GEOCAN Energy Inc. Announces Second Quarter 2008 Results

    CALGARY, Aug. 14 /EMWNews/ - GEOCAN Energy Inc. ("GEOCAN"

or the "Company") (TSX: GCA) announces its financial results for the

quarter ended June 30, 2008.



    2008 Second Quarter Results



    Cash flow from operating activities was $2.73 million ($0.05/diluted

share) for the second quarter 2008 compared to $4.04 million ($0.07/diluted

share) for the second quarter 2007. Earnings after tax were $0.51 million

or $0.01/diluted share for the second quarter 2008 compared to a loss of

$(1.27) million or ($0.02)/diluted share in the second quarter 2007.



    Six month 2008 cash flow was $7.95 million ($0.14/diluted share)

compared to $6.86 million ($0.13/diluted share) for 2007. Six month 2008

earnings after tax were $0.28 million or $nil/diluted share compared to a

loss of $(4.25) million or $(0.08)/diluted share for the six month period

of 2007.



    GEOCAN averaged sales of approximately 917 BOE/d during the second

quarter split 42% to light and medium oil and 58% natural gas.



    Natural gas prices averaged $10.56/mcf in second quarter 2008, up 43%

from $7.37/mcf in second quarter 2007. Light and medium oil prices (before

financial instruments) averaged $102.75/bbl in second quarter 2008 up 99%

from $51.60/bbl in second quarter 2007.



    The Company had two hedge contracts in place during the second quarter.

One of these, a swap contract for 125 boepd at USD$72.15/bbl WTI expired on

June 30, 2008. As at June 30, 2008, the Company had one contract remaining

for 150 boepd at USD$75.25/bbl WTI which will expire on December 31, 2008.



    GEOCAN is strategically focused within three core areas, namely, east

central Alberta, west central Alberta and northeastern British Columbia.

GEOCAN holds 121,415 gross (78,247 net) undeveloped acres of land within

its three core areas.



    Further information regarding the Company's second quarter 2008 results

is contained in the Company's June 30, 2008 consolidated financial

statements, the attached notes and the management's discussion and analysis

relating thereto, all of which are available for viewing on SEDAR

(http://www.sedar.com) and on the Company's website (http://www.geocan.com).



    Review of Strategic Alternatives Process



    On March 6, 2008 the Company announced that its board of directors had

unanimously approved a process to review strategic alternatives to maximize

shareholder value and had retained Tristone Capital Inc. to act as its

exclusive financial advisor. These alternatives included the sale of the

Company, an amalgamation or reorganization or such other transaction that

is considered to be in the best interest of GEOCAN. Interested parties were

invited to a confidential data room set up by Tristone to evaluate the

existing assets and future potential of the Company.



    As announced on August 7, 2008 that process culminated in an agreement

being reached with Arsenal Energy Inc. and the Company whereby Arsenal

agreed to acquire GEOCAN pursuant to a plan of arrangement under the

Business Corporations Act (Alberta). Under the plan of arrangement, Arsenal

will acquire all of the outstanding class "A" common shares of GEOCAN

("GEOCAN Shares") for consideration of $0.70 per GEOCAN Share, payable, at

the election of each GEOCAN shareholder, in cash or 0.81 of a common share

of Arsenal. The consideration to be paid by Arsenal under the Arrangement

of $0.70 per GEOCAN Share represented a premium of 29% over the five day

weighted average trading price of the GEOCAN Shares to and including August

7, 2008 of $0.541. The value of the total consideration to be paid by

Arsenal for the GEOCAN Shares, based upon a share value of $0.865 for each

Arsenal Share and taking into account assumed debt of approximately $8

million, is approximately $47.2 million. Complete disclosure of the

transaction can be found on http://www.sedar.com, the Company website at

http://www.geocan.com and Canada newswire at http://www.newswire.ca.



    Advisory -- Forward-looking Information



    This press release may include certain forward-looking statements.

These statements involve known and unknown risks, uncertainties, and other

factors that may cause actual results or events to differ materially from

those anticipated in the forward-looking statements. However, while

management believes these forward-looking statements to be reasonable, the

reader cannot be assured that these expectations will prove to be correct.

The reader should not unduly rely on these forward-looking statements as

these statements speak only as of the date of August 14, 2008. Additional

information about the company can be found on http://www.sedar.com.



    Barrel of oil equivalent (BOE) may be misleading, particularly if used

in isolation. A BOE conversion ratio for natural gas of 1 bbl : 6 mcf. This

is based on an energy equivalency conversion method particularly applicable

at the burner tip and does not represent a value equivalency at the

wellhead.