Unconventional Natural Gas A Compelling Case. A Focused Vision. June 2007
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Unconventional Natural Gas
A Compelling Case. A Focused Vision.June 2007
Trading Symbol: SPI – TSX Venture ExchangeWebsite: www.csri.ca
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DISCLOSURE STATEMENT
The corporate information contained in this presentation contains forward-looking forecast information. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonably accurate by Canadian Spirit Resources Inc. (“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.
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Farrell Creek Area
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CORPORATE INFORMATION
Listed – SPI (TSX Venture Exchange) Working capital surplus - $1.5mm (March 31). No debt. 28,833,082 shares outstanding
2,471,000 options outstanding – average strike price = $2.40 3,200,00 warrants outstanding – strike price = $2.50
(expiring August 11, 2007) Management and directors own 2.4% (Basic) Directors: George W. Watson (Chairman)
J.R. Richard CouillardDonald R. GardnerPhillip D.C. GeigerPhilip H. GrubbeRobert P. Winnitoy
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OVERVIEW
Acquired 40,000 acres of Shallow Rights 75% of land also has deep rights
Eight test holes drilled to date Four test holes have been fracture stimulated
Independent estimate of 1.8 tcf of discovered resource for the shallow Gething, Gates and Moosebar Formations
Deeper formations are also prospective
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CURRENT STATUS
Have recently established mechanical reliability on pumping units
Implemented field changes to reduce costs
Flowing wells while reducing reservoir pressure and determine a production response on three of four test holes Trailer mounted compressor to be utilized to
complete this test
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CURRENT STATUS
c-083 – Shut-in – deliverability test complete
b-092 – Flowing – currently the best producing well to date
b-003 – Flowing from upper zone – bridge plug wedged between zones
b-002 – Flowing with only 22 meters perforated - lowest capital cost well to date
d-093 – Drilled and cased - preparing to stimulate
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RESULTS
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VALUATION
1.00 140 280 420 560 12+
0.75 105 210 315 420 9
0.50 70 140 210 280 5
0.25 35 70 105 140 1
10 20 30 40
$/mcf
$Million
Recovery Factor ( % )
$/share
Assumes 1.4 tcf of Gas-in-Place (Sproule) and 45 million fully diluted shares
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PRELIMINARY ECONOMIC DATA
Capital Target: Less than $1 million to drill, case and fracture
stimulate
Production Target: 200-300 mcf/d from vertical wells
B.C. Crown Royalty (new Net Profits Interest) Designed for unconventional gas 2% royalty on gross revenue until capital pool payout Capital pool includes previous 3 years of historical cost Propose taking applications this September
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PROPOSED BASE PROGRAM
Deliverability Testing Timing (March 30 to June 30, 2007)
Continue to flare three test holes to establish consistent run time (upward production trend)
Currently b-092 is the best well (100 to 150 mcf/d) Install trailer mounted compressor
Shut in c-083 and continue to monitor b-002 and b-003 Move trailer mounted compressor equipment from b-092 to b-002
Issues: Flaring limitations (on b-092 test hole)
Applied for extension
Goal: Reduce back pressure to increase gas rate Target +/- 200 mcf/d on the b-092 test hole with the use of the
trailer mounted compressor
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PROPOSED BASE PROGRAM
Tie-in Evaluation Timing (June 2007) Determine in parallel
Tie-in options Industry Partner – Short term solution
Will take raw gas for compressor fuel Initiate discussions
Spectra Energy (formerly Duke Energy) – Long term solution
Must meet sales gas specification Equipment availability
Costs to tie-in
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PROPOSED BASE PROGRAM
Apply best completion techniques
Timing (July to August 2007) Fracture stimulate d-093
Flow back and drawdown pressure with trailer mounted compressor Continue to monitor b-092 and b-002
Move trailer mounted compressor as required
Issues: How much will the rate increase Government approval – flaring
Goal: Target 400 mcf/d by the end of August 2007 on two test holes (b-092 and d-093)
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PROPOSED BASE PROGRAM
Prepare for tie-in and add production Timing (August to October 2007)
Finalize pipeline access Start construction
Convert test holes to production wells Drill three vertical wells
Spacing Consider drilling one directional well Continue to evaluate results to finalize a Phase I
development program
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PROPOSED BASE PROGRAM
Tie-in for cash flow Timing (October to mid December 2007)
Tie-in the following producing wells b-092 d-093 Possibility to tie-in up to five additional wells
Goal: Target total production of 1 million cubic feet per day
and increasing
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ADDITIONAL POTENTIAL
Shallow Rights – (Surface to base of Cadomin)
Substantial availability of B.C. Crown lands
Land swap/Farm-in potential
GeoMet “Strategic Process” Infrastructure co-operation
Formations Moosebar and Bluesky
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ADDITIONAL POTENTIAL
Deep Rights – (Below base of Cadomin to basement)
Land swap/Farm-out potential
Activity in Farrell Creek Area NorthPoint Energy Ltd. Talisman Energy Inc. Triumph Pacific Oil & Gas Corp. Others
Formations Nordegg/Fernie, Halfway, Doig/Montney, Debolt
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2007 FUNDING PLAN
Confirm productivity and economics $3 million private placement June 2007 Capital program June – August 2007
Production and reserves $15 – $30 million September 2007 Capital program September 2007 – September 2008
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CONCLUSIONS
Farrell Creek Project Large discovered resource – 1.8 tcf on existing lands
Expect production in early 2008
Large number of potential locations
Prospective deep rights/multi-zone potential
Year round road and pipeline accessibility
Long Reserve Life Index (low decline)
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FARRELL CREEK LOCATION
CSRi Land
Sedimentary Basins
Duke Energy Pipeline
Fort St. J ohn
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FARRELL CREEK LANDS
CSRI EnCana Talisman GeoMet/ CEP/ Triumph
T83
T82
T81
T84
T85
R23R24R26 R2593-O-16
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FARRELL CREEK PILOT PROJECT
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Canadian Spirit Resources Inc.Suite 1950, Ford Tower633 6th Avenue S.W.Calgary, Alberta T2P 2Y5Telephone (403) 539-5005E-mail: [email protected] Venture: SPI
w w w . c s r i . c a