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Canadian Spirit Debt Free Post-Q2; Drills New Montney Well

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Canadian Spirit Resources Inc. reported its financial results for the second quarter of 2016.

Key Points:

• While drilling through the Doig and Montney Formations, extremely high pressures were encountered. On June 25, 2016 the Corporation perforated three zones in the Montney Formation in the c-69-H/94-B-1 well.

• CSRI ended the second quarter 2016 with no debt.

Highlights:

• Despite difficult equity markets, the Corporation has raised a total of $4.1 million of equity capital in the period from December 2015 to June 2016. The principal use of the proceeds was to drill a 100% working interest vertical stratigraphic test well at c-69-H/94-B-1 in West Farrell Creek for land retention and resource delineation purposes.

• The c-69-H/94-B-1 well was successfully drilled and cased, and was rig released on March 6, 2016 at a final total depth of 2,762 metres. The tenure on 8.35 sections of lands, CSRI (8 sections at 100%) and joint venture (1 section at 35%), has been extended for an additional 10 years. While drilling through the Doig and Montney Formations, extremely high pressures were encountered. On June 25, 2016 the Corporation perforated three zones in the Montney Formation in the c-69-H/94-B-1 well. Pressure recorders were placed across these perforations and will be retrieved at the end of the third quarter 2016.

• As previously announced, the Corporation and its joint venture partner shut in their natural gas production at Farrell Creek/Altares effective March 31, 2016. With improving natural gas prices, the processing facility and associated wells are due to be reactivated on or about October 1, 2016.

• Management and the Board of Directors of CSRI are continuing to focus on and pursue strategic alternatives for the Corporation. These include but are not limited to considering alternative financing methods and meeting with potential acquirers or merger partners.