Culane Energy Releases 2008 Second Quarter Results

CALGARY, ALBERTA--(Marketwire - Aug. 27, 2008) - Culane Energy Corp. ("Culane") (TSX VENTURE: CLN.V) announces its financial and operating results for the three and six months ended June 30, 2008. 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.

2008 Highlights

- Gross revenues were $37.8 million for the first half of 2008 compared to $15 million for the 2007 interim period, a 153% increase.

- Second quarter 2008 gross revenues were $22 million compared to $15.8 million in Q1 of 2008. This was driven largely by a 32% increase in the price of oil and a 27% increase in natural gas prices during the second quarter.

- Production averaged 2,525 BOE/d for the first half of 2008 compared to 1,677 BOE/d for the same period in 2007, a 51% increase. Q2/08 production was 2,573 BOE/d compared to 2,476 BOE/d in Q2/07. The current production mix is 70% oil and 30% natural gas.

- Prices for 2008 first half averaged $94.24 per bbl for oil and $9.36 per Mcf of natural gas compared to 2007 interim prices of $51.76 per bbl for oil and $7.40 per Mcf of natural gas.

- Cash flow was $21.8 million or $0.98 per share for the first half of 2008 compared to $7.6 million or $0.37 per share for the same period in 2007, a 186% increase in cash flow and 165% increase in cash flow per share.

- Earnings were $8.3 million or $0.37 per share for the 2008 interim period compared to $0.4 million or $0.02 per share for the 2007 interim period.

- A total of 18 wells (net 16.5) were drilled in the first half of 2008 (20 in the same period or 2007) resulting in 7 producing multi-leg horizontal oil wells, 3 producing gas wells, 1 suspended gas well, 3 standing cased wells, 2 water injection wells, and 2 abandoned wells. All 2008 wells were drilled prior to spring break up.

- Capital expenditures of $13.9 million were invested in 2008, 99% at Killam for the drilling and equipping of 18 wells. Another $21.4 million was spent on June 30, 2008 for the acquisition of additional oil and gas properties at Killam.

- On April 3, 2008 the Company issued 2,860,000 class A common shares at $7.00 per share for gross proceeds of $20,020,000.

- Bank debt less working capital (net debt) at June 30, 2008 is $18.3 million. Debt to annualized cash flow is 0.42 to 1, while debt to equity is 0.36 to 1.

During the second quarter of 2008, Culane strengthened its balance sheet. On April 3rd, 2008 the Company issued 2,860,000 class A common shares at $7.00 per share for gross proceeds of $20,020,000, bringing the Company's outstanding number of shares to 23.9 million. This financing combined with record incoming revenues allowed Culane to acquire the remaining interests in its Killam water-flood project area, increasing Culane's working interest to 100% in a potential 55 million barrel oil resource ('Discovered Petroleum Initially-in-place'). Culane's 2008 capital budget is $45 million. Culane produces 70% oil and 30% natural gas. Current bank debt is approximately $13 million, down from $18.3 million on June 30, 2008. Current debt to annualized cash flow is .29 to 1. Gross revenues for July 2008 were approximately $7.2 million and the Company's netback was approximately $65 per barrel of oil equivalent. For the first half of 2008, Culane's gross revenues were $37.8 million compared to $15.0 million for the 2007 interim period, a 153% increase.

Culane continues its program of evaluating lands at Killam, and expects to see significant increases in its reserve value during the year as the Company drills and proves up more oil and natural gas reserves on its new and existing land base. The two main Lloydminster oil pools potentially have a combined 'Discovered Petroleum Initially-in-place' of 55 million barrels and are ideal candidates for secondary water-flooding. A feasibility study on a portion of the Killam North pool has been completed and the results indicate that these oil reservoirs are also very conducive to tertiary enhanced oil recovery through an Alkali Surfactant Polymer flood ("ASP"). Water-flooding and ASP flooding can dramatically increase the amount of recoverable oil reserves above the 10% oil recoveries 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 resource and ASP flooding has the potential to recover up to 40% of the original oil resource. The initial feasibility study on the Killam oil pools indicates the potential for these recoveries. The full field reservoir studies for the Killam water-flood and ASP flood are expected to be completed early in the fourth quarter. With the commencement of the water-flood, horizontal wells that have been declining are expected to gradually increase, approaching initial oil production levels. The Killam project is a recoverable oil reserve based play rather than a daily production growth play.

To date, Culane has spent approximately $60 million on land, 3D seismic, drilling and infrastructure, water-flood and ASP flood studies developing the Killam oil pools. Culane has also expended approximately $30 million on strategic acquisitions over the past two years which, in addition to strategic farm-ins, has resulted in the 100% capture of this large Lloydminster oil resource at Killam. Due to the latest acquisition, Culane chose to delay its ongoing drilling program until the deal was closed on June 30, 2008. Culane's horizontal well drilling program will commence in late August at Killam. Currently the new wells are being surveyed and licensed. Culane is currently beginning completion operations on 4 potential vertical gas wells. To June 30, 2008 at Killam, Culane has drilled 35 multi-leg horizontal oil wells, 10 producing gas wells, 12 standing cased or suspended wells, and 2 drilled and abandoned wells.

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 Alberta.

ADVISORY: This release contains forward looking statements. Forward-looking statements are based on current expectations that involve a number of risks and uncertainties which could cause actual events or results to differ materially from those reflected in this release. Forward-looking statements are based on the estimates and opinions of management as at the date of this release.

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.

23,872,354 Class A Shares

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contacts

Donald D. Staus
Culane Energy Corp.
President and Chief Executive Officer
(403) 263-2773
(403) 263-2776 (FAX)
Email: dstaus@culaneenergycorp.com

Stewart Larsen
Culane Energy Corp.
Vice President of Finance and Chief Financial Officer
(403) 263-2773
(403) 263-2776 (FAX)
Email: slarsen@culaneenergycorp.com

Thomas H. Field
Culane Energy Corp.
Vice President, Engineering and Operations
(403) 263-2773
(403) 263-2776 (FAX)
Email: tfield@culaneenergycorp.com

420, 333 - 5th Avenue S.W.
Culane Energy Corp.
Calgary, Alberta T2P 3B6
(403) 263-2773
(403) 263-2776 (FAX)
Website: www.culaneenergycorp.com