Cequence Charges Ahead with Peace River Arch Program

In the first quarter of 2010, Cequence expects to spend $30 million concentrating its drilling efforts on its Basal Doig/Montney development in the Sinclair area and various prospects in the Peace River Arch area of Alberta.

At Sinclair, Cequence continues to have success delineating and extending the size of the Basal Doig natural gas pool. The company has drilled and completed two (100 % working interest) horizontal wells targeting the Basal Doig. The 12-09-75-13W6 well tested at 5mmcf/day at 1300psi (as previously disclosed on December 21/2009) and the 13-33-75-12W6 well tested at 3.5mmcf/day at 500psi. The 12-09 well is waiting on tie-in and the 13-33 well is expected to be on production in February 2010. Based on the results of these horizontal wells and vertical 'pilot' holes drilled to date, Cequence believes that the Basal Doig reserves have been proven on five sections of its Sinclair lands which are expected to ultimately be developed with four wells per section. The Company is pleased with the initial results from the Basal Doig wells and plans to drill additional wells in the second half of 2010.

The Company is currently drilling its first Lower Montney horizontal well. If successful, an additional 56 Lower Montney locations, on the Company's 14 (100% working interest) sections in Sinclair, could be added to Cequence's future drilling program. The Company's land position at Sinclair represents a great foothold in a dynamic resource play. Management expects that this large resource will yield a high degree of repeatability and future reserve growth. Cequence is currently reviewing alternatives with industry partners for long term gas processing capacity at Sinclair.

The Sinclair wells are eligible for the Alberta royalty incentives and deep well royalty program that significantly enhance the economics of the play. The royalty programs are applicable to both the Basal Doig and Lower Montney formations and, if fully utilized, equate to a benefit of approximately $3.0 million per well.

At Gordondale, Cequence drilled a 100 percent working interest Lower Montney horizontal well. The well directly offsets existing Montney production with initial rates ranging from 2.5 to 5.8mmcf/day. The well is tied-in to facilities and production is expected to commence by the end of March 2010. Field optimization to increase liquids recovery and lower operating costs are currently underway.

At Valhalla and Knopcik, Cequence expects to drill four vertical wells in the first half of 2010. The first well was drilled and cased in January, and is scheduled to be completed and tied-in mid March. Offset wells from the same zone have come on production with initial rates ranging from 2.0 to 3.0mmcf/day.

Cequence has continued an active work over program on the Peace River Arch assets purchased in Q3 2009. The Company has been successful in recompleting 7 wells that are all tied in to existing Cequence facilities. Several more recompletions are scheduled for the remainder of 2010.

Cequence averaged approximately 2,100 boepd in the fourth quarter of 2009 and expects that it exited 2009 with a positive working capital balance of $5-7 million. The Company's $45 million operating line was undrawn at year-end.




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