Canada Energy Reports on Montney Exploration Results

Canada Energy Partners reports on preliminary results from the first vertical Montney well on its Peace River Block.

The Portage 8-23-81-26 had 114 meters with indicated porosities greater than 3%, the generally accepted lower limit of potentially productive rock, in the Montney and Doig formations combined, including 31 meters in the Upper Montney and 83 meters in the Doig, with corresponding mudlog gas shows. The Doig also had 50m with greater than 6% indicated porosity.

The Lower Doig had a very thick section, high indicated porosities, and good mudlog gas shows. The formation was perforated and stimulated with a 100 tonne slickwater frac job. Sweet gas was recovered at intermittent rates up to 946 MCF/D (946,000 cubic feet per day) over a 76 hour flow-back period. Complete cleanup of the frac fluid was not attained nor were sustained gas flowrates, but the Farmee was adequately satisfied with the results to terminate the test.

The Upper Montney exhibited characteristics similar to productive wells in the Montney fairway. The Upper Montney has not been tested yet; the Operator elected to hold it in reserve until further drilling and completion results are obtained from its second well and from offset operators' results.

The Lower Montney yielded low flow rates of gas but did confirm a gas saturated zone and is a horizontal drilling candidate. The Belloy formation was non-commercial.

The Portage 8-23 well is currently shut-in and will remain so until the completion of drilling and testing of the second test well on the Peace River Block. The Farmee plans to spud the second test well on approximately September 1st, 2009, at a location 4.5 miles north of the Portage 8-23 well. This well will be extensively evaluated and current plans are to case the well to allow the well to be horizontally drilled in the Montney/Doig zones.

The Company's Moberly test well remains on confidential status until January 2010 and has not yet been tested in the Montney or Doig formations. It is expected to remain shut-in, pending further drilling at Peace River.

Despite low natural gas prices, the industry continues to be extremely active in the area with numerous land postings and drilling activity. A large Canadian independent producer has drilled four Montney wells, is currently drilling two simultaneously, has fifteen outstanding drilling permits in the Farrell Creek area, and has announced a vertical well test rate of 4 MMCF/D. These wells are located on the same structural trend approximately 6-9 miles immediately northwest of the Company's Peace River Block. Two of these wells are coming off confidential status September 16th, 2009. This data will provide vital comparative information regarding geology, reservoir characteristics, and completion techniques in the Montney/Doig section in this area.

The Farmee has communicated to Canada Energy that it remains committed to fulfilling its commitment to drill three more Montney exploration wells over the next 12 months which, based on success, will be either tied into the Company's facility at Peace River or a stand-alone facility will be constructed to tie in to the Spectra pipeline infrastructure in the area.