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.
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