Culane Energy Releases 2009 Results and Operations Update

Culane Energy Corp. ("Culane" or the "Company") (TSX VENTURE:CLN) announces its
financial and operating results for the year ended December 31, 2009. The
audited Financial Statements and related Management's Discussion and Analysis,
Statement of Reserves, and Annual Information Form have been filed with Canadian
securities regulatory authorities on SEDAR at www.sedar.com and posted on the
Company's website at www.culaneenergycorp.com.




2009      2008                                             2009        2008
Q4          Q4                   HIGHLIGHTS              Y to D      Y to D
---------------                 ------------        ------------------------
1,073    1,787  Daily production - BOE                    1,370       2,310
26.76    20.63  Netback per BOE                           24.96       46.19

1,939    2,705  Cash flow - ($000's)                     10,018      36,145
0.08      0.11  Cash flow per share (basic)                0.42        1.57

(375)   (2,618) Earnings (loss) - ($000's)               (4,840)      9,718

-            6  Wells drilled                                 4          28
4,968    6,001  Capital expenditures - ($000's)          13,105      23,435
-          118  Acquisitions -- ($000's)                      -      21,660
-            -  Dispositions -- ($000's)                   (408)          -
----------------------------------------------------------------------------
                Working Capital (deficit) - ($000's)        169      (1,919)
                Bank debt - ($000's)                    (13,913)    (11,262)
                                                    ------------------------
                Net debt - ($000's)                     (13,744)    (13,181)

                Basic shares outstanding             24,519,754  23,872,354



Highlights - continued (per share information stated below is based on weighted
average - basic outstanding shares)


- The Company began its full field water-flood at Killam in mid November
following regulatory approval. The water-flood facilities were completed during
the third quarter, and additional injection wells and water source wells were
completed in the fourth quarter.


- In Saskatchewan, the Company spent $4.1 million in 2009 acquiring 37,575 acres
(58.7 sections) of undeveloped land. The land is concentrated in three new areas
of exploration and is 83% Crown land and 17% freehold. The Company also spent
$291,000 for seismic and commenced drilling of the first well on December 28,
2009.


- Production averaged 1,370 BOE/d for 2009 compared to 2,310 BOE/d for 2008, a
41% decline. (Q4/09 - 1,073, Q4/08 - 1,787). Production mix for 2009 is 72% oil
and 28% natural gas, of which 96% is from the Company's Killam oilfield in east
central Alberta.


- Prices for 2009 averaged $57.95 per bbl for oil and $4.10 per Mcf for natural
gas compared to 2008 prices of $89.05 per bbl for oil and $8.63 per Mcf of
natural gas. Net backs were $24.96 per BOE for 2009 and $46.19 per BOE for 2008,
a 46% reduction.


- Gross revenues were $24.5 million for 2009 (Q4 - $5.7, Q3 - $5.8, Q2 - $6.8,
Q1 - $6.2) compared to $66.4 million for 2008, a 63% decrease. This was due to a
41% decrease in the Company's production for 2009 compared to 2008, and a 38%
decrease in the average commodity prices received in the two comparative
periods.


- Cash flow for 2009 was $10 million, or $0.42 per share, compared to $36.1
million for 2008, or $1.57 per share, a 73% decrease in per share cash flow.
(Q4/09 - $1.9 (0.08/share), Q3/09 - $2.3 (0.10/share), Q2/09 - $3.0
(0.13/share), Q1/09 - $2.7 (0.12/share)).


- The Company recorded a loss of $4.8 million for 2009, or $0.21 per share,
compared to earnings of $9.7 million, or $0.42 per share in 2008. The Company
recorded depletion costs of $16.1 million in 2009 and $19.8 million in 2008.


- Capital expenditures of $13.1 million were invested in 2009 ($7 on water-flood
facilities, related pipelines, and injection wells at Killam, $4.4 on
undeveloped lands and seismic costs in new areas of exploration in Saskatchewan,
$1.4 of additional development costs at Killam, and $0.3 on exploration drilling
in Saskatchewan).


- Net debt (bank debt less working capital) at December 31, 2009 was $13.7
million compared to $13.2 million at December 31, 2008. Debt to annualized cash
flow is 1.77 to 1 (based on fourth quarter cash flow), while debt to equity is
0.27 to 1.


- The Company had drawn $13.9 million on its primary credit facility of $27
million at December 31, 2009, leaving $13.1 million available.


- Early in 2009, the Company purchased and returned to treasury, 723,500 common
shares of Culane at an average price of $0.99 per share, through the Normal
Course Issuer Bid process.


- On September 29, 2009 the Company issued 1,397,000 flow-through common shares
at $2.15 per share for gross proceeds of $3 million. There are 24,519,754 common
shares outstanding at December 31, 2009 and April 27, 2010 (26,139,754 fully
diluted).


Reserves

All of the reserves of the Corporation were evaluated by McDaniel & Associates
Consultants Ltd. ("McDaniel") as at December 31, 2009 and have been prepared in
accordance with National Instrument ("NI") 51-101. The reserve evaluation has
been approved by the Board of Directors of Culane.




Company share of remaining reserves - forecast prices and costs
----------------------------------------------------------------------------
Reserves                                          Natural  Gas
 category     Medium Oil   Heavy Oil       Sales      Liquids       Total
                 (Mbbl)      (Mbbl)      Gas (MMcf)   (Mbbl)        (MBOE)
            ----------------------------------------------------------------
              Gross  Net  Gross    Net  Gross    Net Gross Net  Gross    Net
----------------------------------------------------------------------------
Proved
 producing     11.3  9.6  994.3  784.5  692.2  568.0   0.2 0.1 1121.2  888.9
Proved
 non-producing  0.0  0.0  505.4  372.7  252.2  194.8   0.0 0.0  547.5  405.2
Proved
 undeveloped    0.0  0.0  892.1  673.2  124.6   99.3   0.0 0.0  912.9  689.8
            ----------------------------------------------------------------
Total proved   11.3  9.6 2391.9 1830.5 1069.0  862.1   0.2 0.1 2581.5 1983.9
Probable        5.0  4.1 1298.3  953.3  505.7  411.8   0.9 0.8 1388.5 1026.8
Total proved
 plus probable 16.3 13.7 3690.2 2783.8 1574.7 1274.0   1.1 0.9 3970.0 3010.7
Possible        0.0  0.0 3723.6 2586.1  324.0  237.0   0.0 0.0 3777.6 2625.6
            ----------------------------------------------------------------
Total proved
 plus probable
 plus possible 16.3 13.7 7413.8 5369.9 1898.6 1511.0   1.1 0.9 7747.6 5636.4
----------------------------------------------------------------------------
            ----------------------------------------------------------------


----------------------------------------------------------------------------
Forecast prices  Company share of Net Present Value Before Income Taxes ($M)
----------------------------------------------------------------------------
Reserves category                    Discounted (per year) at:
                       -----------------------------------------------------
                            Undisc         5%       10%       15%       20%
                       -----------------------------------------------------
Proved producing          44,458.3   36,947.0  31,723.4  27,942.0  25,098.0
Proved non-producing      20,564.7   17,374.9  14,759.3  12,706.0  11,084.0
Proved undeveloped        36,071.4   23,784.1  16,911.7  12,609.9   9,697.0
                       -----------------------------------------------------
Total proved             101,094.4   78,106.0  63,394.3  53,257.9  45,878.0
Probable                  61,344.8   31,136.9  18,082.9  11,308.7   7,386.0
                       -----------------------------------------------------
Total proved plus
 probable                162,439.2  109,242.9  81,477.2  64,566.5  53,264.0
Possible                 111,949.9   39,096.8  17,102.3   8,385.3   4,282.0
                       -----------------------------------------------------
Total proved plus
 probable plus
 possible                274,389.2  148,339.6  98,579.4  72,951.9  57,546.0
----------------------------------------------------------------------------
                       -----------------------------------------------------


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                                        Alberta 
                                            Bow      Alberta
McDaniel's              Edmonton Par      River         AECO
 forecast    WTI Cushing    Price 40   Hardisty        price
 pricing        Oklahoma  degree API  Crude Oil         spot       US / Cdn
 assumptions  ($U.S./bbl) ($Cdn./bbl) ($Cdn/bbl) ($Cdn/MMBtu)      Exchange
----------------------------------------------------------------------------
2010               80.00       83.20      72.30         6.05           0.95
2011               83.60       87.00      73.80         6.75           0.95
2012               87.40       91.00      74.40         7.15           0.95
2013               91.30       95.00      75.80         7.45           0.95
2014               95.30       99.20      79.20         7.80           0.95



Beyond year 2014, the price escalates on average 2% per year. A foreign exchange
rate of $0.95 US to $1.00 Cdn was used beyond 2014.


In 2009, gross proved reserves increased by 5.5%, gross proved plus probable
reserves decreased by 12.7%, and gross proved plus probable plus possible
reserves increased by 4.0% from 2008. The net present value before income tax
(discounted at 10%) of gross proved reserves at December 31, 2009 was $63.4
million, an increase of 28.1% from December 31, 2008, owing primarily to
commodity prices. At December 31, 2009, the net present value before income tax
(discounted at 10%) of gross proved plus probable reserves was $81.4 million, a
decrease of 11.0% year over year. At December 31, 2009, the net present value
before income tax (discounted at 10%) of gross proved plus probable plus
possible reserves was $98.6 million, a decrease of 9.8% from December 31, 2008.
All of the reserve increases are attributable to increased reserves for
secondary and tertiary recovery at Killam, Alberta.


Pursuant to NI 51-101, the Reserve category for the majority of Culane's crude
oil reserves is heavy, based on new regulatory classifications for Crown royalty
purposes in Alberta, effective January 1, 2009, as defined by the Alberta
government under the New Royalty Framework ('NRF'). This resulted in a change in
classification from medium to heavy in 2008. The Company still considers this
medium-gravity crude, using industry-standard guidelines.


OPERATIONS UPDATE

In November of 2008 there was a lot of uncertainty over the looming economic
downturn that was on the world's doorstep. Knowing that there was no way to
avoid the downturn that was already underway, Culane examined go-forward
strategies with the main emphasis on seeking opportunities to take advantage of
the downturn and expand Culane's oil growth opportunities. Culane was in a
strong financial position and identified a window of opportunity to acquire land
when competition was at a lowest point. This was a time when the general
industry sentiment was to conserve cash and ride out the downturn. In choosing
its new area Culane wanted to remain focused on oil prone opportunities. In the
end, the Crown Royalty system, infrastructure and excellent horizontal well
economics in Saskatchewan were most suited to Culane for its next planned stage
of organic growth. Culane's recent exploration drilling activities have been
targeting both the Upper Shaunavon and the Birdbear Formations in S.W.
Saskatchewan. However, the lands Culane has acquired have multi-zone oil
potential. Culane is still in the very early stages of its exploration program
in Saskatchewan.


In January of 2009, Culane commenced an active full cycle oil exploration
initiative in S.W. Saskatchewan. Culane intends to carry out its future growth
through the drill bit as it has since its inception. Over the course of 2009
Culane's oil exploration initiative included the acquisition, processing and
interpretation of 2D seismic as well as the participation in Crown land sales
and acquisition of freehold land. As of this date Culane owns a 100% working
interest in approximately 63.0 sections (40,000 acres) of land in S.W.
Saskatchewan. Total land acquisition costs to date in Saskatchewan are
approximately $4.1 million. Total Saskatchewan seismic acquisition costs to date
are approximately $322,000. On September 29, 2009 the Company issued 1,397,000
flow-through common shares at $2.15 per share for gross proceeds of $3 million.
The proceeds of this financing have been used to fund Culane's S.W. Saskatchewan
initial horizontal oil well exploration drilling program.


Culane is currently completing its initial phase of exploration activity in
Saskatchewan. Vertical stratographic ("strat") test drilling operations of three
new Culane exploration plays commenced on December 28th 2009. On two of the
vertical strat wells, drill cores from the Birdbear Formation were recovered and
sent to an independent laboratory in Calgary for analysis. Open-hole well logs
were run on all three wells and the wells were then plugged back and horizontal
drilling operations commenced. One horizontal test well targeted potential oil
from the Upper Shaunavon Formation and two additional horizontal test wells
targeted potential oil from the Birdbear Formation in two separate plays. Delays
were encountered waiting for initial completion services after the wells were
drilled. After the initial completion and swab testing of the wells, single well
batteries were constructed for two of the horizontal wells. As these were the
first test wells ever drilled by Culane in these formations, technical issues
specific to these plays had to be addressed, resulting in completion of the
wells taking longer than expected. Culane is currently carrying out the final
completion of two of the three horizontal wells drilled.


The Notukeu Upper Shaunavon oil pool is located in S.W. Saskatchewan. Four
abandoned vertical oil wells previously drilled and produced in the Notukeu pool
are situated on land owned by Culane. Culane also owns the majority of land
surrounding six additional vertical oil wells in the Notukeu pool, two of which
are currently suspended and four of which are still producing oil. The Notukeu
Upper Shaunavon oil pool has produced approximately 290,000 barrels of 22.8 API
oil from ten vertical wells. This oil production amounts to less than 1% of the
Saskatchewan Government's reported Original Oil in Place - "OOIP" ("Discovered
Petroleum Initially-in-place") of approximately 16.0 million barrels for the
Notukeu Shaunavon oil pool. Culane expects increased oil recoveries from the
Notukeu pool with the use of horizontal infill drilling. Directly south of the
Notukeu pool is the Instow Upper Shaunavon oil pool that has produced
approximately 66 million barrels of 22 API oil to date. Northwest of the Notukeu
pool, the Bench and Butte Upper Shaunavon pools have produced approximately 23
million barrels of 23 API oil combined. These pools were developed with vertical
wells before the common use of horizontal drilling and advanced completion
techniques.


Culane's Notukeu pool, Upper Shaunavon horizontal test well swabbed 99% oil at
rates of approximately 280 barrels per day. A single well battery was
constructed in order to production test the well. Since this is the first well
drilled in the Upper Shaunavon by Culane, the Company wanted to establish how
the horizontal well would perform before committing to additional stimulation of
the well. Pressure work indicated that the well was not in direct communication
with the main reservoir. Culane has established a pre-stimulation production
capability for this well and, on April 19, 2010, following the lifting of road
bans due to spring breakup, began the final completion operation. After the
operations were completed the well was swabbed in. After two days swabbing, the
rates were approximately 310 BOPD with a 92% oil cut. THESE ARE NOT STABILIZED
PRODUCTION RATES BUT INITIAL SWABBING RESULTS. Swabbing operations ceased on
April 26th, and the well was placed on production on April 27th. Stabilized
daily oil production rates cannot be determined at this time. Culane expects to
be in a position to announce initial production results by mid May.


Gravity of the oil is 22.4 API. Culane will pay a 2.5% Royalty on the first
38,000 barrels (6000 m3) of oil produced from horizontal wells drilled in the
Upper Shaunavon Formation on Saskatchewan Crown lands. Culane owns a 100%
working interest in 13 sections (8300 acres) of land on this play and is the
operator. Culane is currently licensing additional locations and expects to
commence the second phase of drilling operations in the third quarter of 2010.


Culane has also drilled wells targeting the Birdbear formation in west central
Saskatchewan. This is considered to be similar to the Hallam oil pool in West
Central Saskatchewan, where approximately 18 horizontal wells have been drilled
in the Birdbear Formation. The Hallam Birdbear pool is the model used by Culane
for the development of this play concept.


Culane has drilled two test horizontal wells in the Birdbear Formation. The
first well was acidized and swabbed with rates fluctuating from 0 to 70 barrels
of oil per day and water cuts ranging from 65% to 100%. The oil quality is 14.6
API. A single well battery was then constructed to place this well on production
test. This well requires further completion work and evaluation to determine if
it is capable of economic production. Culane encountered delays completing this
well, waiting on services that couldn't proceed because of road bans. Culane
will pay a 2.5% Royalty on the first 100,000 barrels (16,000 m3) of oil produced
from any horizontal wells drilled in the Birdbear Formation on Saskatchewan
Crown lands. Culane owns a 100% working interest in this project.


In a separate Birdbear exploration project area, a second horizontal Birdbear
test well was drilled, tested and suspended as un-economic. Total drilling costs
in all areas of Saskatchewan to date have been approximately $4.9 million.


KILLAM

As was previously announced, Culane has fully delineated two main Lloydminster
oil pools at Killam. Culane defines the Killam Lloydminster oil project as a
recoverable oil reserve based play rather than a daily production growth play.
With the full field implementation of the waterflood program, daily oil
production rates are expected to increase. Culane has increased the number of
injection wells from 2 to 13. The injection wells are a combination of both
vertical and converted horizontal wells. Culane is producing oil from 32
multi-leg horizontal wells. Culane commenced construction of its water injection
facilities mid July. Construction of the water injection facilities, including
pipelines, was completed on October 3rd, 2009. This central injection facility
will service all Culane lands in the Killam area. With full implementation of
the waterflood, reservoir simulation modeling by a third party consultant,
indicates that secondary oil recoveries can be expected to increase to
approximately 22% from around 10% under primary production. A surfactant-polymer
injection testing skid is being shipped to Killam to conduct in-field
injectivity testing on one of Culane's existing injector wells. This is the last
stage of testing before full implementation of surfactant-polymer for the whole
field, which is planned for the third quarter of 2010. Subsequent reservoir
simulation studies by a third party consultant, using existing pool analogies
along with linear core flood testing, continue to support the theory that this
combination of surfactant polymer added to the water flood can be expected to
increase oil recoveries in excess of 40%. 


On November 10th 2010 Culane announced that it had received regulatory approvals
for four water flood applications submitted by Culane for its Killam project.
Culane had endured external delays in gaining approval for the implementation of
the Killam water flood of over a year resulting in declining oil production
rates as reservoir pressure continued to drop. Culane has been ramping up water
injection rates starting in the first quarter of 2010. Water injection rates are
now approximately 4,200 barrels of water per day. For the past 4 months Culane's
production has stabilized at Killam, so the Company's total production has held
around 1,050 BOE/D. As the reservoir pressure increases the fluid level in the
well bores are increasing. When the reservoir pressure increases sufficiently,
Culane intends to increase pump speeds and oil production rates, this is
expected to happen during the third quarter. Culane also plans to introduce
surfactant-polymer in the third quarter. The addition of the surfactant-polymer
will cause the water production rates to drop as the oil is pushed in a front
instead of fingering and breaking through. Culane is currently planning to drill
two more water source wells to increase water injection volumes.


Culane's independent engineering evaluator has completed its evaluation of the
Company's reserves as of December 31, 2009. The reserves have been assigned as
Proved, Probable and Possible. The evaluator has assigned Possible reserves (3P)
to the surfactant polymer flood. The Proved, Probable and Possible reserves
assigned at this time combine for a 22.5% oil recovery factor. The "Discovered
Petroleum Initially-in-place" at Killam net to Culane is estimated at
approximately 42 million barrels of 24 API oil. Culane maintains 100% ownership
in this asset and is the operator.


Production averaged 1,370 BOE/d for 2009 compared to 2,310 BOE/d for 2008, a 41%
decline. (Q4/09 - 1,073, Q4/08 - 1,787). Production mix for 2009 is 72% oil and
28% natural gas, of which 96% is from the Company's Killam oilfield in east
central Alberta.


Capital expenditures of $13.1 million were invested in 2009 ($7 on water-flood
facilities, related pipelines, and injection wells at Killam, $4.4 on
undeveloped lands and seismic costs in new areas of exploration in Saskatchewan,
$1.4 of additional development costs at Killam, and $0.3 on exploration drilling
in Saskatchewan). Net debt (bank debt less working capital) at December 31, 2009
was $13.7 million compared to $13.2 million at December 31, 2008. Debt to
annualized cash flow is 1.77 to 1 (based on fourth quarter cash flow), while
debt to equity is 0.27 to 1. The Company was drawn to $13.9 million on its
primary credit facility of $27 million at December 31, 2009, leaving $13.1
million available.


The 2009 reserve report does not include any of the new horizontal wells drilled
in Saskatchewan in the first quarter of 2010 as these wells have either just
been completed or are in the process of being completed


About Culane Energy Corp.

Culane is a junior oil and gas company engaged in the exploration, development
and production of oil and natural gas in western Canada.


FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements. More particularly, this
press release contains statements concerning anticipated results from the
Company water flood program, oil recoverability, and anticipated exploration
activities. The forward-looking statements contained in this document are based
on certain key expectations and assumptions made by Culane. Although Culane
believes that the expectations and assumptions on which the forward-looking
statements are based are reasonable, undue reliance should not be placed on the
forward-looking statements because Culane can give no assurance that they will
prove to be correct. Since forward-looking statements address future events and
conditions, by their very nature they involve inherent risks and uncertainties.
Actual results could differ materially from those currently anticipated due to a
number of factors and risks. These include, but are not limited to, the failure
to obtain necessary regulatory approvals, risks associated with the oil and gas
industry in general (e.g., operational risks in development, exploration and
production; delays or changes in plans with respect to exploration or
development projects or capital expenditures; the uncertainty of reserve
estimates; the uncertainty of estimates and projections relating to production,
costs and expenses, and health, safety and environmental risks), commodity price
and exchange rate fluctuations and uncertainties resulting from potential delays
or changes in plans with respect to exploration or development projects or
capital expenditures. Certain of these risks are set out in more detail in
Culane' Annual Information Form which has been filed on SEDAR and can be
accessed at www.sedar.com.


The forward-looking statements contained in this document are made as of the
date hereof and Culane undertakes no obligation to update publicly or revise any
forward-looking statements or information, whether as a result of new
information, future events or otherwise, unless so required by applicable
securities laws.


24,519,754 Common Shares