CALGARY, ALBERTA--(Marketwire - June 29, 2011) - Canadian Spirit Resources Inc. ("CSRI" or the "Corporation") (News - Market indicators) (OTCBB:CSPUF) announces the release of its interim financial results and Management Discussion and Analysis ("MD&A") for the three month period ended March 31, 2011.

The financial data presented herein is in accordance with International Financial Reporting Standards ("IFRS") and all amounts are presented in Canadian dollars, unless otherwise indicated. The unaudited interim financial statements for the three months ended March 31, 2011 include certain reconciliations between the previously used Canadian Generally Accepted Accounting Principles ("previous GAAP") and IFRS.

This news release summarizes information contained in the unaudited interim financial statements and MD&A for the three month period ended March 31, 2011 and should not be considered a substitute for reading these full disclosure documents which are available on SEDAR at www.sedar.com or the Corporation's website at www.csri.ca.

CSRI is a natural resources company focusing on the identification and development of opportunities in the unconventional gas sector of the energy industry.

FINANCIAL AND OPERATIONAL HIGHLIGHTS

• CSRI achieves first production and operating revenue (in Corporation's history).
• Sproule Unconventional Limited ("Sproule") increases Montney resource estimate and provides first estimate of Contingent Resource.
• Sproule provides initial Montney reserve estimate.
• Capital program will evaluate potential for natural gas liquids.
• CSRI net Montney acreage increases to over 26,000 acres (40.8 net sections).

Revenue and Royalties

The first quarter 2011 was a milestone for CSRI as it achieved the first production and operating revenue in the Corporation's history. Total revenue from the sale of natural gas during the quarter was $407,013 over a 63 day period. The Corporation's horizontal drilling program generates up to $2.5 million in royalty credits per well as these wells qualify for the Government of British Columbia's deep well royalty credit program. As a result, the Corporation will pay minimal royalties for the next few years. There was no revenue or royalties in the comparative 2010 period.

Production, Prices and Netbacks

On January 28, 2011, the Farrell Creek Montney Gas Plant commenced operations (63 production days in the first quarter 2011) with natural gas currently being sold on a spot basis at BC Station 2 on the Spectra Energy Pipeline System. Production averaged 1,917 Mcf/d (319 boe/d) during the first quarter with the Corporation realizing an average price of $3.35 per Mcf ($20.08 per boe). After royalties, operating costs and transportation, the operating netback was $3.02 per Mcf ($18.10 per boe).

In 2011 the Corporation continued the consulting contracts with an investment advisor, a land consultant, a computer network maintenance company and an external IFRS consulting firm. During the first quarter of 2011, the Corporation also entered into consulting arrangements with a staffing recruitment firm and an executive compensation firm, resulting in an increase in consulting fees, after capitalization, from $11,644 for the first quarter 2010 to $72,097 for the first quarter 2011.

Salaries and benefits, after capitalization, of $186,917 for the three months ended March 31, 2011 decreased by 4.1% compared with 2010 ($194,814) due to efficiencies gained in the Corporation's group health benefits plan, but offset by general increases in staff salaries.

The increase in Other General and Administrative Expense was entirely attributable to increased professional fees including legal, audit and engineering. The professional fees covering the resource assessment, reserve evaluation and interim IFRS review of the first quarter 2011 were included in this period.

During the three months ended March 31, 2011, the Corporation capitalized a total of $127,872 (2010: $117,592) of general and administration expenses, including salaries and benefits, directly related to exploration and development activities. These amounts are included as part of either Exploration and Evaluation Assets, or Property, Plant and Equipment as recorded by the Corporation. Other costs capitalized during the three months ended March 31, 2011 of $600 (2010: $600) relate to consulting fees incurred as equity instruments issue costs, and are recorded by the Corporation as a reduction of shareholders' capital. For the three months ended March 31, 2011 the Corporation also capitalized $67,605 (2010: $105,237) of share-based compensation expense for those employees of the Corporation directly involved in exploration and development activities.

Due to the reduced levels of stock options granted as well as a decrease in the market price of the Corporation's shares, share-based compensation, after capitalization, decreased by 7.3% to $241,396 for the three months ended March 31, 2011, from $260,330 for the comparative prior period.

Capital Expenditures, Liquidity and Capital Resources

The Corporation's natural gas capital expenditures for the three months ended March 31, 2011 and 2010 are detailed in the following table:

The Corporation's capital budget is reviewed and approved by the Board of Directors on a quarterly basis. The Corporation's Board of Directors has approved a revised total forecasted capital expenditure in 2011 of up to $16.2 million, including an estimated $0.5 million for capitalized overhead. The capital budget for the first half of 2011 has been approved for a total of up to $4.8 million, including $0.2 million for capitalized overhead.

For the three months ended March 31, 2011, gross capital expenditures including land acquisitions totaled $2.8 million (2010: $1.0 million), compared to a budgeted capital expenditure of $2.7 million (2010: $1.4 million).

Cash administration expenses (general and administrative expenses excluding share-based compensation) for 2011 are expected to total $2.6 million (2010: $2.1 million), before capitalization of exploration and development related overhead. Revenue from interest on cash balances is budgeted at $0.1 million for the 2011 year. The Corporation has budgeted for operating netbacks from the Farrell Creek Montney operations of $2.1 million during 2011.

At March 31, 2011, the Corporation had a net working capital balance of $18.2 million, consisting of cash in the amount of $18.3 million, term deposits of $1.3 million, accounts receivable and prepaids of $0.2 million, and net of accounts payable and other accrued liabilities of $1.6 million. The accounts payable and other accrued liabilities balance at March 31, 2011 relates primarily to horizontal drilling and completion activity in the Montney Project as well as facilities construction at Farrell Creek in conjunction with the Corporation's joint venture partner, Canbriam. The Corporation has no bank indebtedness and has no credit agreements to borrow money in place at this time.

OPERATIONAL REVIEW

In 2008 the Corporation entered in a joint venture agreement with Canbriam Energy BC Partnership ("Canbriam") to explore and further advance the development of its major resource property at Farrell Creek, B.C. The joint venture with Canbriam is exploring and developing the petroleum and natural gas rights (primarily in the Montney Formation) below the base of the Cadomin/Nikanassin Formation ("Deep Rights").

Construction of the joint venture's gas processing facility with an initial capacity of 10 MMcf/d gross (3.5 MMcf/d net) and the tie-in to the Spectra Energy sales pipeline were completed in January 2011. First commercial production from the joint venture's Montney lands began on January 28, 2011. The horizontal wells initially tied into the facility were c-A48-I (lower Montney), b-17-I (lower Montney) and c- 18-I (upper Montney).

Farrell Creek Montney Activity

Three additional horizontal wells were drilled and cased in the upper Montney during 2010. It is anticipated that two of these wells, c-45-I and c-B18-I, will be fracture stimulated and tied into the processing facility during the third quarter 2011. It is expected that production from these two wells will fully utilize the capacity of the gas plant for several months. As such the fracture stimulation of the third upper Montney well will be deferred pending available capacity.

The joint venture plans to move a portion of its planned capital program to its east Farrell Creek lands to test the potential for natural gas liquids in this area. The program will begin with the drilling and testing of a vertical well at the 12-7 location during the third quarter 2011. Other Montney operators in the immediate area appear to have indications of natural gas liquids in commercial quantities in their gas streams.

Montney Resource and Reserves

As at December 31, 2010, Sproule prepared an independent resource assessment in accordance with definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook (see news release dated April 7, 2011). The report assessed the gross natural gas initially-in-place ("GIIP") at 2.6 Tcf (raw) of Discovered GIIP and 2.4 Tcf (raw) of Undiscovered GIIP. Company Gross GIIP was comprised of 1.0 Tcf (sales) of Discovered GIIP and 1.3 Tcf (sales) of Undiscovered GIIP resource. Best estimate Company Gross Contingent and Prospective Resources were 134 Bcf (sales) and 274 Bcf (sales) respectively.

The report also estimated that 900 gross wells would be required to develop the Gross Discovered and Undiscovered resources on the lands as at December 31, 2010. Since that date, the Corporation has increased its Montney lands by more than 33% to approximately 26,000 net acres.

As at March 31, 2011, Sproule prepared an independent reserve evaluation covering the Montney Formation at Farrell Creek in accordance with NI 51-101: Standards of Disclosure for Oil and Gas Activities (see news release dated May 16, 2011). The evaluation was based on CSRI's corporate plan to drill and complete 18 Montney wells over several years to prove-up its Montney lands at Farrell Creek.

This represents 2% of the 900 gross well locations identified in the December 2010 resource assessment.

The reserve report was based on information provided by the Corporation to which Sproule applied an industry standard 6% limestone porosity cutoff consistent with the December 31, 2010 resource assessment. The report, using Sproule's March 31, 2011 price forecast, estimated Company gross (before royalties) proved plus probable reserves of 20 Bcf with a net present value of $13.5 million using a 10% discount rate. The estimated average gross ultimate recovery was 3.2 Bcf per well averaged over a total of 18 wells.

INTERNATIONAL FINANCIAL REPORTING STANDARDS

In February 2008, the Accounting Standards Board of the Canadian Institute of Chartered Accountants confirmed that IFRS would replace previous GAAP commencing in 2011 for profit-oriented Canadian publicly accountable enterprises effective January 1, 2011. As such, the Corporation has reported its first quarter 2011 results and 2010 comparative information in accordance with IFRS. The adoption of IFRS has not had a material impact on the Corporation's operations.

Information regarding CSRI is available on SEDAR at www.sedar.com or the Corporation's website at www.csri.ca.

On behalf of the Board of Directors,

CANADIAN SPIRIT RESOURCES INC.

Don Gardner, Chief Executive Officer & Secretary

The corporate information contained in this news release may contain forward-looking forecast information. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonably accurate by CSRI at the time of preparation, may prove to be incorrect. The actual results achieved during the forecast period will vary from the information provided herein and the variations may be material. Consequently there is no representation by CSRI that actual results achieved during the forecast period will be the same in whole or in part as those forecast.