Culane Energy Releases 2009 Second Quarter Results

Culane Energy Corp. ("Culane"or the "Company") (TSX VENTURE:CLN) announces its
financial and operating results for the second quarter ended June 30, 2009. The
unaudited Financial Statements and related Management's Discussion and Analysis
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.


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


- Production averaged 1,592 BOE/d for the first half of 2009 compared to 2,525
BOE/d for the same period in 2008 (Q2/09 - 1,480, Q1/09 - 1,706, Q4/08 - 1,787).
Production mix is 72% oil and 28% natural gas.


- Prices for 2009 averaged $52.06 per bbl for oil and $4.37 per Mcf for natural
gas compared to 2008 first half prices of $94.24 per bbl for oil and $9.36 per
Mcf of natural gas. Net backs were $24.29 for 2009 and $50.84 for the first half
of 2008.


- Gross revenues were $13 million for 2009 (Q2 - $6.8, Q1 - $6.2) compared to
$37.8 million for the first half of 2008, a 66% decrease. This was due to a 37%
decrease in the Company's production for 2009 compared to the first half of
2008, and a 47% decrease in commodity prices received in the two comparative
periods.


- Cash flow for 2009 was $5.7 million, or $0.25 per share, compared to $21.8
million for the first half of 2008, or $0.98 per share. (Q2/09 - $3.0
(0.13/share), Q1/09 - $2.7 (0.12/share), and Q4/08 - $2.7 (0.11/share)).


- The Company recorded a loss of $3.2 million for 2009, or $0.14 per share,
compared to earnings of $8.3 million, or $0.37 per share in the first half of
2008.


- Capital expenditures of $3.8 million were invested in 2009 for the drilling
and equipping of four water injection wells and tie in and equipping of two gas
wells at Killam, and acquired additional undeveloped lands in a new area of
exploration, compared to $13.9 million in 2008 to drill 18 oil and gas wells at
Killam. The Company also acquired additional assets at Killam in the second
quarter of 2008 for $21.4 million.


- In January, the Company began injecting water at its Killam North water-flood
pilot project through two injector wells drilled in 2008. The Company is
currently waiting for regulatory approval to commence its full field water-flood
program and plans to construct full field water-flood facilities during the
third quarter.


- Net debt (bank debt less working capital) at June 30, 2009 was $11.4 million
compared to $13.2 million at December 31, 2008 and $18.3 million at June 30,
2008. Debt to annualized cash flow is 0.94 to 1 (based on second quarter cash
flow), while debt to equity is 0.23 to 1.


- The Company was drawn to $13 million on its primary credit facility of $27
million at June 30, 2009.


- During the first quarter, the Company purchased and returned to treasury,
723,500 Culane shares at an average price of $0.99 per share, through the Normal
Course Issuer Bid process. There are 23,122,754 common shares outstanding at
June 30, 2009 (25,407,754 fully diluted).


During the second quarter of 2009, Culane continued its focus on government
regulatory issues, reservoir engineering and facilities design for the Killam
water flood project as well as debt reduction. On the regulatory front, Culane
has been meeting with the regulator and is seeing progress towards attaining
approval of four separate water flood applications submitted by Culane earlier
this year. According to the regulator, approvals for water flood applications
are released without any advance notice to the operator. Culane anticipates
receiving government approval for its full field water flood applications by
late third quarter or early fourth quarter. Culane has commenced development of
its water injection facilities as of mid July. Lease preparation is almost
complete, all pipelines have been surveyed, all major equipment has been
procured and the water injection project construction commenced on August 24th,
including pipeline construction. This project will involve central injection
that will service all Culane lands in the Killam area. As previously announced
the expected completion date of the Killam water flood injection facilities is
by the end of the third quarter. The project as of this date is on schedule.


With the completion of the water injection facilities and government approval of
its water flood applications, Culane intends to increase water injection rates
from approximately 1,250 up to 6,000 barrels per day, essentially recharging the
reservoir by increasing the reservoir pressure and subsequently reversing the
oil production decline that occurred during the primary production phase of the
reservoir. This will be achieved through a combination of vertical well
injectors and converted horizontal wells. When Culane has replaced sufficient
reservoir voidage and a clear increase in reservoir pressure and well fluid
levels is observed, Culane intends to introduce surfactant polymer to the water
flood. Existing pool analogies indicate that the addition of surfactant polymer
has the potential to increase the oil recovery factor to in excess of 40%.


Production in the first half of 2009 averaged 1,592 BOE/d with a mix of 72% oil
and 28% natural gas. Gross revenues were $13 million for the first half of 2009
with cash flow of $5.7 million for the first half of 2009. Bank debt less
working capital at June 30, 2009 was $11.4 million. Debt to annualized cash flow
is 0.94 to 1 (based on annualized second quarter cash flow) while debt to equity
is 0.23 to 1. The Company has a primary credit facility of $27 million and a $3
million development/acquisition facility currently in place. Also during the
first quarter, the Company purchased and returned to treasury, 723,500 Culane
shares at an average price of $0.99 per share, through the Normal Course Issuer
Bid process. There are 23,122,754 common shares outstanding at June 30, 2009.


Culane has weathered the economic storm favorably within its peer group over the
past year. Culane is fortunate that it is essentially an oil story. The Company
has followed strict financial controls, not only over the past year but since
its inception. With the full implementation of the water flood at Killam, Culane
expects to see a reversal of production declines and a return to much higher oil
production rates. The advantage to Culane shareholders is that the Killam assets
generate oil revenues that have allowed Culane to reduce its debt and most
importantly allowed the Company to take advantage of the economic downturn and
expand into other exciting oil prone areas through its ongoing exploration
program without going to the capital markets. This will effectively increase
shareholder value now and in the near future. Culane will continue to exploit
in-house developed, high working interest oil opportunities, and grow the
Company mainly through the drill bit as it has done since its inception. Culane
will also continue to evaluate strategic oil acquisition opportunities. Culane
expects a return to oil exploration drilling in the fourth quarter of 2009.


Culane is a healthy junior oil company with a solid oil production base and well
established recoverable oil reserves. The company has both the financial and
technical capability to continue its growth from a small junior oil company into
a medium size oil company during this next cycle of high oil prices, which
Culane feels has already begun. Going forward, Culane anticipates that rising
oil production rates out of Killam coinciding with increasing oil prices, will
allow the Company to fund its future growth in new oil prone areas. It is
important to note that the Killam project was a very large undertaking (in
excess of $100 million invested) that Culane management proved to be up to the
task of discovering, capturing and developing. The consequence of this was $64
million in cash flow from Killam operations, $147 million in remaining 3P
reserve value - 5% dcf (both as of December 31, 2008), only 23.1 million shares
outstanding, and a debt of only $11.4 million. With Killam established as a
base, management believes that Culane's future growth and rising shareholder
value is ensured


Effective today, the Company has cancelled 750,000 share options which were
previously granted to officers of the Company, exercisable at prices ranging
from $5.93 to $7.95. There are 1,535,000 share options outstanding as of today's
date.


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 Alberta.


ADVISORY: Certain information regarding Culane in this news release including
management's assessment of future plans and operations, timing of drilling and
tie-in of wells, productive capacity of the new wells, expected production
rates, drilling success rates, dates of commencement of production, may
constitute forward-looking statements under applicable securities laws and
necessarily involve risks including, without limitation, risks associated with
oil and gas exploration, development, exploitation, production, marketing and
transportation, loss of markets, volatility of commodity prices, currency
fluctuations, imprecision of reserve estimates, environmental risks, competition
from other producers, inability to retain drilling rigs and other services,
unexpected decline rates in wells, wells not performing as expected, delays
resulting from or inability to obtain required regulatory approvals and ability
to access sufficient capital from internal and external sources. As a
consequence, actual results may differ materially from those anticipated in the
forward-looking statements. Readers are cautioned that the foregoing list of
factors is not exhausted. Additional information on these and other factors that
could effect Culane's operations and financial results are included in reports
on file with Canadian securities regulatory authorities and may be accessed
through the SEDAR website (www.sedar.com). Furthermore, the forward-looking
statements contained in this news release are made as at the date of this news
release and Culane does not undertake any obligation to update publicly or to
revise any of the included forward-looking statements, whether as a result of
new information, future events or otherwise, except as may be required by
applicable securities laws.


Disclosure provided herein in respect of barrels of oil equivalent (boe) may be
misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf:
1 Bbl is based on an energy equivalency conversion method primarily applicable
at the burner tip and does not represent a value equivalency at the wellhead.


23,122,754 Class A Shares