Listing: TSX Venture Exchange ("EEI.V")
Issued Common Shares: 60,208,086
TORONTO, April 27 /CNW/ - Echo Energy Canada Inc. (the "Company") is
providing an update on the independent reserves assessment and evaluation of
its oil and gas reserves effective December 31, 2008 (the "reserves report").
The reserves report was prepared by GLJ Petroleum Consultants Ltd., an
internationally recognized leader in oil and gas asset evaluations, pursuant
to recommendations of National Instrument 51-101 ("NI 51-101").
The reserve report received on Friday by the Reserve Committee and the
Audit Committee of the Board of Directors of the Company reports highly
significant declines in the valuation of reserves from the opening balance at
the start of the year. Part of the reason for this discrepancy is the
performance of the existing wells, and management is currently evaluating how
to improve performance of the wells.
This report from GLJ Petroleum Consultants Ltd. enables the Company to
fully comprehend its gross and net proved and probable reserves attributable
to the property interests utilizing GLJ's customary methods and procedures and
in accordance with standard industry practices and to estimate the future net
revenue to be realized with respect to such reserves. The estimated reserves
and future net revenues were determined in accordance with the requirements of
NI 51-101 and the Canadian Oil and Gas Evaluation Handbook ("COGEH"), using
forecast price and costs assumptions and were presented as required by Form
This reserves report has caused Management to review the Company's
impairment test for valuation of oil and gas properties and to clarify that
this test restricts the net capitalized costs from exceeding an amount equal
to the estimated undiscounted value of future net revenues from proven oil and
gas reserves based on current forecasted prices and costs, after deducting
estimated future operating expenses, income taxes and site restoration costs.
Management has concluded that the impairment test will result in a very
significant write-down in the carrying value of oil and gas reserves as at
December 31, 2008, and also noted that this will be partially offset by a
significant favourable impact on the provision for future income taxes.
This revaluation of oil and gas reserves will also result in significant
increases in the provision for depletion of oil and gas reserves and
amortization of the gas gathering pipeline and compressor system in 2008 and
Because of the potential impact on the bank borrowing base, Management
has sent a copy of the reserves report to the bank. Management believes that
the net cash flows from proved producing reserves forecasted in the new
reserves report correspond with the previously reported estimate of the bank's
independent engineer. However, Management is awaiting the bank's review and
cannot at this time provide any assurance as to the bank's possible response.
About Echo Energy Canada Inc.
Echo Energy Canada Inc. is a publicly traded energy company with revenue
producing natural gas production operations near Port Burwell Ontario, Canada
on the shores of Lake Erie.
Statements in this news release that are not historical facts, including
statements about plans and expectations regarding properties, reserves,
transactions and opportunities, capital resources and future financial results
are forward-looking. Forward-looking statements involve risks and
uncertainties, which may cause the Company's actual results in future periods
to differ materially from those expressed. These uncertainties and risks
include changing gas and commodity prices and currency exchange rates, demand
for gas, lack of success of future exploration and development, competition
and other factors discussed from time to time in the company's filings with
the Ontario Securities Commission.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this news release.
For further information:
For further information: Charles Edey, President, at 1-877-396-3540,