Canadian Superior Buys El Paso's Offshore Nova Scotia Assets

Canadian Superior Energy has acquired El Paso's offshore Nova Scotia exploration and production assets. This acquisition stems from Canadian Superior's negotiations with El Paso and El Paso's decision to exit the exploration and production side of the business in Western Canada and Offshore Nova Scotia.

Speaking today, Greg Noval, President of Canadian Superior, said, "We are pleased to announce the El Paso Nova Scotia acquisition and we have enjoyed working with the various El Paso teams and El Paso Management over the last 3 years on this exciting project. The transaction allows each of our respective companies to proceed forward with our corporate objectives and Canadian Superior remains a strong supporter of El Paso's Blue Atlantic Pipeline Project to connect Atlantic Canada natural gas to the New York area and some of the most vibrant natural gas markets in North America."

The acquisition includes El Paso's interests in the "Marquis" Blocks (EL 2401 & 2402), and in the "Mariner" Block (EL 2409) offshore Nova Scotia and in the "Mariner" I-85 well, all of El Paso's seismic data, all shared geophysical, geotechnical and environmental data, all "Marquis" L-35/L-35A well data, all "Mariner" I-85 well data, all related inventory and extensive tax pools. The acquisition was completed for undisclosed consideration.

Both the "Marquis" and "Mariner" holdings are located in shallow water depths (less than 100 meters) in close proximity to producing Sable Island natural gas fields. Canadian Superior's "Marquis Project" represents an Abenaki gas play Offshore Nova Scotia which is a proven play type in the area. The "Marquis" blocks (EL 2401 & 2402) are located in shallow water approximately 20 kilometers (12.5 miles) northwest of Sable Island and the prospects are directly on trend and analogous to the Deep Panuke Abenaki Reef Natural Gas Discovery, approximately 25 kilometers (15.6 miles) to the southwest where wells have been successfully drilled with productive capacity each in excess of 50 MMCF/D. Canadian Superior's "Marquis" L-35/L-35A exploration well was drilled and evaluated in July 2002 - September 2002. It encountered porosity and Abenaki reef reservoir; but, did not establish commercial quantities of hydrocarbons from the "Marquis" L-35/L-35A well. Further work on this prospect is planned by Canadian Superior.

Canadian Superior's "Mariner Project" represents a Cretaceous gas play Offshore Nova Scotia which is a proven producing play type in the area. The "Mariner" block (EL 2409) is a shallow water block encompassing a total area of 101,800 acres and directly offsets five significant discoveries offshore Nova Scotia near Sable Island, including ExxonMobil's Venture natural gas field. Three large prospects have been identified for drilling on the "Mariner" block utilizing high-resolution seismic acquired in late 2002. The offshore "Mariner" Block is located approximately 275 kilometers (170 miles) southeast of Halifax, Nova Scotia, Canada.

Speaking from Canadian Superior's Halifax Office today, Mike Coolen, Canadian Superior's Vice President, East Coast Operations, said, "This acquisition now provides Canadian Superior with additional flexibility to facilitate joint venture partnerships in support of future planned exploration and development on these prospects. All our multi-play offshore holdings are at various stages in the exploration and development cycle and we are indeed fortunate to be one of the few operators offshore Nova Scotia involved in every play type in this basin, with our deepwater 'Mayflower' block turbidite plays, our shallow water 'Marquis' Abenaki reef plays and our shallow water 'Marauder', 'Marconi' and 'Mariner' Cretacous plays. In the near term, on the East Coast of Canada, our focus is on advancing further drilling on 'Mariner'. We are well along in this effort and we will have more to say on this in the weeks ahead."

As recently as August 2004, Canadian Superior successfully completed offshore wellsite survey work at two new proposed future "Mariner Project" drilling locations. The geophysical survey field work was undertaken by Fugro Jacques GeoSurvey's Inc. of Dartmouth, Nova Scotia using the M/V Anticosti. Speaking further, Coolen went on to say, "We are very pleased to have completed this work in a timely fashion, another important step in progressing our drilling, procurement and permitting activities to further advance drilling on our 'Mariner Project' lands. Canadian Superior has been preparing for further 'Mariner' drilling for several months. We are presently tendering certain key goods and services and are now at the bid evaluation stage for several of these, including recently tendered drilling rig bids. With this acquisition from El Paso complete, we can now expeditiously move forward with further drilling planned for our 'Mariner' project."