Exploration & Production | Drilling Program

Canadian Spirit Resources Drilling Montney with No Debt

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Canadian Spirit Resources Inc. has announced the release of its financial results for the three and twelve months ended December 31, 2014 including the filing of its 2014 annual audited Financial Statements, Management Discussion and Analysis, and Forms 51- 101F1, F2 and F3.

The Corporation has 5 (1.75 net) Montney wells being produced through its 10 MMcf/d (3.5 net) capacity joint venture gas plant located on its western lands at Farrell Creek/Altares, British Columbia.

Highlights

• CSRI ended the year with a strong working capital position and no debt.
• 2014 was a pivotal year as CSRI transitioned into a Montney operator with the drilling of two 100% working interest horizontal wells.
• strong>In March 2014, CSRI drilled the first horizontal well at its 1-1-83-25W6 location. This well was drilled for land retention purposes and allowed the Corporation to retain 9 sections of 100% working interest land for an additional term of five years.
• In June 2014, the Corporation raised total gross funding proceeds of $7.8 million. The funding was comprised of units ($2.6 million), Flow-through shares ($3.5 million), and the exercise of share purchase warrants ($1.7 million). The proceeds were used for the drilling of the c-81-H/94-B-1 well in June/July 2014 and for general corporate purposes.
• CSRI successfully drilled and cased its second 100% working interest horizontal well at c- 81-H/94-B-1. The well commenced drilling on June 23, 2014 and was cased and rig released on July 31, 2014. Subject to financing, the well will be hydraulically fractured in the second half of 2015 and will be tied-in for production.
• As a result of the drilling of the 1-1-83-25W6 well in the first quarter 2014 and the c-81-H/94- B-1 well as noted above, the Corporation has extended the tenure on 9,961 gross acres (4,031 gross hectares) of land and increased CSRI's 100% working interest to 16,248 acres or 25.4 sections. 
• CSRI's net Montney acreage position at Farrell Creek is now 26,044 acres or 40.7 net sections.
• Competitor activity in the area continues to demonstrate the quality and value of CSRI's land and resource position at Farrell Creek/Altares.
• A third party well, approximately 3.3 kilometers east of CSRI's 100% working interest lands was flow-tested up casing at an announced steady rate of 7.9 MMcf/d at a pressure of 1,250 psi. This well further highlighted the Montney potential in our area.
• In November 2014, a third party purchased 20,633 acres of Montney exploration rights for $123.6 million in the Bernadet area approximately 20 miles north of CSRI's core land position. At an average price of approximately $6,000 per acre for undeveloped acreage, this land value continues a trend set immediately adjacent to the Corporation's lands in November 2013 with the Petronas Energy Canada purchase of Talisman Energy Inc.'s lands for over $5,000 per acre.
• On April 15, 2015 the National Energy Board approved the TransCanada Pipeline North Montney Mainline Project. This new 42 inch diameter pipeline will traverse CSRI's Farrell Creek lands and provide additional infrastructure for moving gas from Farrell Creek to the West Coast LNG projects as well as into the Alberta NGTL system.
• On February 19, 2015, the government of Canada announced accelerated capital cost allowance rules for LNG facilities thus further enhancing the attractiveness of LNG projects in Canada.