Transcript Georgia Basin Energy

Unconventional Natural Gas
A Compelling Case. A Focused Vision.
June 2007
Trading Symbol: SPI – TSX Venture Exchange
Website: www.csri.ca
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.
Farrell Creek Area
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 Couillard
Donald R. Gardner
Phillip D.C. Geiger
Philip H. Grubbe
Robert P. Winnitoy
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
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
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
RESULTS
VALUATION
$Million
1.00
140
280
420
560
12+
0.75
105
210
315
420
9
$/share
$/mcf
0.50
70
140
210
280
5
0.25
35
70
105
140
1
10
20
30
40
Recovery Factor ( % )
Assumes 1.4 tcf of Gas-in-Place (Sproule) and 45 million fully diluted shares
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
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
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
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)
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
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
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
ADDITIONAL POTENTIAL
Deep Rights – (Below base of Cadomin to basement)
 Land swap/Farm-out potential
 Activity in Farrell Creek Area

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NorthPoint Energy Ltd.
Talisman Energy Inc.
Triumph Pacific Oil & Gas Corp.
Others
 Formations
 Nordegg/Fernie, Halfway, Doig/Montney, Debolt
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
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)
FARRELL CREEK LOCATION
FARRELL CREEK LANDS
CSRI
T85
EnCana
Talisman
T84
GeoMet/CEP/Triumph
T83
T82
T81
93-O-16
R26
R25
R24
R23
FARRELL CREEK PILOT PROJECT
Canadian Spirit Resources Inc.
Suite 1950, Ford Tower
633 6th Avenue S.W.
Calgary, Alberta T2P 2Y5
Telephone (403) 539-5005
E-mail: [email protected]
TSX Venture: SPI
www.csri.ca