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Toronto, Ontario, Canada -
Candax Energy Inc. ("Candax") [TSX: CAX] is pleased to
announce an update to its net reserves as of December 31, 2007, with total
Proved plus Probable Reserves (2P) of 6.0 MMboe and Proved Reserves of 3.3
MMboe. The net present value (NPV) of future cash flows (escalated price
forecast, after tax and discounted at 10%) attributable to these 2P
reserves is valued at $152.9 million. Candax had cash resources of $22.2
million at year end with debt of $13.9 million, thus the Company's Net
Asset Value (using a 10% discount factor) equates to approximately $0.95
per share.
An independent engineering report was prepared by Ryder Scott Company
Petroleum Consultants (Ryder Scott) for all of Candax's producing
properties in Tunisia. The report was prepared in accordance with NI 51-101
guidelines, and more details on the reserves and valuations can be found in
the Annual Information Form which has been filed and is available on SEDAR.
The report gives net 2P reserves in El Bibane of 4.1 MMboe and in Ezzaouia
1.9 MMboe. The El Bibane reserves are very similar to year end 2006
figures, which reflect the success of the 2007 redevelopment drilling and
the confirmation of the gas-oil and oil-water contacts in the reservoir. A
remaining 30 metre oil column has been estimated from the new wells. The
small decrease in overall reserves compared to year end 2006, is primarily
attributable to the Ezzaouia field and reflects annual production and the
results of two well workovers in the Jurassic reservoir. Due to ambiguous
results from the workovers, Ryder Scott downgraded the remaining reserves
for these wells. Candax is about to
commence a program of development infill drilling in the Jurassic plus a
workover well in the Cretaceous reservoir of the Ezzaouia field. The first
infill well is targeting an un-drilled block in the eastern part of the
field which has significant upside reserves potential and could lead to a
future increase in 2P reserves at Ezzaouia.
Contingent Resources and Exploration Potential
Ryder-Scott has assigned significant Contingent Resources to the Robbana
field (March 2008) and the Chaal Exploration Permit (March 2007). During
the workover of the Robbana-1 well in late 2007, the potential for
significant additional reserves was recognized from the information gained
during the workover. It is estimated by Ryder-Scott that in the most likely
case, approximately 3.0 million barrels of oil could be recovered by the
implementation of water injection. To-date the single well at Robbana has
produced approximately 413,000 barrels of oil through simple natural
depletion. In addition, Candax believes that further reserves could be
present to the west of Robbana-1, along a structural ridge which extends to
the recent Mezrane discovery where oil was tested at the same stratigraphic
level as in Robbana-1. It should be noted that these further reserves are
not included in the current Ryder-Scott Contingent Resources.
Candax is currently evaluating whether to drill an appraisal/development
well (subject to rig and equipment availability) downdip of Robbana-1 to
assess the extent of the reservoir and the effectiveness of water
injection. The well could be drilled as soon as the fourth quarter of 2008
and, if successful, Candax would then embark upon a full water injection
project in the Robbana area and undertake further appraisal drilling to
assess additional potential along the ridge towards Mezrane.
The technical work on the Chaal Block, onshore Tunisia, is largely complete
and the partners have agreed, subject to suitable rig availability, to
drill a sidetrack in the second half of this year to the Chaal-1 discovery
well, which was drilled in 2006. As reported previously, this potentially
significant gas discovery could not be effectively evaluated at Chaal-1 due
to formation damage and mechanical problems during the drilling and testing
of the well. Following extensive technical studies, it has been agreed that
the new well will be drilled using managed pressure drilling to minimize
formation damage and maximize the chances of achieving commercial gas
rates. Ryder Scott completed an independent estimate of natural gas
resource potential on the Chaal Permit in Tunisia, effective December 31,
2006 and classified Chaal as a Contingent Resource with an un-risked, high
case estimate of 1.7 Tcf gas in place (GIIP) and recoverable Contingent
Resources of 854 Bcf..
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Oil in Place
Contingent Resources
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Robbana
Low Most-likely High
Low Most-Likely High
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Oil (MMBbl) 11.0
12.5 14.0
2.4
3.0 3.6
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Gas in Place
Contingent Resources
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Chaal
Low Medium
High Low
Medium High
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Natural Gas (Bcf)
150 1,088
1,708
75
544 854
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The "most likely or medium" un-risked value of the contingent
resources of both Chaal and Robbana net to Company, has been estimated by
Candax at approximately US$350 million.
Candax has an exciting exploration portfolio with high potential prospects
in both Tunisia and Madagascar. In Tunisia the focus of our exploration
efforts are the large Triassic structures beneath both the Ezzaouia and El
Bibane fields. The exploration potential of these prospects is very
significant, with un-risked estimates of GIIP being in excess of 3 Tcf for
each prospect. Commercial discussions with its partners in Ezzaouia are
progressing well and Candax hopes that a commitment to drill at least one
of these world class structures will be made by the end of 2008.
In Madagascar, Candax and its partner have completed the initial geological
fieldwork, geochemical and aeromagnetic/gravity studies, which have
confirmed the significant hydrocarbon potential of Block 1101. The typical
petroleum systems of the proven Madagascan oil discoveries have been
identified in the Block and numerous oil shows and seeps were identified
during the fieldwork.. In addition to the encouraging results from
exploration of the large anticline of the Ankaramy Peninsula, which is
analogous to the discovered fields in the south and was the main objective
of Phase I, further potential has been identified in the Ambilobe area to
the north. A 2D seismic acquisition program is planned for 2008 and the
first exploration well is expected to be drilled in 2009.
Michael Wood, President & CEO, commented:
"With the redevelopment of our offshore El Bibane field now in its
final stages and full production scheduled for late April, Candax is
switching its focus to the onshore potential in Tunisia, where 2008 will be
a very significant and active year for Candax. A rig will be mobilized
shortly to Ezzaouia to commence in-fill drilling, and a second rig will
also be mobilized in April to evaluate the remaining potential of the
Cretaceous reservoir in Ezzaouia. Following the on-going evaluation work at
Robbana, we are keen to undertake further drilling in the Robbana area and
appraise the significant upside potential identified. In Q3 we will embark
upon the sidetrack of Chaal-1, which will allow the partners to appraise
the commercial potential of the gas discovery. We are also pushing hard to
seek agreement with all the partners in Ezzaouia to progress the drilling
of the Deep Triassic prospect and whilst availability of a suitable rig and
equipment will probably not allow its drilling in 2008, we are looking to
drill the well in early 2009. Candax is also excited about our exploration
activities and the emerging potential of a major new basin in Madagascar.
The underlying net asset value of Candax is significantly above the current
share price. Candax has the financial resources and a strong positive cash
flow as production increases in 2008 continue to develop the full value of
the reserves in the portfolio. In addition Candax will continue to identify
and develop the contingent resource potential and exploration value of the
portfolio. These assets have the potential to add world class reserves and
very significant growth to Candax. However, such a prize requires the
deployment of experience and skills as well as risk capital to realize this
potential value, and the Candax team is committed to maintaining our
momentum in 2008 and accelerating our success."
Candax Energy Inc. is an international energy company with its head office
in Toronto, Ontario, Canada and management offices in London, Dubai and
Tunis. The Company holds a number of concessions in Tunisia through its subsidiary
companies and is involved in the exploration and production of oil, gas and
power generation in the country. Candax was formed through the combination
of a highly experienced executive management team with successful Canadian
founders and financiers, to develop an international upstream oil and gas
project portfolio. Candax is initially focusing its growth activities on
production and development projects in the Middle East and North Africa,
where the group has strong relationships as well as extensive management
experience.
Not for distribution to United States newswire services or for
dissemination in the United States.
This press release includes "forward looking statements",
within the meaning of applicable securities legislation, which are based on
the opinions and estimates of Management and are subject to a variety of
risks and uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the forward looking
statements. Forward-looking statements are often, but not always,
identified by the use of words such as "seek",
"anticipate", "budget", "plan",
"continue", "estimate", "expect",
"forecast", "may", "will",
"project", "predict", "potential",
"targeting", "intend", "could", "might",
"should", "believe" and similar words suggesting future
outcomes or statements regarding an outlook. Such risks and uncertainties
include, but are not limited to, risks associated with the oil and gas
industry (including operational risks in exploration development and
production; delays or changes in plans with respect to exploration or
development projects or capital expenditures; the uncertainty of reserve
estimates; the uncertainty of estimates and projections in relation to
production, costs and expenses; the uncertainty surrounding the ability of
Candax Energy Inc. to obtain all permits, consents or authorizations
required for its operations and activities; and health safety and
environmental risks), the risk of commodity price and foreign exchange rate
fluctuations, the ability of Candax Energy Inc. to fund the capital and
operating expenses necessary to achieve the business objectives of Candax
Energy Inc., the uncertainty associated with commercial negotiations and
negotiating with foreign governments and risks associated with
international business activities, as well as those risks described in
public disclosure documents filed by Candax Energy Inc. Due to the risks,
uncertainties and assumptions inherent in forward-looking statements,
prospective investors in securities of Candax Energy Inc. should not place
undue reliance on these forward-looking statements. Statements in relation
to "reserves" are deemed to be forward looking statements, as
they involve the implied assessment, based on certain estimates and
assumptions, that the reserves described can be profitably produced in the
future.
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