OPERATED BY CANADA ENERGY PARTNERS INC.
On November 7th, 2008 Canada Energy announced that it has entered into a farm-in agreement (the “Agreement”) with its joint venture partner (the “JV Partner”) for Moosebar Shale shallow rights on its Peace River CBM Project. This agreement covers the Moosebar Shale formation on Canada Energy’s 50,000 acre (approximately 78 sections) Peace River CBM Project. Under the Agreement Canada Energy will become the Operator of the Moosebar Shale rights.
In addition to its current 50% working interest, Canada Energy has the right to earn an additional 25% to 37.5% working interest in the Moosebar Shale formation by funding 100% of the drilling costs of the earn-in wells. Subject to certain drilling obligations and elections by the JV Partner, Canada Energy will have the right or option to earn an aggregate 75% to 87.5% interest in the Moosebar Shale under the subject acreage. Canada Energy will earn one (1) section for each Moosebar Shale vertical well drilled and two (2) sections for each Moosebar Shale horizontal well drilled. The Company has a 180 day rolling option to drill earning wells until all acreage is earned.
Canada Energy has received a permit for its first Moosebar Shale horizontal well and expects it to be drilled and completed before year-end 2008. The location of the first well has been chosen where an unstimulated natural gas flow occurred from the Moosebar Shale formation while drilling a deeper CBM well.
Monias Prospect Shallow Rights (including Moosebar Shale, Gething and Nikanassin) formations and Farm-in from “Major” lands.
CE Shallow Rights Farm-in.
Deep Rights Farm-out to West.
The Company is Operator on a total of 18 sections or 11,734 gross (10,169 net) acres of Monias Prospect, including a shallow rights farm-in with a “Major” adjacent to Monias Prospect. The Company will earn 70% working interest with a “Major” in eight sections or 5,216 gross acres with the possibility of expansion. The Company is responsible for 100% of the drilling and completion costs on the first four wells to earn its 70% working interest in all eight sections. There is a 180-day rolling option to drill earning wells. The first well drilled on farm-in lands reached the target depth of 776 metres.
On November 4th, 2008, Canada Energy announced that it has commenced the drilling of a horizontal CBM well on its Monias Prospect in northeast British Columbia. This well is a follow-up of the first well. The Company's analysis of the drilling results from the previous well has indicated that the coal seems intersected may be favourable for horizontal development. The Company will employ the latest technology in horizontal drilling for this well. This well is in close proximity to the Major's existing gas infrastructure and the Company has a gas transportation agreement with the Major.
