JOINT VENTURE WITH CREW ENERGY

Deep Rights Joint Venture on Peace River Project and Moberly Prospect

Scale: 1 mile square = 1 square

In March 2008, the Company entered into a joint venture agreement with Crew Energy Inc. (TSX: CR; “Crew Energy”) to explore the deep formations including Montney/Doig Formation on Canada Energy’s Peace River Project and shallow and deep formations on the Company’s Moberly Prospect in northeast British Columbia. 

The joint exploration program between Canada Energy and Crew Energy covers 55 sections (approximately 35,500 acres) of lands held by Canada Energy.  Crew Energy operates the project and in order to earn 50% in the Company’s lands, Crew committed to paying 100% of the initial exploration program (approximately $20-$25 million) plus option wells and completion costs of approximately $10-15 million.   The initial program is expected to consist of a three-dimensional seismic project over the majority of the Peace River lands and the drilling of five exploratory wells.  This program is currently anticipated to be completed by March 31st, 2009.   Crew drilled their first Montney exploration well in July 2008.

Exploration program:

Committed Exploration	Estimated CREW Work Commitment (mm)	Estimated CE Work Commitment (mm)
3D seismic	$3.0 to $5.0	$0.0
Four Peace River commitment wells	$14.5 to $16.5	$0.0
One Moberly area commitment well	$2.5 to $3.5	$0.0
Total committed exploration	$20.0 to $25.0	$0.0
Optional 2 wells + completion	$10.0 to $15.0	$1.0
Total	$30.0 mm to $40.0 mm	$1.0 mm