Exploration & Production | Quarterly / Earnings Reports

Canadian Spirit Tags 5 Producing Farrell Creek Montney Wells

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Canadian Spirit Resources Inc. has reported its interim financial results and Management Discussion and Analysis (MD&A) for the three month period ended March 31, 2013.

Production

CSRI's natural gas sales volume averaged 1.4 MMcf/d (net) during the three months ended March 31, 2013 (2012: 1.9 MMcf/d (net)). The Corporation has 5 (1.75 net) Montney wells being produced through its 10 MMcf/d (3.5 net) gas plant located on its western lands at Farrell Creek, British Columbia.

Farrell Creek Outlook

CSRI continues to focus on its eastern lands due to their prospectivity for natural gas liquids. A vertical well at 3-24-83-25W6 was drilled in March 2013 and allowed CSRI to retain 8 sections of land for an additional term of 5 years. This well was designed to be re-entered at a later date subject to improved natural gas prices. Gas analysis taken from 3-24 indicated that processed liquids would be in the range of 5-10 BBls per MMcf. Should this well be re-entered, frac water for the completion activities would be supplied by the water pipeline (25% owned by CSRI) that the operator, Canbriam Energy, has constructed from the Williston Reservoir. CSRI is also continuing to evaluate the capability of using shallower formations as produced water disposal zones.

Being able to create a solution for produced water disposal, combined with CSRI's 25% working interest in the 10,000 m3/d source water pipeline from the Williston Reservoir, will provide the Corporation with a fully integrated approach to water handling in the Farrell Creek area. With both access to fresh water and an environmentally safe plan to dispose of produced water, CSRI is capable of ramping up a Montney Formation drilling program quickly should natural gas prices improve in the near future.

Financial Resources

The Corporation had C$1.9 million of working capital as at March 31, 2013 and has no debt.