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A Compelling Case. A Clear Vision. August 2006 Unconventional Natural Gas SPI.

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Presentation on theme: "A Compelling Case. A Clear Vision. August 2006 Unconventional Natural Gas SPI."— Presentation transcript:

1 A Compelling Case. A Clear Vision. August 2006 Unconventional Natural Gas SPI

2 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.

3 SPI Overview Unconventional natural gas: One of the fastest- growing sectors of North America's energy industry Canadian Spirit Resources: Focused on developing 1.0 tcf of unconventional natural gas from coal (NGC) A huge resource play: Farrell Creek, northeast British Columbia, 40,000 + acres, 94% (average) owned by CSRI, 80% of land includes deep rights, $30 million invested to date

4 SPI Current Status Seven test holes drilled and cased Two holes fracture-stimulated in the Gething Formation Both holes producing natural gas and water Dedicated a test hole to evaluate gas-bearing shales

5 SPI Resource Potential: Farrell Creek Sproule Associates Limited Preliminary Report April 17, 2006: Contingent gas-in-place resource potential Gething coals12 – 16 bcf per section Gething shales11 – 17 bcf per section Gates & Moosebar shales7 – 8 bcf per section

6 SPI Next Steps Measure production rates Develop pilot plan to drill and complete more test holes Focus on engineering, operational and marketing aspects of developing a commercial project

7 SPI Fast Facts Shares outstanding28.8 million Recent share price$2.25 Market cap$65 + million Land62 + sections (42,000 gross acres) Contingent resource * Gething coals12 – 16 bcf/section Gething shales11 – 17 bcf/section Total contingent resource*1.4 – 2.0 tcf Estimated recovery rate60% Market cap / recoverable mcf$0.06 per mcf Largest shareholderSprott Asset Management (18.8%) * (Sproule Associates, Apr 17/06, Gething Formation only, Farrell Creek, B.C.) (As at June 5, 2006) ($ Cdn)

8 SPI Natural Gas from Coal (NGC) U.S. 10 years ahead of Canada Industry in Western Canada growing rapidly Production of unconventional gas similar to production of conventional gas Typically, to economically produce natural gas from coal, formation water must be removed first

9 SPI A Compelling Case NGC compared to conventional gas Coal can store up to 6 or 7 times more gas NGC well can have 3 times the life NGC recovery factors can be as high as 80%

10 SPI A Clear Vision CSRI focused on unconventional gas, including NGC 2002 regional NGC assessment of WCSB Five-year plan: explore for and develop 1.0 tcf of NGC within five years in an environmentally safe and responsible manner

11 SPI A Clear Vision (contd) Within four years: Identified several large resource plays Assembled high working interest land position in northeast B.C. Began evaluating productive capability of principal resource property

12 SPI Coalbed Gas Potential in B.C. CSRI area of interest

13 SPI Farrell Creek, NE B.C. CSRI Test Area

14 SPI Farrell Creek Geology

15 SPI Resource Overview Gething Formation Multiple thin coal seams As many as 30 individual seams Net coal thickness: 25 – 50 feet Gas content: 230 – 550 scf/ton Contingent resource Coals12 – 16 bcf/section Shales11 – 17 bcf/section

16 SPI Resource Overview Moosebar/Gates (Shale Formation) Gas content2.5 – 11 scf/ton Thickness900 feet Cored 600+ feet Additional prospects identified Bluesky, Cadomin, Halfway, Baldonnel, Doig/Montney Contingent resource Shales7 – 8 bcf/section

17 SPI Farrell Creek Potential Land62 + sections Well spacing 4 – 8 wells per section Risked well locations 200 – 400 Productivity per well250 – 300 mcf/d Potential production50 – 120 mmcf/d

18 SPI Farrell Creek 2006 Plan of Activities License 2 – 4 additional locations for summer drilling program Prepare and submit Feasibility Plan for provincial government approval Raise funds for pilot phase of production Drill, complete and test up to 4 additional wells Initiate application to tie-in to Duke Energy pipeline

19 SPI First Half (approved)$3.6 Second Half (estimated) 9.0 $12.6 G & A expense $1.4 Net cash resources (Jan 1/06)$8.0 2006 Capital Program ($ million Cdn)

20 SPI Risks Farrell Creek productivity Equipment and service costs Commodity prices

21 SPI Strategic Advantages Resource knowledge and expertise of technical team Energy development experience of management and directors High working interest land position with multiple prospective targets

22 SPI In Summary Material land base of 62 + sections 1.4 – 2.0 tcf (coals and shales, Gething only) Value/Market upside Additional potential (shallow and deep) Favorable commodity pricing 200 mmcf/d capacity in nearby Duke Energy pipeline

23 A Compelling Case. A Clear Vision. A company with its eye on the prize: 1.0 tcf of NGC

24 SPI Canadian Spirit Resources Inc. Suite 1950, Ford Tower 633 6th Avenue S.W. Calgary, Alberta T2P 2Y5 Telephone (403) 539-5005 E-mail: TSX Venture: SPI w w w. c s r i. c a

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