Celtic Exploration Ltd., Calgary (Toronto: CLT) plans to acquire natural gas assets at Grande Cache, Alberta, for C$50 million in cash.

The assets include approximately 61,000 net acres (95 sections) adjacent to Celtic's core area at Resthaven, of which approximately 33,000 net acres (51 sections) are undeveloped. The majority of the lands contain Cretaceous rights, including the Cardium, Dunvegan, Cadotte, Falher, Bluesky, Gething Cadomin and Nikanassin formations.

Production is approximately 15 million cubic feet per day or 2,500 barrels equivalent per day, of which approximately 50% is operated. Proved producing reserves as of March 31 were 4.7 million barrels equivalent. BOE and proved and probable reserves were 6.1 million barrels equivalent.

Average royalties are approximately 16% and production expenses are currently below C$6 per barrel equivalent.

Also, Celtic will acquire 30% working interest in the Copton gas plant, 7% working interest in the Narraway gas plant and interests in various compressors and gas gathering pipelines.

Celtic has identified several horizontal drilling opportunities on the Grande Cache asset base that has previously been developed using only vertical wells. The assets are complementary to Celtic's land holdings at Resthaven where the Company is currently drilling a horizontal well in the Cretaceous Falher formation.

The deal is expected to close in mid-December.