Culane Energy Releases 2010 Second Quarter Results

THIS NEWS RELEASE IS NOT FOR DISSEMINATION IN THE UNITED STATES OR TO U.S. PERSONS.

Culane Energy Corp. ("Culane" or the "Company") (TSX VENTURE:CLN) announces its
financial and operating results for the second quarter ended June 30, 2010. 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.




                                       2010     2009       2010        2009 
HIGHLIGHTS                               Q2       Q2     Y to D      Y to D 
----------------------------------------------------------------------------
                                                                            
Daily production - BOE                  980    1,480      1,018       1,592 
                                                                            
Netback per BOE                       22.73    27.70      25.56       24.29 
                                                                            
Cash flow - ($000's)                  1,399    3,032      3,575       5,753 
                                                                            
Cash flow per share (basic)            0.06     0.13       0.15        0.25 
                                                                            
Earnings (loss) - ($000's)             (819)  (1,532)    (1,394)     (3,253)
                                                                            
Wells drilled                             -        -          4           4 
Capital expenditures - ($000's)       1,493    1,705      8,222       3,817 
                                                                            
Dispositions - ($000's)                   -       50          -         408 
----------------------------------------------------------------------------
                                                                            
Working Capital (deficit) - ($000's)                        890       1,555 
                                                                            
Bank debt - ($000's)                                    (19,533)    (12,956)
                                                     -----------------------
                                                                            
Net debt - ($000's)                                     (18,643)    (11,401)
                                                                            
Basic shares outstanding                             24,519,754  23,122,754 



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




--  The Notukeu area has yielded the Company's first successful oil well in
    SW Saskatchewan with a horizontal well drilled into the Upper Shaunavon
    formation. A multi-stage sand frac using the 'Packers Plus' technology
    has resulted in a 94 bbl/d oil well (initial production rate). The
    Company has 13 sections of contiguous land in this area, on which 45
    drilling locations have been identified. 
    
--  Water-flood injection rates at Killam are at 4,200 barrels of water per
    day. The Company plans to increase water injection rates up to 6,000
    barrels per day by the fourth quarter, following the addition of four
    more water source wells. 
    
--  Production averaged 1,018 BOE/d for the first six months of 2010
    compared to 1,592 BOE/d for the first half of 2009 (Q2/10 - 980, Q1/10 -
    1,056, Q4/09 - 1,073). Production mix was 75% oil and 25% natural gas
    for the first six months of 2010. 
    
--  Prices for 2010 averaged $70.15 per bbl for oil and $4.67 per Mcf for
    natural gas compared to 2009 first half prices of $52.06 per bbl for oil
    and $4.37 per Mcf of natural gas. 
    
--  Gross revenues were $11 million for the first six months compared to $13
    million for the first half of 2009. 
    
--  Cash flow for the first six months was $3.6 million, or $0.15 per share,
    compared to $5.8 million, or $0.25 per share for the same period in
    2009. 
    
--  The Company recorded a loss of $1.4 million for the first half, or $0.06
    per share, compared to a loss of $3.3 million, or $0.14 per share in the
    first six months of 2009. Higher depletion costs in 2009 contributed to
    the bigger loss in the earlier period. 
    
--  Capital expenditures of $8.2 million were invested in 2010. Most of the
    expenditures were in Saskatchewan with three horizontal wells and one
    vertical test well drilled in new exploration areas, plus 10 additional
    sections of lands acquired. 
    
--  The Company's land base in Saskatchewan is now comprised of 44,000 acres
    (69 sections), 85% Crown and 15% freehold. 
    
--  Net debt (bank debt less working capital) at June 30, 2010 was $18.6
    million compared to $13.7 million at December 31, 2009. Debt to
    annualized cash flow is 3.3 to 1 (based on second quarter cash flow),
    while debt to equity is 0.4 to 1. 
    
--  The Company had drawn $19.5 million on its primary credit facility of
    $27 million at June 30, 2010, leaving $7.5 million available, plus $3
    million on its development facility. 
    



Operations Update

As previously announced, the Company has opened up a new exploration front in
southwest Saskatchewan. In choosing the new core areas Culane wanted to remain
focused on oil prone opportunities. In the end, the Crown royalty regime,
infrastructure, and excellent horizontal well economics in Saskatchewan were
well suited to Culane for its next planned stage of organic growth.


SASKATCHEWAN 

NOTUKEU 

At Notukeu, Culane's drilling operations in southwest Saskatchewan have resulted
in a successful 100% working interest horizontal oil well in the Upper Shaunavon
formation. Initial production rates are approximately 15 m3 (94 barrels) of oil
per day with an 8 to 10 % water cut. The Notukeu 2-6-11-17W3 was drilled in
February 2010 and following an initial completion and production testing period,
was shut in for most of April, May and June because of spring break-up and
extended delays due to extremely wet weather and field conditions.


When recompletion work was finally able to occur, the well was sidetracked and a
new leg drilled in the Upper Shaunavon. The liner in the first leg could not be
removed, necessitating the drilling of a new leg from the same well-bore, and
the abandonment of the original leg. The horizontal length of the new leg is
approximately 600m. A Packers Plus liner assembly was run and the new leg frac'd
with a nine stage, 135 tonne frac (15 tonnes per stage) on July 31, 2010. The
well was flowed back immediately after the frac. Overnight, the well flowed back
504 barrels of 22 degrees  API oil. The single-well battery was re-piped and the
well was placed back on production on August 6.


Initial completion attempts were unable to establish full communication with the
Upper Shaunavon reservoir resulting in unusually low reservoir pressure readings
and declining production rates caused mainly by drilling damage. The drilling
damage has been overcome with the multi stage sand frac completion that has
achieved full communication with the reservoir. The well was put back on
production and after a week of production the well bore fluid levels started to
stabilize. The well is currently producing approximately 15 m3 (94 barrels) of
oil per day with an 8 to 10 % water cut. Water production based on analysis is
substantially load fluid from the frac operation.


At Notukeu, Culane owns 13 sections of land with a 100% working interest and has
identified an additional 45 drill locations. The Company currently has
horizontal well project approvals from Saskatchewan Energy and Resources for
eight new wells and has made a horizontal well project application for another
23 drill locations. Drilling operations are scheduled to recommence at Notukeu
by the second week of September. The next wells at Notukeu will be drilled with
longer horizontal legs which Management believes will produce at higher rates
than the first well at 600m.


COLEVILLE

In the first quarter of 2010, Culane drilled an exploration well targeting the
Birdbear formation in west central Saskatchewan at Coleville. The well was then
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 degrees  API. A
single well battery was then constructed to allow this well to be production
tested. Culane carried out an initial chemical treatment on this well in April
with the subsequent testing of the well being delayed by road bans and wet
weather. Once production commenced Culane produced 100 barrels of oil in 18
hours, then the well turned back to producing water. The produced oil sample was
sent to the lab for analysis. The produced oil turned out to be a thick emulsion
that formed when the mud system was turned over to produced water from another
Birdbear pool. To date, efforts to break the emulsion block have failed. Culane
has reviewed the seismic data on this play and expects to drill another test
well in the fourth quarter of this year. Seismic data indicates that the new
well should be approximately 10 meters higher in structure from the first test
well. Fresh water with a KCL inhibitor will also be used to change over the mud
system before completion of the well to eliminate the formation of any emulsion.


Culane will pay a 2.5% Crown 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.


ALBERTA

KILLAM

Water injection rates are now approximately 4,200 barrels of water per day. For
the past seven months Culane's production has stabilized at Killam. Culane
currently has two water source wells completed and ready to produce up to an
additional 1,000 barrels of water per day for which government approval was just
recently received. Culane is currently equipping these wells and expects to
increase water injection rates to approximately 5,000 barrels of water per day
by mid September. Culane has drilled and cased one new water source well in
August and is currently drilling another. The two new water source wells are
expected to add an additional estimated 1,000 barrels of water per day
increasing water injection volumes to approximately 6,000 barrels of water per
day. Culane expects to be in a position to add this increased water injection by
the beginning of the fourth quarter. As the reservoir pressure increases
sufficiently, Culane intends to increase pump speeds and oil production rates.
As a direct result of water injection into the Killam pool, Culane has observed
daily oil production rate increases in several wells along with comparable
decreasing daily natural gas rates. Culane has 31 multi-leg horizontal producing
oil wells at Killam, 14 water injectors that are a combination of vertical and
horizontal wells and 10 water source wells.


Culane's independent engineering evaluator completed its most recent 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 degrees  API oil. Culane maintains
100% ownership in this asset and is the operator.


Water-flooding and Surfactant Polymer flooding can dramatically increase the
amount of recoverable oil reserves above the estimated 10% oil recovery
resulting from primary production. Analogous oil pool case histories have
established that water-flooding similar oil reservoirs has the potential to
recover up to 25% of the original oil in place and Surfactant Polymer flooding
has the potential to recover up to 40% of the original oil in place. The initial
feasibility study on the Killam oil pools indicates the potential for these
recoveries.


FUTURE GROWTH

As previously announced, Culane has acquired a 100% working interest in close to
two townships of land (69 sections) in southwest Saskatchewan. Culane acquired
this land for its oil potential. Culane's initial venture into Saskatchewan this
year has been one of many technical challenges that include the associated
learning curve that is part of dealing with new technical issues. Based on
initial results in this area, management believes that Culane can now move back
into an organic growth phase through the development drilling program of its
Notukeu property. At Notukeu Culane has identified 45 drilling locations.
Notukeu is only the first of a number of potential oil opportunities that Culane
has identified on its lands. Culane's entry into Saskatchewan and its subsequent
oil discovery at Notukeu represents a major turning point for Culane and its
shareholders.


In September Culane will commence development drilling operations at Notukeu.
Culane also expects to be conducting oil exploration drilling in the fourth
quarter and into 2011 at Coleville, Kerrobert and Whiteside in southwest
Saskatchewan. Culane is currently producing approximately 1,100 BOEs per day
(77% oil, 23% natural gas).


About Culane Energy Corp.

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


Reader Advisories

Forward-Looking Statements: This news release contains certain forward-looking
statements, including management's assessment of future plans and operations and
the expected timing and results from operations, that involve substantial known
and unknown risks, uncertainties and assumptions, certain of which are beyond
Culane's control. Such risks, uncertainties and assumptions include, without
limitation, those associated with oil and gas exploration, development,
exploitation, production, marketing, processing 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, delays resulting from or
inability to obtain required regulatory approvals and ability to access
sufficient capital from internal and external sources, the impact of general
economic conditions in Canada, the United States and overseas, industry
conditions, changes in laws and regulations (including the adoption of new
environmental laws and regulations) and changes in how they are interpreted and
enforced, increased competition, the lack of availability of qualified personnel
or management, fluctuations in foreign exchange or interest rates, stock market
volatility and market valuations of companies with respect to announced
transactions and the final valuations thereof, and obtaining required approvals
of regulatory authorities. Culane's actual results, performance or achievements
could differ materially from those expressed in, or implied by, these
forward-looking statements and, accordingly, no assurances can be given that any
of the events anticipated by the forward-looking statements will transpire or
occur, or if any of them do so, what benefits that Culane will derive there
from. Readers are cautioned that the foregoing list of factors is not
exhaustive. Additional information on these and other factors that could affect
Culane's operations and financial results are included in reports, including
Culane's annual information form for the financial year ended December 31, 2009,
on file with Canadian securities regulatory authorities and may be accessed
through the SEDAR website (www.sedar.com). All subsequent forward-looking
statements, whether written or oral, attributable to Culane or persons acting on
its behalf are expressly qualified in their entirety by these cautionary
statements. 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.


BOEs may be misleading, particularly if used in isolation. A BOE conversion
ratio of 6 Mcf: 1 bbl is based on an energy equivalency convervion method
primarily applicable at the burner tip and does not represent a value
equivalency at the wellhead.


Possible reserves are those additional reserves that are less certain to be
recovered than probable reserves. There is a 10% probability that the quantities
actually recovered will equal or exceed the sum of proved plus probable plus
possible reserves.


24,519,754 Common Shares