Canoel Plans To Acquire Cogeneration Facility - WOWK 13 Charleston, Huntington WV News, Weather, Sports

Canoel Plans To Acquire Cogeneration Facility

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CALGARY, ALBERTA / ACCESSWIRE / April 14, 2014  Canoel International Energy Ltd. (“Canoel” or the “Company”) (TSX VENTURE: CIL) is pleased to report that its 100% subsidiary, Canoel Italia Srl, has signed a Letter of Intent (LOI) to acquire cogeneration equipment and facilities located at its Torrente Cigno concession in Italy. During the next two months, Canoel Italia Srl will have the exclusive right to negotiate a contractual agreement with the current owner of the cogeneration plant so that the Company will be able to produce electricity and to sell it directly into the national electrical grid, using gas produced from Canoel’s Masseria Vincelli 1 well, located in the Torrente Cigno concession. Currently, Canoel sells the gas to the owner of the onsite cogeneration facility as per an agreement which had been negotiated by the previous well operator.

Masseria Vincelli 1

The Masseria Vincelli 1 gas field is located in Canoel’s Torrente Cigno concession in Italy. The field currently has one producing well which was completed with a single tubing string in order to develop a gas horizon from a limestone reservoir. Produced gas requires treatment as it contains about 35% CO2 and nitrogen. After treatment, the gas is delivered to an in-situ electrical power generation plant that transforms it into electricity at a ratio of 2.6 kWh per standard cubic meter.

A reservoir study by an independent Italian engineering company assigned original gas reserves in place of 4.8 Bcf (136 million m3) to the reservoir, with a final recovery factor assumed to be approximately 60%. Proven remaining reserves (P1) have been estimated at 816 million cubic feet (23 million m3) of gas and 14,400 barrels of condensate.

Additionally, since the structure is composed of different blocks with hydraulic separation, Canoel management believes that significant upside potential could be unlocked by targeting new production horizons in separate structural blocks of the Masseria Vincelli field.

The company cautions investors that the numbers and calculations for the Torrente Cigno concession are management’s estimates and must be validated by the forthcoming National Instrument 51-101 Report for the year ending March 31, 2014. Canoel completed the purchase of this property, among other Italian assets, from an international vendor in June 2013.

Cogeneration Plant

Canoel management has previously reported its intention to maximize revenues from natural gas in Italy through the development of cogeneration opportunities in areas where pipeline facilities are not available or in situations, like the Masseria Vincelli field, where gas quality does not allow delivery into the national grid.

This LOI will allow the Company to produce electricity directly. Under the terms to be negotiated with this agreement, the Company will have the opportunity to acquire four (4) engines for the generation of electricity, with an hourly output capacity of 700 kW each, for a cumulative production capacity of 2,800 MW. The production plant is expected to have a conservative performance of 7,500 hours per year, equal to a production volume of 21,000 MWh. An additional generator will also be purchased in order to compensate for potential maintenance downtime and to avoid production interruptions.

A price forecast for electricity in Italy has been developed by the Electricity Market Operator (GME), which reports a selling price of EUR55.00 MWh for the years 2014 and 2015, an increase to EUR60.00 per MWh for 2016, and up to EUR65.00 per MWh for the following years. Initial production is expected to be approximately 10,500 MWh per year which, in combination with condensate production, is expected to produce gross revenues of EUR750,000 per annum (~CDN $1,100,000 assuming current foreign exchange rates). Assuming that production will grow to stabilize for at 21,000 MWh for 2016 and subsequent years, Canoel management anticipates revenues, including condensate sales, from the Torrente Cigno concession to reach EUR1,640,000 per year, which would be equivalent to approximately CAD $2,405,000 at current exchange rates.

Andrea Cattaneo, Canoel’s President and CEO says, “We are excited to advance our plans to diversify Canoel’s corporate revenues by generating electricity using existing and future gas production at Torrente Cigno. Italy has one of the more developed national grids for integrating gas and electricity, with an impressive network of entry points for natural gas and electricity. When, as in the Masseria Vincelli case, the gas does not conform to the pipeline grid standards, it is important for Canoel to have the ability to exploit these reserves directly and to create immediately accretive revenues to improve overall corporate performance. As an Operator, Canoel continues to advance its core competencies and include electrical generation capabilities, to diversify its operations and revenues.”

About Canoel

Canoel’s producing licenses cover 837 square kilometers with net land holdings of 369 square kilometers (approximately 91,143 acres). The company is one of very few Operators within Italy and currently manages eight onshore producing fields while, at the same time, overseeing the operations of three other non-operated fields.

Canoel is TSX-V listed under the symbol “CIL”. The Company’s focus is creating shareholder value through the acquisition and development of low-risk exploration and production opportunities offering strong logistics and close proximity to refineries and pipelines. Canoel’s Management and Directors have extensive international and governmental experience and possess the technical knowledge to execute this strategy.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward-Looking Statements

Certain information in this press release is forward-looking within the meaning of applicable securities laws, and related to anticipated financial performance, events and strategies. When used in this context, words such as “will”, “anticipate”, “believe”, “project”, “plan”, “intend”, “target” and “expect” or similar words suggest future outcomes. By their nature, such statements are subject to significant risks, assumptions and uncertainties, which could cause the Company’s actual results and experience to be materially different than the anticipated results or expectations expressed. Although Canoel believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward looking statements and information because Canoel can give no assurance that they will prove to be correct.

In particular, forward-looking information and statements include, but are not limited to: (i) the anticipated capital expenditures (costs) required in order to commence or increase production at the Torrente Cigno Field; (ii) the ability of the Company to commence and increase production; (iii) the price of natural gas and electricity in Italy; (iv) the fluctuation of foreign exchange rates for currencies (v) the ability of the Company to comply with certain regulatory requirements; (vi) the Company’s low overhead costs; (vii) the Company’s ability substantially increase its oil and gas production by the end of 2014 and through 2016; (viii) the Company’s ability to produce gas and electricity for industrial and retail markets in Italy and Europe.

These statements are based on certain assumptions and analysis made by the Company in light of its experience and perception of historical trends, current conditions and expected future developments and other factors it believes are appropriate. The material factors and assumptions used to develop these forward-looking statements include, but are not limited to: (i) assumptions related to international natural gas prices and the price of electricity; (ii) ability to obtain regulatory approvals; (iii) costs of acquisitions, construction and development; (iv) availability and cost of labour and management resources; (v) performance of contractors and suppliers; (vi) availability and cost of financing; (vii) assumption the Company will continue to focus its activities through low-risk exploration and production opportunities offering logistical and proximate locations to refineries and pipelines and gas ducts; and (viii) the Company’s business strategy and outlook.

Whether actual results, performance or achievements will conform to the Company’s expectations and predictions is subject to a number of known and unknown risks and uncertainties which could cause actual results to differ materially from the Company’s expectations. Such risks and uncertainties include, but are not limited to, risks and uncertainties relating to: (i) political and economic conditions in the countries in which the Company operates or may operate; (ii) fluctuations in foreign exchange rates and natural gas prices; (iii) the Company’s ability to access external sources of debt and equity capital; (iv) failure to obtain any required regulatory approvals; (v) regulatory and governmental decisions including changes to environmental legislation; and (vi) availability and cost of labour, equipment and management of resources.

Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date hereof, and to not use such forward-looking information for anything other than its intended purpose as actual results could differ materially from the plans, expectations, estimates or intentions expressed in the forward-looking statements. Canoel undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.

For further information, please contact:

Jose Ramon Lopez Portillo Andrea Cattaneo

Chairman of the Board CEO & President

Email: info@canoelenergy.com

Telephone: (403) 938-8154

Telefax: (403) 775-4474

This press release is not to be distributed to U.S. newswire services or for dissemination in the United States. Any failure to comply with this restriction may constitute a violation of U.S. securities law.

SOURCE: Canoel International Energy Ltd.

ReleaseID: 414340