled on this block in 2003/2004 (November 2003 to March 2004). Furthermore, upon consolidation, the exploration term for Canadian Superior's 100% deepwater "Mayflower" license (EL 2406) will be extended for 2 additional years, from the current expiry date of December 31, 2006 to December 31, 2008; and, thereafter, 50 % of the licnese area will be extended for an additional 2 years to December 31, 2010. Canadian Superior's "Mayflower" deepwater project exploration licnese covers approximately 712,000 acres and mapping to date indicates the presence of five sizeable deepwater prospects. These large prospects are structural and are typically formed by mobile salt tectonics. Canadian Superior plans to take full advantage of the extended exploration term on "Mayflower". We are planning to proceed in due course with a high resolution seismic program over the "Mayflower" block to further define targeted structures to enable future drilling and in 2005 updated our Environmental Impact Assessment in regard to this planned seismic activity, and we have had expressions of interest by major oil companies to partner with us on this exciting deepwater exploration Block.

In addition to Canadian Superior's "Mariner" exploration project targeting Cretaceous and Jurassic gas bearing sands, we continue to monitor drilling activities near our Abenaki Reef "Marquis" 100% prospects. Our "Marquis Project" lands encompass two exploration licneses with approximately 111,000 contiguous acres located in shallow water depths close to the existing Sable Offshore Energy Project producing infrastructure and EnCana's Deep Panuke discoveries. We also have identified several other large Cretaceous and Jurassic prospects on our 100% "Marauder" and 100% "Marconi" exploration lands which cover an additional 371,000 acres offshore Nova Scotia, offsetting the Sable Island area, and in the fourth quarter 2005, the Corporation has initiated the environmental impact assessment work required prior to conducting seismic and drilling on these properties. As previously noted, with our focused strategy we have become the largest public company holder of exploration acreage offshore Nova Scotia.


2005 was a very successful year for Canadian Superior. Increases in both production and cash flow, as well as operational efficiencies in the field, contributed to the Corporation achieving a record financial year, which has increased the overall Net Asset Value of the Corporation. All of Canadian Superior's current production in Western Canada is primarily located in the Drumheller, Alberta area, with other production and exploration in the Windfall, Boundary Lake, East Ladyfern, Giroux Lake and Teepee areas.

During 2005, the Corporation drilled or participated in 67 gross (28.2 net) wells which included 17 gross (14.4 net) operated wells and 50 gross (13.8 net) non - operated wells. The Corporation participated in the completion or tying in of 63 wells for an overall success rate of 94%.

The Corporation maintained its extensive land holdings in Western Canada. At December 31, 2005, the Corporation held 275,710 gross acres (193,576 net acres) of predominately Canadian Superior operated lands with a high working interest of approximately 70%.

Drumheller Area

In our Drumheller area of Central Alberta, Canada, which has shallow, low cost prospects and year round accessibility and is located approximately 60 miles N.E. of the city of Calgary, our Corporation has major acreage and production holdings in both conventional Cretaceous plays and in the Horseshoe Canyon and Mannville Coal Bed Methane ("CBM") plays, and this core area accounts for approximately 90% of Canadian Superior's production. In 2005, 64 gross (26 net) wells were drilled in the Drumheller area consisting of 18 gross (13.2 net) conventional wells and 46 gross (12.8 net) Horseshoe Canyon CBM wells. The Corporation acquired or purchased five extensive 3-D seismic programs, which are critical in continuing the success that Canadian Superior has achieved in 2005.

Conventional Plays

The Drumheller area offers a multitude of opportunities that include both oil and gas play types and are contained in five distinct stratigraphic zones.

The shallow targets include the Belly River and the Edmonton Groups and range in depth from 300-700 meters (980 - 2300 feet). Well production in these zones range from 50 - 750 mcf/d with associated reserve size of 1 - 2 Bcf.

Intermediate targets in this area include the Medicine Hat and Second White Specks formation which produce between 10 to 100 mcf/d and the Viking Formation which can produce up to 1000 mcf/d. Canadian Superior continues to evaluate these formations through logging as it drills into deeper zones. The Corporation plans to drill two Viking tests in the first half of 2006.

Deeper targets in the Drumheller area include the Mannville group and the Banff formation, and the Nisku and Leduc formations are being evaluated. The Mannville group typically encounters several reservoirs with average production rates for these horizons ranging from 250 to over 1000 mcf/d. The Banff formation is a carbonate play which ranges in depth from 1100 - 1400 meters (3600 - 4600 feet) and tend to be oil prone. On average the Banff can produce oil rates of 20 - 200 bbl/d with reserves ranging from 20 - 200 mbbl. The Nisku and Leduc formations are typically high reserve prospects with high deliverability.

In 2006, the Corporation plans on drilling 25-30 conventional wells in Drumheller, a low cost area with year-round access and we have an extensive portfolio of multiple-zone locations identified for drilling on our existing acreage. Approximately 66% of these wells will target the Mannville group, 22% will target the Viking or the Belly River and Edmonton groups and the remaining 12% will target the Banff and/or Nisku or Leduc formations.

Coal Bed Methane

Coal bed methane has recently been recognized as one of the emerging plays available to the oil and gas industry, which has added significant Proven and Proven plus Probable Reserves to the Corporation. The Drumheller area is in the heart of recent coal bed methane (CBM) development in Western Canada where Canadian Superior is fortunate to have one of the largest concentrated high working interest land positions with significant land holdings in both the Horseshoe Canyon and the Mannville stratigraphic zones.

Canadian Superior's current activities in CBM are centered on the Horseshoe Canyon in which the Corporation drilled or participated in 46 wells during 2005. All of these wells have been successful and the Corporation will continue to develop these assets in 2006. Canadian Superior holds 157 gross (81 net) sections of Horseshoe Canyon rights. The Horseshoe Canyon Coal depths range from 200 - 400 meters (650 - 1300 feet) and are typically found in 8 - 10 coal seams with thicknesses averaging from 0.75 - 1.5 meters (2.5 - 5 feet). These coals contain dry gas and produce little or no water. The Corporation will drill or participate in 20 - 40 Horseshoe Canyon wells in 2006.

An untapped resource that exists in the Drumheller area is the Mannville coals. These coals are between 1000 - 1300 meters (3300 - 4300 feet) in depth with each seam being thicker (up to 4 meters) but less frequent (1 - 5 seams) than the Horseshoe Canyon. Resource potential estimates are still in the early stages but Canadian Superior calculates it has over 100 BCF (P50) of net sales reserves in this area. Currently the Corporation has 42 gross (41 net) sections of land in the Mannville CBM fairway. Drilling for these coals would include horizontal drilling techniques. Plans for development of Mannville CBM by Canadian Superior will be cautious until the reserve and production parameters are better defined.

The Corporation's total acreage for CBM is 185 gross (108 net) sections of which 14 gross (13.4 net) sections have both Horseshoe Canyon and Mannville CBM potential. The results to date achieved by Canadian Superior and its partners on a small portion of Canadian Superior's non-operated land will be utilized by the Corporation to provide a solid foundation for development and operating drilling on this large CBM potential that exists over our extensive operated high working interest acreage base within our Drumheller core producing area. The Corporation is working hard to develop its extensive concentrated land holdings adjacent to recent (January 11, 2006) record land sales with land prices as high as approximately $700,000 per section. Potential Reserves and Potential Value for the Corporation's CBM are highlighted in the following table:

Coal Bed Methane Potential Reserves and Potential Value

                                           P10        P50        P90
Horseshoe Canyon Coals
Estimated Gross Resource (bcf)             125         95         70
Potential Net Reserves (bcf)                30         22         15
Potential Values(1) ($mm CDN)               53         38         26

Mannville Coals
Estimated Gross Resource (bcf)             358        240        144
Potential Net Reserves (bcf)               161        104         62
Potential Values(1) ($mm CDN)              137         89         53

Note: P10, P50 & P90 represent geological probabilities.
(1) Coal Bed Methane is relatively new in Canada and actual values
    are based on conservative net backs of $1.75/mcf for Horseshoe
    Canyon and $0.85 for Mannville. As production histories are
    established, these values are subject to change.


Windfall/Pine Creek/Giroux Lake

Canadian Superior drilled or participated in two wells in the Windfall area in 2005. Both these wells were successful and have been tied in. Both wells are producing between 500 - 750 mcf/d. The Corporation is planning a 2D seismic shoot in the Giroux area and has budgeted two locations in the Windfall/Pine Creek/Giroux area. The Corporation continues to look at this higher reward, medium risk area with a view towards further expansion, using its current land base as a nucleus.

Boundary Lake/Teepee

The Boundary Lake / Teepee area is a high reward medium risk area and was a major focus area for Canadian Superior in 2005 and into 2006. At the end of 2005, this property represented a minor portion of the Corporation's total production, but renewed emphasis has been placed on this year round access area. The Corporation purchased additional lands, 2D and 3D seismic data and plans on drilling two wells in 2006 and will participate in a third. The Corporation also has several follow-up locations based on the success of the initial drilling. The area has multi-zone potential with typical well reserves in the range of 2 - 5 BCF and associated production of 1 - 4 mmcf/d.

East Ladyfern

In 2005, the Corporation followed up its Slave Point play in the East Ladyfern area with the addition of 2D seismic and the drilling of the 1-26-91-11W6 well. This well was drilled in late January 2005 due to delayed freeze-up and rig availability. Because of early break-up, no testing could be done at the time. The logs over the Slave Point have been subsequently further evaluated and we have now determined that they show gas over water and at this time because of high costs associated with completing this type of sour natural gas further testing of this formation is not justified. However, the shallower Cretaceous zones in the 1-26 and other wells in the area show promise. The Corporation plans (with its partner) to complete the 12-27-91-11W6 and the 1-26-91-11W6 well bores and to drill a new shallow location in first half of 2006. With success in the shallower non-sour lower cost Cretaceous resource play, the needed infrastructure will be brought into the area and may allow economic tie-ins of the Slave Point gas in this area at a later date.

Strategy for Drilling in the Foothills of Alberta West of the 5th Meridian

Canadian Superior is now also focusing its exploration in Western Canada towards the foothills of Alberta, Canada. This area represents an area of high risk - high reward exploration and production with year round access. In this area well reserves can range to over 10 bcf/well with associated natural gas liquids and can produce at rates of over 5 - 10 mmcf/d.


Also, the Corporation's year end 2005 exit production rate reached a new record high of approximately 3,470 boe/d, up 27% from the production rate at the beginning of 2005. Daily production for the fourth quarter of 2005 averaged 2,953 boe/d which was up 8% from 2004 production of 2,726 boe/d. The increased production is the result of increased well tie-ins and operational efficiencies in the last quarter as well as bringing the majority of our coal bed methane wells on-stream. This was achieved by Exploration and Development drilling with no production acquisitions. Average daily production for the year, increased to 2,632 boe/d, up from 2,565 boe/d recorded in 2004.

The Corporation recorded a net income of $1.4 million ($0.01 per share) during the fourth quarter of 2005, up from a net income of $0.3 million ($0.00 per share) recorded in the fourth quarter of 2004. For the year, the Corporation posted a net income of $3.1 million ($0.03 per share) compared to a net loss of $3.0 million ($0.03 loss per share) over 2004, up 201%.

Cash flow from operations for the fourth quarter increased 73% to $10.3 million from $6.0 million recorded in 2004. For the year, cash flow of $30.3 million was up 50% from 2004 cash flow of $20.2 million. Higher product prices received in 2005, combined with increased product volumes, were the primary contributor to the cash flow increases.

Oil and gas revenue, net of transportation costs of $187,000, during the fourth quarter of 2005 increased 68% to $18.6 million as compared to $11.0 million in 2004. For the year, oil and gas revenues, net of transportation costs of $678,000, of $54.5 million were 41% higher than 2004 revenues of $38.7 million. The revenue increases are due to increased production volumes brought on in the third and fourth quarters of 2005 as well as higher average prices. The average sales price net of transportation costs for the fourth quarter of 2005 was $68.59/boe ($11.91/mcf for natural gas and $59.45/bbl for oil and NGLs) up 40% from $43.92/boe in 2004 ($7.04/mcf for natural gas and $48.82/bbl for oil and NGLs). Average sales prices net of transportation costs for the year averaged $56.79/boe ($9.40/mcf for natural gas and $57.96/bbl for oil and NGLs) up 37% from $41.33/boe recorded in 2004 ($6.80/mcf for natural gas and $42.91/bbl for oil and NGLs). Gas volumes of 13,489 mcf/d during the fourth quarter increased 10% compared to 12,209 mcf/d in the same period in 2004, while oil volumes were up slightly to 705 bbls per day from an average of 691 bbls per day produced in 2004. 2005 average gas volumes of 12,083 mcf/d were up 5% from 11,533 mcf/day recorded over the same period in 2004 while oil volumes of 618 bbls/d for the year were down 4% from 2004 sales of 642 bbls/d. Operating Costs were approximately $7.54/boe compared to $7.64/boe in 2004 and Operating Netbacks were approximately $39.13/boe compared to $27.48/boe in 2004, with Cash Flow per boe of approximately $31.57 compared to $21.62/boe in 2004.


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