GEOCAN Energy Farms-in to Raven Prospect

GEOCAN Energy Inc. said that the company has signed a farm-in agreement with ProspEx Resources Ltd. on a high-impact play targeting the Devonian Swan Hills Formation of the Beaverhill Lake Group in the Caroline area northwest of Calgary. GEOCAN will pay 40 percent of the cost to drill, case and complete the first well to earn a 25 percent working interest in the Swan Hills Formation in 44 largely contiguous sections (28,160 gross acres) of land as well as a right to participate for 25 percent across an additional 44 section area of mutual interest below the top of the Beaverhill Lake Group. The well, located about six miles northeast of the prolific Caroline Beaverhill Lake "A" Pool, will be spudded in late July or August. ProspEx will be the operator of the well, which is expected to take 60 days to drill to a vertical depth of approximately 11,500 feet (3,500 meters). GEOCAN's share of well costs will be approximately $1.7 million.

The drilling location is targeting the Stage 1 Swan Hills reef-rimmed margin. GEOCAN interprets the prospect to be situated paleo-seaward (east) of the Stage 2 Swan Hills reef-rimmed margin from which the Caroline Beaverhill Lake "A" pool has been assigned 1.7 trillion cubic feet of liquids-rich producible gas. The prospect is covered by approximately 100 square miles of 3D seismic within which a porosity anomaly at the Swan Hills Stage 1 reef-rimmed margin has been interpreted. Porosity enhancement due to dolomitization is essential to provide the high deliverability anticipated from this reservoir. Reef-building organisms that are crucial for porosity enhancement due to dolomitization should be present in the deposits of the targeted Stage 1 reef-rimmed margin. Several faults are present in the area that could facilitate the migration of dolomitizing fluids to the reef-rimmed margin, thereby providing the conditions necessary for the creation of exceptional reservoir quality. The seal is the well-documented Waterways shales above and lateral to the reef-rimmed margin. Timing and emplacement of hydrocarbon in the area is confirmed by the accumulation of hydrocarbons in the adjacent Caroline Beaverhill Lake "A" pool. The prospective reef-rimmed margin appears to have a geometry that will provide for favorable trapping conditions. The position of the reef-rimmed margin is interpreted on the 3-D seismic and by two nearby wells; one comprising rocks interpreted as lagoon deposits that are normally situated landward of a reef-rimmed margin and another comprising rocks interpreted as fore-reef or reef-tongue deposits that normally occur immediately seaward of a reef-rimmed margin. The drilling location is situated between these two wells, within an interpreted porosity anomaly and upon a structural high. Eight to 12 follow-up locations could result from a successful wildcat well. In addition to the Swan Hills rights, the play includes approximately four sections with selected shallow rights which includes the test well section.

"This farm-in is very attractive for GEOCAN for several reasons; immediate access to a large land base across the extent of the play, existing 3D seismic information showing interpreted porosity anomalies within a natural gas target zone that is typically very liquids rich, regulatory approval to drill the test well and a rig secured for drilling within the next several weeks. This agreement also puts GEOCAN into another high-impact play at a reasonable cost," said Wayne Wadley, president and CEO of GEOCAN. "Our share of the well costs represents only about five percent of our total capital expenditure budget for 2006 and is a continuation of our strategy of developing an inventory of high-reward light oil and natural gas prospects in west central, northwestern Alberta and northeastern British Columbia. If successful, this play could quickly and significantly accelerate GEOCAN's growth."

With the recently closed acquisition of Columbus Exploration Ltd. GEOCAN is now producing approximately 3,500 boepd, with 750 awaiting tie in. GEOCAN's current production split is approximately 50% oil and 50% natural gas.

GEOCAN Energy Inc. is an oil and gas company with operations in British Columbia, Alberta, and Saskatchewan. The focus of GEOCAN's current growth strategy is exploration and development while pursuing accretive acquisitions that create value for its shareholders. Fiscal discipline, operational control and a balanced risk profile are key components of this strategy. The company currently has 56,231,560 basic common shares issued and outstanding.

Where amounts are expressed on a barrel of oil equivalent ("boe") basis, natural gas volumes have been converted to oil equivalence at six thousand cubic feet per barrel. The term boes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.