Celtic enters into agreement to acquire strategic assets at Kaybob South

    Stock Symbol "CLT" - TSX

    CALGARY, March 17 /CNW/ - Celtic Exploration Ltd. ("Celtic" or the
"Company") has entered into an agreement with a major petroleum company to
acquire certain liquids-rich natural gas assets located in the Company's core
operating and producing area at Kaybob South, Alberta. The acquisition has an
effective date of January 1, 2008 and is subject to standard industry closing
conditions. Closing is expected to occur on or around April 30, 2008. The
consideration to be paid by Celtic under the agreement will be financed by
bank debt. The Company has received a commitment letter from its lead bank,
National Bank of Canada, whereby, Celtic's available bank credit line will be
increased by $30.0 million to $195.0 million, upon closing of the acquisition.

    Description of Assets
    -   Kaybob South Beaverhill Lake Unit 1 (9.3% interest);

    -   Kaybob South Beaverhill Lake Unit 2 (11.5% interest) - currently
        operated by Celtic, with a pre-acquisition interest of 49.9%;

    -   Kaybob South Beaverhill Lake Unit 3 (10.2% interest);

    -   Kaybob South Triassic Unit 1 (0.5% interest);

    -   Various interests in non-unit properties located at Kaybob South
        T58-62 R18-20 W5, including Montney and Nordegg rights in certain

    -   Various interests in facilities including the KA Gas Plant
        (0.8% interest) and the K3 Gas Plant (0.4% interest).

    Key Attributes of Assets to be Acquired
    -   Daily production for the first six months of 2007 averaged 866 BOE
        per day - 71% natural gas and 29% natural gas liquids (approximately
        70% of the 68 barrels/mmcf of liquids yield based on natural gas
        sales, is condensate).
    -   Net operating income for the first six months of 2007 was
        $3.1 million.
    -   Approximately 60% of the production base, as well as varying
        interests in certain facilities, are subject to rights of first
        refusal ("ROFRs"). The increase in Celtic's available bank credit
        line resulting from this acquisition may be reduced if certain ROFRs
        are exercised.
    -   Petroleum and natural gas reserves to be acquired have not been
        evaluated by an independent third party. Celtic expects to have an
        independent reserves evaluation of the assets to be acquired
        completed, after ROFRs have been either exercised or waived, prior to
    -   Complementary fit with a large contiguous land position adjacent to
        Celtic's Kaybob South exploration and development area.

    Minor Properties Divestiture
    Celtic has retained Tristone Capital Inc. to sell the Company's interest
in several non-operated units located in Alberta. Celtic's working interests
in these units range from 0.4% to 13.0%. Reserves relating to these assets
were evaluated independently by Sproule Associates Ltd. effective
December 31, 2007. Estimated current production is 260 BOE per day (68% oil
and 32% gas). Proved plus probable (2P) reserves were 1.4 million BOE and the
net present value, discounted at 10% before tax, was $17.0 million. Bids for
these assets are due on March 18, 2008.

    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.

    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.

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

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Celtic Exploration Ltd.

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