Transcript Unconventional Natural Gas A Compelling Case. A Focused Vision. March 2007 Trading Symbol: SPI – TSX Venture Exchange Website: www.CSRi.ca.

Unconventional Natural Gas
A Compelling Case. A Focused Vision.
March 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.
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HISTORY OF CSRi
1987
Incorporated as Super Twin Resources (a junior mining venture)
2001
Began investigating CBM potential in western Canada
2002
CBM joint venture with Chevron Texaco, current management
joined CSRI
2003
Joint venture dissolved, CSRi retained all rights to proprietary
information, commenced land acquisition and resource
confirmation
2004+ Evaluation of Farrell Creek potential
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STRATEGY
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Fourth year of a five year development plan
Focus on unconventional gas resources
 Specifically the coals, shales and tight sands of the Gething
Formation at Farrell Creek, NE B.C.
 Sproule Associates Limited (“Sproule”) estimates 1.8 tcf of
discovered resource for the shallow Gething, Gates and Moosebar
Formations
 Additional deep rights are prospective
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Phased approach to testing and development
 8 test wells drilled to date
 Pilot project with 4 test wells that have test flared 50 mmcf
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Planned production by the end of 2007 with a 2 km tie-in to
Duke transmission line
Full scale commercial development, downspacing and
optimization
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FARRELL CREEK LAND PLAT
T85
T84
T83
T82
T81
93-O-16
R26
R25
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R24
R23
LAND SUMMARY
PROPERTY
LAND
COMMENTS
(sections)
Farrell Creek, B.C.
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 94% average WI in Gething
 96% average WI in deep rights on
75% of lands
Monias, B.C.
1
 100% WI surface to basement
Coal Lake, AB
3
 100% WI in Mannville
 100% WI Horseshoe Canyon in one
section – 4 suspended wells
Iskut, B.C.
2
 Wollastonite mineral deposit
 No current activity
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FARRELL CREEK GEOLOGY
Average depth to top of Cadomin is 900m
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FARRELL CREEK
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High working interest, operated land position
 100% operated
 39,506 gross acres, average 94% WI
 Deep rights in 75% of lands, average 96% WI

Independent estimate (Sproule) of 1.8 tcf of discovered
resources from the shallow horizons only
 32 – 41 bcf per section from the Gething, Gates and Moosebar
Formations
 1.4 tcf attributed to the Gething “Rock Package”
 Coals: 13.1 – 16.4 bcf per section
 Shales: 10.9 – 17.6 bcf per section
 0.4 tcf in the Gates and Moosebar Formations
 7.1 – 8.5 bcf per section


Sproule did not estimate recovery factors and no proved or
probable reserves were assigned
Long reserve life characteristic
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FARRELL CREEK

Currently flow testing 4 well pilot program
 Gas rates: 50 – 250 mcf/d per well (>24 hr production test)
 Water rates: 10 – 60 bbl/d per well
 Cumulative test flaring of over 50 mmcf from 4 test wells
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Trucking water to Fort St. John disposal facility
Various completion techniques have been evaluated
All wells were fracture mapped
Six section Experimental Scheme approved by BC MEM/OGC
Capital costs to date (excluding land) - $19 million
Optimal spacing not yet determined
 200 – 500 well locations (assuming 4 - 8 wells per section)
 Horizontal potential not yet determined
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Expected productivity: 250+ mcf/d per well
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OPERATIONAL PLANS 2007/8
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Further optimization of drilling and completion techniques
 Determine optimal well spacing
 Evaluate directional and/or horizontal potential
 Continue to reduce capital costs per well
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Proceed with Duke Energy tie-in
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Maintain favorable relations with stakeholders
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Anticipate gas flowing to market late this year
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Evaluate deep targets for farmout or deep test
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Additional vertical wells to delineate reservoir extent
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ADDITIONAL POTENTIAL

Moosebar & Gates shales resource potential (Sproule) estimates:
 0.4 tcf
 7 – 8 bcf per section
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Deeper zones
 Estimates of >175 bcf per section OGIP
 Cadomin, Fernie, Nordegg, Halfway, Doig, Montney and Debolt
 Drilling on neighboring land for targets in the Bluesky, Halfway, Debolt
and other deeper targets

Horizontal drilling potential
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CAPITAL STRUCTURE,
OWNERSHIP
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Listed – SPI (TSX Venture Exchange)
Working capital surplus - $2.1 million
No debt
Tax pools – $39.6 million (est. as at Dec. 31, 2006)
28,833,082 shares outstanding (basic)
 29,129,868 fully diluted
 2,496,000 options outstanding – avg. strike price = $2.46
 3,200,000 warrants outstanding – strike price = $2.50
(expiring Aug.11, 2007)
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Management and directors own 2.38%
Largest shareholder - Sprott Asset Management (15.6%)
Employees – 8 permanent, 3 contract, 1 field (contract)
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VALUE CONSIDERATIONS

Convert large Gething resource to reserves
VALUE
RESOURCE
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RESERVES
Explore/farmout deep rights
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UNIQUE STRENGTHS

Significant resource: 1.8 tcf (shallow formations only)
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High working interest land position: 39,506 acres
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Multiple prospective targets
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Resource knowledge and expertise of technical team
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Ready access to infrastructure and pipeline
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Advancing towards development phase of resource
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Creating Shareholder Value
Balanced Approach. Focused Vision.
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
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