Canada Southern Begins Drilling at Kotaneelee Field

Canada Southern Petroleum reports that the Kotaneelee L-38 development well was spud on August 22, 2004 in the Yukon Territory, Canada.

This well is targeted to enter the Nahanni formation horizontally and achieve a total well depth of 4,882 meters (16,017 feet).

As previously disclosed, effective May 1, 2004, Canada Southern converted from a 30.67% carried interest in the Kotaneelee natural gas field to a 30.67% working interest. On May 3, 2004, the Company was served by the field operator with a notice to drill a new development well at Kotaneelee. Canada Southern elected to participate to its full 30.67% working interest. The operator estimates that the gross cost to drill and case the well is $16,738,000, of which Canada Southern's share is approximately $5,133,000. If the drilling of the well is successful, it is estimated that a further $5,200,000 (gross) will be incurred to complete and tie-in the well.

The operator estimates it will take approximately 150 days to drill the well.