Canada Energy Partners commences gas sales from eight wells on its 50,788-acre Peace River Coalbed Methane (CBM) Project. Canada Energy owns a 50 per cent working interest in the Project and GeoMet, Inc. through its wholly-owned subsidiary Hudson's Hope Gas, Ltd., owns the other 50 per cent and is the Operator. This significant achievement is the first commercial CBM project in British Columbia and is a result of eight years and more than $45 million cash invested by the Company and its partners into acquisition of lands, exploration and development.

In conjunction with the announcement, Honourable Richard Neufeld, Minister of Energy, Mines and Petroleum Resources of British Columbia, commented: "I would like to congratulate you and your entire exploration and production team for reaching this significant milestone. This event signifies the first commercial production of coalbed gas in the Province of British Columbia and, as such, it is especially noteworthy. Unconventional gas development plays an important role in British Columbia's future energy security. Investment in coalbed gas development and the realization of gas royalties and taxes from coalbed gas production and sales will help fuel the Province's economy. The Ministry of Energy, Mines and Petroleum Resources acknowledges your accomplishment in coalbed gas development and looks forward to continuing to work with industry to allow the sector to succeed, while balancing economic and social priorities and protecting our environment and quality of life."

Ben Jones, Canada Energy President and Chief Executive Officer, commented: "After eight years of tremendous collaborative effort, it is a distinct pleasure to see this milestone achieved. I believe this project will be of a great value to our shareholders and will benefit the community, region and the Province of British Columbia. We look forward to its continuing development."

Darby Sere, GeoMet President and Chief Executive Officer, commented: "We are excited to achieve the first coalbed methane gas deliveries in British Columbia. We expect to increase gas sales from the Peace River Project for many years as we continue the development of the project."

Canada Energy also holds a 50 per cent interest in the gas treating and compression facilities installed on the Project. The facilities are scalable and modular and can be expanded with an increasing production base. The Company believes that in addition to the processing of the CBM these mid-stream facilities will be strategic in the commercialization of the Moosebar Shale, the Montney Shale, and other deeper formations. Exploration programs on Moosebar Shale and Montney/Doig formations are currently underway on the lands covered by the Project.

The current eight wells on production represent the first phase of a scalable project with 315 potential well locations (based on 160 acre spacing). The Company expects to have an updated independent reserve report including the recent activities completed on the CBM Project in February 2009.

The 2009 CBM development program will be finalized with the joint venture partner in Q1 2009 and the Company anticipates an additional multi-well production drilling program to start in July 2009.

Tags: Canada Energy Partners Inc.