Celtic Reports Financial Exposure To Filing By SemCAMS For Creditor Protection In Canada



    (Stock Symbol "CLT" - TSX)

    CALGARY, July 25 /CNW/ - Celtic Exploration Ltd. ("Celtic" or the
"Company") has potential financial exposure to SemCAMS ULC ("SemCAMS"), a
Canadian subsidiary of U.S. based SemGroup LP ("SemGroup"), relating to the
marketing of a portion of the Company's natural gas and associated by-products
production.
    SemGroup filed a petition for reorganization under Chapter 11 of the U.S.
Bankruptcy Code. In addition, SemCAMS filed an application to obtain an order
under the Companies' Creditors Arrangement Act (Canada) in the Court of
Queen's Bench of Alberta Judicial District of Calgary.
    Celtic has a potential financial exposure of approximately $30.0 million
relating to natural gas and associated by-product sales, net of processing
costs. The Company is now marketing its natural gas through an alternative
purchaser, with the agreement of SemCAMS. These new arrangements are effective
immediately. At this time, Celtic cannot determine the period within which or
the amount of the financial exposure that will ultimately be collected.
    Celtic is diligently pursuing all options available to recover the
amounts owing to the Company. Celtic has sufficient available bank credit
lines to finance the potential financial exposure, without affecting the
planned 2008 capital expenditure budget of $180.0 million. The amount of the
potential financial exposure represents approximately 17% of the Company's
forecasted annualized exit 2008 funds from operations of $176.5 million. This
forecast is based on commodity price assumptions of US$96.00 per barrel for
WTI oil and US$9.75 per mmbtu for NYMEX natural gas. Applying the full
potential financial exposure, Celtic's debt to 2008 exit funds from operations
ratio would remain under 1.0 times.

    Information relating to SemCAMS
    -------------------------------
    The website at http://www.semcams.com states that "SemCAMS is the largest
licensed sour gas processor in Alberta, Canada. Based in Calgary, Alberta,
SemCAMS' assets include four gas processing plants and more than 600 miles of
natural gas gathering pipeline in Alberta. SemCAMS provides an integrated
gathering and processing service with several options for wet or dry, sweet or
sour gas gathering and processing, as well as dehydration, field compression,
liquid recovery and sulfur forming and handling. The four processing plants -
three sour gas and one sweet gas - have combined licensed capacity of 
1.5 billion cubic feet of gas per day. The company has gathering connections
to the Central Foothills Gas Gathering System. It has sales gas connections to
the Trans Canada West (Nova) Gathering System and Alliance Pipeline. Formed in
the year 2000, SemCAMS was created to align and optimize the operation and
business development activities relating to gathering and processing assets
located in the west-central area of the province of Alberta."

    New Montney Lands Acquired in the Greater Kaybob Area
    -----------------------------------------------------
    Celtic has entered into a farm-in agreement with a major petroleum
company on 7,040 (11 sections) gross and 5,133 net (8 sections) acres of land
with Montney rights in the Kaybob South/Pine Creek area of Alberta. The
Company has committed to drill two horizontal wells targeting the Montney
formation, earning a 50% interest in three sections per well. The Company will
continue to have an option to drill additional horizontal wells (earning in
three sections per well) or vertical wells (earning two sections per well).
This transaction is subject to third party preferential rights of first
refusal, expiring in 30 days.
    In addition, through various tuck-in acquisitions, Celtic has recently
purchased approximately 55 BOE per day of Montney production, facility
interests, and 12,032 (18.8 sections) gross and 11,859 (18.5 sections) net
acres of land with Montney/Nordegg rights in the Greater Kaybob area. Celtic
expects to spud its first horizontal well on these lands within the next
45 days.

    Measurements
    ------------
    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 BOE may be misleading, particularly if used in
isolation. A BOE conversion ratio of six thousand cubic feet per barrel is
based on an energy equivalency conversion method primarily applicable at the
burner tip and does not represent a value equivalency at the wellhead.

    Advisory Regarding Forward-Looking Statements
    ---------------------------------------------
    The information with respect to Celtic contained herein, contains
forward-looking statements. These forward-looking statements are based on
assumptions and are subject to numerous risks and uncertainties, certain of
which are beyond Celtic's control, including the impact of general economic
conditions, industry conditions, volatility of commodity prices, currency
exchange rate fluctuations, imprecision of reserve estimates, environmental
risks, competition from other explorers, stock market volatility and ability
to access sufficient capital. As a result, Celtic's actual results,
performance or achievement could differ materially from those expressed in, or
implied by, these forward-looking statements and, accordingly, no assurance
can be given that any events anticipated by the forward-looking statements
will transpire or occur. In addition, the reader is cautioned that historical
results are not necessarily indicative of future performance.





For further information:

For further information: CELTIC EXPLORATION LTD., Suite 500, 505 - 3rd
Street SW, Calgary, Alberta, Canada, T2P 3E6; David J. Wilson, President and
Chief Executive Officer, (403) 201-5340; or Sadiq H. Lalani, Vice President,
Finance and Chief Financial Officer, (403) 215-5310; or visit our website at
www.celticex.com

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Celtic Exploration Ltd.

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