Culane announces operations update and 2006 financial results



    CALGARY, April 24 /CNW/ - Culane Energy Corp. ("Culane") (TSXV:CLN) is
pleased to provide an operations update and announce 2006 financial results.
    2006 was a year of tremendous growth for Culane. Exploration and
development drilling in all three of Culane's producing areas resulted in
significant gains in reserves, production and cash flow. In particular, new
oil and gas pools were discovered at Nelson and Killam South.

    Killam South
    ------------
    At Killam South, three sections of exploration land were acquired under a
farm-in agreement in the first quarter of 2006. One four square mile 3D
seismic program and one five mile 2D seismic program were acquired, processed
and interpreted in the third quarter of 2006 over these lands.
    In the fourth quarter of 2006 Culane completed an equity financing for
gross proceeds of $10.1 million. Culane issued 1,011,000 common shares at
$10.00 per share. The proceeds of this financing allowed Culane to initiate a
work program and to commence drilling operations on its Killam South
properties.
    From November 2006 to today, four vertical natural gas wells, two
horizontal natural gas wells and fifteen multi-leg horizontal oil wells have
been drilled. During this time period, Culane contracted two full-time
drilling rigs and on occasion contracted a third rig that cumulatively drilled
approximately 50,000 meters. Drilling operations of a sixteenth multi-leg
horizontal oil well are currently underway with drilling operations expected
to be completed by the end of April 2007.
    In the first quarter of 2007, Culane constructed a 4.6 mile natural gas
gathering system and production facilities costing approximately $4.0 million.
This gathering system allows Culane to produce its newly discovered natural
gas wells and to conserve associated gas produced from its oil wells in the
area.
    Culane intends to continue its drilling program at Killam South with
three vertical test wells followed up by an additional 10 multi-leg horizontal
oil wells. Culane owns a 100% working interest in this project.

    Nelson
    ------
    At Nelson, the Company completed a two well drilling program in the
second quarter of 2006. Nelson 7-26-45-25 W4M was directionally drilled and
reached total depth on April 1, 2006. Culane confirmed the presence of its
primary target as well as several secondary pay zones. The Nelson horizontal
oil well located at 10-26-45-25 W4M was drilled and reached total depth on
May 17, 2006. The associated natural gas required conservation and a 2.5-mile
natural gas pipeline was constructed. The two wells were placed on production
in the fourth quarter of 2006. The 7-26 directional oil well has been
producing high rates of natural gas but is now beginning to stabilize with the
natural gas production decreasing and the oil production increasing. The 10-26
horizontal oil well has been plagued with pump configuration issues which
appear to be resolved and has just recently began to stabilize.
    Culane has identified 5 additional horizontal drilling locations and has
licensed two locations that it intends to spud in the third quarter of 2007.
Culane has recently acquired an additional 1.5 sections of land at Nelson and
is moving forward with the acquisition of two lines of 2D seismic. Culane
expects to drill an exploration well on these lands in the third quarter of
2007. Culane owns a 100% working interest in this project.

    Reserves
    --------
    In 2006, Culane's total gross proved plus probable reserves increased by
135% to 2,351 Mboe from 2005. At December 31, 2006, the net present value
before income tax (discounted 10%) of gross proved plus probable reserves was
$40.8 million, an increase of 126% year over year. The increases in reserves
are attributable to the 100% drilling successes achieved at Nelson, Redwater
North, Killam North and Killam South, Alberta. Reserves expected from ten
additional new wells drilled at Killam South are not included in the 2006
reserve report as they were drilled in 2007. The 2006 engineering report
clearly indicates the beginning of a major turn for Culane.

    Production
    ----------
    Current production is approximately 2,500 BOE (barrels of oil equivalent)
per day (70% oil) based on field estimates. This daily production number
includes production from eight new Killam South multi-leg horizontal oil wells
that are still undergoing gradual production increases and have not yet fully
stabilized, and three new natural gas wells.
    However, this daily production number does not include twelve new wells:
five new Killam South multi-leg horizontal oil wells currently being brought
on production, two new multi-leg horizontal oil wells shut-in due to current
drilling operations, one recently drilled multi-leg horizontal well still to
be completed, equipped and brought on production, one new multi-leg horizontal
development oil well currently being drilled and two natural gas wells shut-in
awaiting increased pipeline capacity expected in early May and one now being
tied-in to the pipeline gathering system. These new wells will require time to
stabilize once they are completed and brought on production during second
quarter 2007.
    In the first quarter of 2007, Culane's bank credit facility was increased
to $12.0 million. Culane has 20.7 million common shares outstanding that trade
on the TSX Venture Exchange.

    
    2006 Highlights
    ---------------

    -   Revenues of $12.7 million and earnings of $1.6 million were recorded
    -   Production averaged 633 Boe/d in 2006 generating funds from
        operations of $7.1 million
    -   Drilled 11 (9.5 net) wells at Killam, Alberta resulting in
        5 (4.0 net) crude oil wells, 5 (5.0 net) natural gas wells and
        1 (0.5 net) potential water injector well
    -   Drilled 1 (1.0 net) oil well at Redwater, Alberta
    -   Drilled 2 (2.0 net) oil wells at Nelson, Alberta
    -   Capital expenditures of $15.8 million were invested
    -   Equity financing of $10million was completed in December 2006


    Annual Information
                                            2006          2005          2004
    -------------------------------------------------------------------------
    Revenues                          12,685,809     1,305,651       862,416
    Funds from (used in)
     Operations(1)                     7,062,226       144,911      (156,241)
      Per share, basic(1)                   0.37          0.01         (0.01)
      Per share, diluted(1)                 0.35          0.01         (0.01)
    Net Earnings (loss)                1,599,993       415,775      (469,547)
      Per share, basic and diluted          0.08          0.03         (0.04)
    Total Assets                      26,420,212    12,347,355     3,225,224
    Long term Liabilities                      -             -             -
    Working Capital (deficiency)       3,052,189     2,253,439       (73,088)
    -------------------------------------------------------------------------
    (1) Funds from operations and funds from operations per share is not a
    standard measure under generally accepted accounting principles and may
    not be comparable to similar measures presented by other companies.
    Management believes that funds flow per share is a useful supplementary
    measure that may assist investors in assessing the underlying per share
    value of the Company.

    Revenues in 2006 were generated from 1 oil well and 1 gas well at
Redwater, 6 oil wells at Killam, and 2 oil wells at Nelson. No additional
wells were drilled and placed on production during 2006. The Killam South
drilling program commenced in fourth quarter 2006.
    Revenues in 2005 were generated from two oil wells at Redwater, three oil
wells at Killam North and one natural gas well at Killam North which commenced
production in August 2004 and was shut in during July 2005.


    CULANE ENERGY CORP.
    Balance Sheets
    December 31, 2006 and 2005
    -------------------------------------------------------------------------

                                                       2006          2005
                                                         $             $
                                                  -------------  ------------
    ASSETS

    CURRENT
      Cash and cash equivalents                      6,827,670     4,669,013
      Accounts receivable and prepaid deposits       2,662,940     1,868,023
                                                  -------------  ------------
                                                     9,490,610     6,537,036
    Future income tax                                        -     1,025,841
    Property and equipment                          16,929,602     4,784,478
                                                  -------------  ------------
                                                    26,420,212    12,347,355
                                                  -------------  ------------
                                                  -------------  ------------

    LIABILITIES

    CURRENT
      Accounts payable and accrued liabilities       6,438,421     4,283,597

    Asset retirement obligation                        393,388       139,173
    Future income taxes                                216,945             -
                                                  -------------  ------------
                                                     7,048,754     4,422,770

    SHAREHOLDERS' EQUITY

      Share capital                                 19,244,091     9,982,808
      Contributed surplus                              927,242       341,645
      Deficit                                         (799,875)   (2,399,868)
                                                  -------------  ------------
                                                    19,371,458     7,924,585
                                                  -------------  ------------
                                                    26,420,212    12,347,355
                                                  -------------  ------------
                                                  -------------  ------------



    CULANE ENERGY CORP.
    Statements of Operations and Deficit
    Years ended December 31, 2006 and 2005
    -------------------------------------------------------------------------
                                                       2006          2005
                                                         $             $
                                                  -------------  ------------
    REVENUE
      Petroleum and natural gas sales               12,685,809     1,305,651
      Royalty expense                               (3,282,831)     (220,144)
                                                  -------------  ------------
                                                     9,402,978     1,085,507
      Interest                                          38,095        70,923
                                                  -------------  ------------
                                                     9,441,073     1,156,430
                                                  -------------  ------------

    EXPENSES
      Operating                                      1,442,122       508,274
      General and administrative                       936,725       496,998
      Stock based compensation                         643,113       153,771
      Interest                                               -         6,247
      Depletion, depreciation and accretion          3,862,283       487,687
                                                  -------------  ------------
                                                     6,884,243     1,652,977
                                                  -------------  ------------
    Earnings (loss) before tax                       2,556,830      (496,547)

    Future income tax (recovery)                       956,837      (912,322)
                                                  -------------  ------------
    Net earnings                                     1,599,993       415,775
    Deficit, beginning of year                      (2,399,868)   (2,815,643)
                                                  -------------  ------------
    Deficit, end of year                              (799,875)   (2,399,868)
                                                  -------------  ------------
                                                  -------------  ------------

    Earnings per share
      Basic and diluted                                   0.08          0.03
                                                  -------------  ------------
                                                  -------------  ------------



    CULANE ENERGY CORP.
    Statements of Cash Flows
    Years ended December 31, 2006 and 2005
    -------------------------------------------------------------------------
                                                       2006          2005
                                                         $             $
                                                  -------------  ------------
    CASH FLOWS RELATED TO THE FOLLOWING
    ACTIVITIES:

    OPERATING
    Net earnings                                     1,599,993       415,775
    Adjustments for:
      Stock based compensation                         643,113       153,771
      Depreciation, depletion and accretion          3,862,283       487,687
      Future income tax  (recovery)                    956,837      (912,322)
                                                  -------------  ------------
                                                     7,062,226       144,911
      Changes in non-cash working capital           (1,046,516)      (32,677)
                                                  -------------  ------------
                                                     6,015,710       112,234
                                                  -------------  ------------

    FINANCING
    Issue of common shares                          10,235,973     5,566,666
    Share issue costs                                 (746,258)     (337,654)
                                                  -------------  ------------
                                                     9,489,715     5,229,012
                                                  -------------  ------------

    INVESTING
    Additions to property and equipment            (15,753,191)   (3,047,396)
    Changes in non-cash working capital              2,406,423     1,569,931
                                                  -------------  ------------
                                                   (13,346,768)   (1,477,465)
                                                  -------------  ------------

    Net increase in cash and cash equivalents        2,158,657     3,863,781

    Cash and cash equivalents, beginning of year     4,669,013       805,232
                                                  -------------  ------------

    Cash and cash equivalents, end of year           6,827,670     4,669,013
                                                  -------------  ------------
                                                  -------------  ------------

    SUPPLEMENTARY INFORMATION
      Interest received                                 27,630        70,923
                                                  -------------  ------------
                                                  -------------  ------------
      Interest paid                                          -         6,247
                                                  -------------  ------------
                                                  -------------  ------------
    

    Culane is a junior oil and gas company engaged in the exploration,
development and production of oil and natural gas in Alberta. Culane currently
has 20.7 million common shares outstanding which trade on the TSX Venture
Exchange under the symbol "CLN".

    ADVISORY: Certain information regarding Culane in this news release
including management's assessment of future plans and operations, timing of
drilling and tie-in of wells, productive capacity of the new wells, expected
production rates, drilling success rates, dates of commencement of production,
may constitute forward-looking statements under applicable securities laws and
necessarily involve risks including, without limitation, risks associated with
oil and gas exploration, development, exploitation, production, marketing and
transportation, loss of markets, volatility of commodity prices, currency
fluctuations, imprecision of reserve estimates, environmental risks,
competition from other producers, inability to retain drilling rigs and other
services, unexpected decline rates in wells, wells not performing as expected,
delays resulting from or inability to obtain required regulatory approvals and
ability to access sufficient capital from internal and external sources. As a
consequence, actual results may differ materially from those anticipated in
the forward-looking statements. Readers are cautioned that the foregoing list
of factors is not exhausted. Additional information on these and other factors
that could effect Culane's operations and financial results are included in
reports on file with Canadian securities regulatory authorities and may be
accessed through the SEDAR website (www.sedar.com). Furthermore, the
forward-looking statements contained in this news release are made as at the
date of this news release and Culane does not undertake any obligation to
update publicly or to revise any of the included forward-looking statements,
whether as a result of new information, future events or otherwise, except as
may be required by applicable securities laws.
    Disclosure provided herein in respect of barrels of oil equivalent (boe)
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.

    The TSX Venture Exchange has not reviewed and does not accept
    responsibility for the adequacy or accuracy of this release.





For further information:

For further information: Culane Energy Corp.: Donald D. Staus, President
& Chief Executive Officer, (403) 263-2773, dstaus@culaneenergycorp.com

Organization Profile

CULANE ENERGY CORP.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890