Company Information for Canoel International Energy Ltd

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TSX.V; CIL View full financial data

Company Statement

Canoel International Energy Ltd. is a fast growing International exploration company focusing in the acquisition of large acreages in oil producing countries that offer a good protection of the ownership of petroleum asset by foreign investors.

Furthermore the company prefers to invest in area where infrastructure exists to transport  crude oil and/ or natural gas once a commercial discovery is achieved. The company strength is due to an experienced management and board of directors composed of people having large international exposure and a network dating back long time of strong relations in the industry.

The attitude of the company is to act very rapidly once an opportunity presents itself. On the other hand, the company strategy does not suggest large unfunded commitments as the company intends to perform properly  the working program respecting its time schedule and matching the host country  energy development program.

Operations and Technology

Canoel International Energy Ltd. ("Canoel" or the "Company") (SYMBOL in the TSXV:”CIL”) has announced that the Company has taken a major step in a new direction by entering into an Agreement to become the operator of a large oil exploration block in Mongolia. The Agreement provides that a Canoel subsidiary will become the controlling shareholder of Block XXIII (as such block is designated by the Mongolian Petroleum Authority) by purchasing such interest from the present shareholder who will continue a co-venture partner.

The agreed terms call for the Company to purchase shares of the entity presently holding the rights to explore and develop Block XXIII and for seller/co-venture partner to retain an amount of free carried working interest of 6% through the first commercial discovery. The Corporation is required to spend up to approximately US$46 million over the next five years, but only a small portion of that amount during this next year. In order for the Corporation to conclude this purchase of shares, it will seek the required approval of the TSX.

Block XXIII is located in the Mongolian part of the Gobi desert, immediately north of the boundary with China. It covers 13'575 square kilometres (about 3.37 million acres). The railway line from the Mongolian capital, Ulan Bator to Beijing runs through the eastern part of the Block; railway is the most important method of transportation for crude oil in mainland Asia.

Block XXIII includes a structural feature that separates the highly prospective Erlian Basin in China from the East Gobi Basin in Mongolia. The biggest field in the Erlian Basin, the Ershan field, is said to contain reserves of 500 million barrels of oil in Lower Cretaceous sediments. It produces currently about 60'000 bopd, all of which is transported to a refinery at Dong Wu, China. In Mongolia, two smaller discoveries have been made in the East Gobi Basin. The Zuunbayan Field and the Tsagaan fields are located a few kilometers north of Block XXIII and are producing about 1'600 bopd from Lower Cretaceous sediments at relatively shallow depths. These discoveries were made by Roc Oil, and the fields are now operated by a subsidiary of PetroChina.

No intensive exploration activity has been carried out in Block XXIII. The Soviets conducted regional gravity and magnetic surveys and shot in 1970 a small amount of seismic lines. A significant amount of the results of these surveys has been published in Soviet academic publications. No wells have been drilled in Block XXIII since the Soviet exploration efforts.

The Mongolian Petroleum Authority imposes certain minimum work commitments on those to whom it grants licenses in blocks such as Block XXIII. Accordingly, these commitments to do seismic testing and drilling are spread over the next 5 years.

Hans Oesterle, Vice President for Exploration stated: "Preliminary work identified several large structures in Block XXIII under major regional thrust faults. These leads need to be verified by modern seismic data; but the current size of the mapped structures is such that any discovery will be of significant size. Future production will satisfy local requirements, but surplus production can be transported by railway to the Chinese refinery at nearby Dong Wu".

In Tunisia the company has a working intertest in 3 blocks , Bazma , Jorf and Sud Touzer , operated by a partner called Cygam Energy Inc ( TSXV symbol : “CYG”), totalling 10,000 square kilometres. In these blocks all seismic activity has been completed. Spudding for the  first well in the Bazma block is expected in the last quarter of this year. Production is located in the borders of Canoel Bazma block; the block is covered by good infrastructure and in case of commercial discovery the company will go on stream in a shortwhile.

Geographical Spread

Mongolia Tunisia

Board of Directors and Key Management

Major Shareholders

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