Canoel International Energy Ltd. declared that the Italian "Ministero per lo Sviluppo Economico" (the ministry responsible for economic and industrial activities) has confirmed in writing that the Company's application for two natural gas properties has been successful.

In August 2009, the Italian Government had opened an invitation for bidding on properties previously owned and operated by Eni, the Italian multinational oil and gas major. A data room was opened and all the companies interested in the bidding process were asked to prepare a technical proposal to improve production from the licences. Canoel participated in the bidding process for two properties and was later selected as one of the finalists for both, as announced in a previous press release.

The two natural gas properties are in proximity to each other and are located in southern Italy, an area which is currently producing most of Italian hydrocarbons. The first property, named "Torrente Vulgano" is located in the Puglia Region, while the second one, named "Canaldente", is located in the Basilicata Region. Both properties are already connected to the Italian national gas distribution grid; there is therefore no need to install new gas pipelines.

The Torrente Vulgano and Canaldente properties were previously produced by Eni.

Before the agreement to return the field to the Authorities, in the last 4 years of production (1997-2000), the Torrente Vulgano property was producing an average of 7.900 Standard Cubic meters per day (= 278,949 Scfd, Standard Cubic feet per day, using a conversion rate of 1 Scm= 35.31 Scf)

Furthermore, Canoel anticipates that production will commence approximately 9 months from today, as Canoel will have to comply with some Italian regulatory obligations before field start-up.

There are no assurances that production of the Torrente Vulgano and Canaldente properties will be at the same levels that they were previously producing.

Canoel will disclose all reserves data for these two licenses, once this data has been translated into documentation in compliance with applicable securities regulations.

At the end of production, the Canaldente reservoir appears to be a good candidate for gas storage.

Gas prices in Italy are substantially higher than in North America, with natural gas currently selling at approximately CAD$12 per 1000 cubic feet (approximately €8.46Mcf, at an exchange rate of 0.7047 (using nominal rate).

Mr. Andrea Cattaneo, Canoel's president and CEO, stated "[w]ith Canoel's management expertise, understanding of the producing environment in Italy and with our low overhead, we believe we will be able to increase production and generate robust cash flow from these two properties. They are going to be a key cornerstone in the Company's strategy as it aims to substantially increase its oil and gas production by the end of 2012. With these two properties, Canoel expects to start producing gas for the industrial and retail markets in Europe for the first time, whilst currently already producing crude oil in Latin America since 2010."

Tags: Canoel International Energy Ltd