12/01/2010
GB00B0MH9D42/GBP/PLUS-exn
CAP ENERGY LIMITED
("Cap" or the "Company")
OPERATIONS UPDATE
INTRODUCTION
In October, 2009, Cap Energy Ltd completed the funding necessary to make the final payments due on the
acquisition of interests in the Stark's Dome Field and the Iberia Dome Project in Louisiana, and to
enable Cap to participate in the expansion of oil production at the former location and begin the
evaluation of potential oil and gas production at the latter. The Company is announcing an update to
its operations since completion of that fund raising.
Operations in two of Cap's three production areas have suffered from problems with salt water disposal
wells (SWDWs), happily offset by an encouraging workover in the third area.
Stark's Dome Field
After a series of production delays totaling about six weeks caused by problems with the field's SWDW,
a new water injection pump has been installed and the seven wells in which Cap has an interest were
restored to full production at the end of December. To prevent further problems, the field operator
(CSV Holdings, Inc.) has applied to have a nearby non-producing well converted to a SWDW in a deeper
and lower pressure zone, reducing the cost of electricity consumed by the injection system, and
hopefully eliminating production delays.
In January, CSV plans to complete and put on production the three remaining new wells in which Cap has
a 25% interest, and this should generate some flush oil production. Following this, three existing non-
producing old wells will be completed in other zones known to be productive elsewhere in the field.
After evaluation of these results, further wells will be recompleted.
Iberia Dome Project
In February, CSV plans to re-enter an existing well on this structure which has previously tested oil
and gas in several zones, and will test a shallower zone which also appears productive. Other wells
on this structure have produced large quantities of oil and gas.
If the test results are positive, the well should be able to produce oil and gas at rates much higher
than in the Stark's Dome Field.
Oklahoma Operations
The SWDW servicing the wells in which Cap has an interest encountered major problems, and the cost of
restoring the well to use could exceed the value of Cap's interests. Consequently Cap plans to
dispose of its Oklahoma interests, the scale and potential of which are small compared with its other
interests, rather than pay these costs. At present it is not possible to forecast the timing and the
value of this transaction, except to the extent that the expected value is expected to be impacted by
the known problems with the SWDW.
Texas Operations
Cap, which has interests in two oil and gas wells producing a small cashflow, accepted an offer to
carry out a major and expensive workover of the wells in exchange for Cap's relinquishing one half of
its interests in the wells.
The first well has been worked over and put back on production. The latest production results have
been very encouraging, and, if sustained, will substantially improve cash flow. The second well will
be worked over shortly.
Results
Cap's year ended on 31 December 2009 and the Company will be releasing the audited results to the
market no later than 31 May 2010 in line with the PLUS Rules.
The Directors of Cap are responsible for the contents of this announcement.
Contact Information:
Company:
Cap Energy Limited
John Killer
Tel: 07979 903673
Corporate Adviser:
St Helens Capital Partners LLP
Duncan Vasey or Mark Anwyl
Tel: 020 7368 6959
Cap Energy Ltd