Canada Energy Partners has provided an update on its Montney/Doig Joint Venture Agreement (the "JV"), previously announced on March 14, 2008, regarding the deep rights on fifty-five sections (approximately 35,500 acres) of Canada Energy's Peace River and Moberly prospects. Pursuant to the terms of the Joint Venture Agreement, the Joint Venture Partner (the "JV Partner") is conducting an exploration program, the primary purpose of which is to test the potential of the Montney/Doig and other deep formations.
Peace River Prospect -- production testing of Montney/Doig on the first well to be completed by the end of Q3-2009
The JV Partner has recently completed a 28.5 square mile three-dimensional seismic survey of the Peace River Prospect. One Montney well was drilled and cased during 2008. This well was temporary shut-in pending completion of the three-dimensional seismic survey. Several prospective deep formations, including the Montney/Doig, have been identified in this well and on the three-dimensional seismic survey. The JV Partner anticipates that the completion testing will be finished by the end of the third quarter 2009, dependant on the number of formations to be completed and the time required to test each formation.
Canada Energy and the JV Partner have amended the terms of the Joint Venture Agreement to extend the time allowed for the completion of the exploration program due to delays in permitting and access in the seismic program and the extraordinary market conditions. Under the amended terms, the JV Partner will spud the next three wells on or before, respectively August 1st, 2009, March 15th, 2010, and August 1st, 2010. At least one of these wells will be horizontal. The $5 million Letter of Credit provided by the JV Partner and issued in favour of Canada Energy has been extended to September 30, 2009 and will be reduced to $2.5 million upon the completion of the next well. All other terms of the original agreement remain intact.
Moberly Prospect - production testing of Montney/Doig on the first well to be completed by the end of Q3-2009
The JV Partner drilled an initial well on the Moberly Prospect in early 2009. Several prospective deep formations including the Montney/Doig have been identified in this well. Casing has been set in the initial well. The JV Partner has began production testing on this well and anticipates it to be finished by the end of the third quarter 2009, dependant on the number of formations to be completed and the time required to test each formation.
Canada Energy Partners 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. Canada Energy has no debt and working capital of approximately $11 million.
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