Highlights from the Byron Capital Markets Research Report

- The Montney has been the focus of increased attention as international companies seek new sources of reserves.

- Canadian Spirit Resources Inc. (SPI) has a strong cash position of $14.0 M and their joint ventures are proceeding at no cost to the company.

- The upper Montney has been the target of other companies in the area and their success has significantly derisked the upper Montney play in the Farrell Creek area.

- The b-17-I well completed in Q4 '09 targeted the lower Montney and the test "exceeded expectations and should lead to further exploitation of the lower Montney in the Farrell Creek area." This is significant because SPI now has an additional zone capable of adding greatly to their prospective resource and eventually adding to their reserves and production.

- The Montney recovery factor can range from 20% to 50%. Byron 's share value of $3.00 is based upon 100 bcf/section and a 15% recovery factor. Given that the Montney could contain up to 350 bcf/section (some estimates are as high as 700 bcf/section) and recovery rates could be as high as 50%, Byron notes that there is significant upside under the best case scenarios which can also be seen from our calculations and summary. Higher recovery rates and higher gas prices would have a substantial impact on share prices

- SPI has set a goal of meaningful productivity, revenue and reserves from its Montney play by the end of the year.

- Talisman has been very active on its lands adjacent to SPI and has moved their Farrell Creek project into commercial development. Talisman's exploration success has significantly derisked the Montney play in this area.

- Sproule will be releasing a resource report on SPI's Montney lands in April.

- SPI has a highly prospective land position in the Montney and Byron has initiated coverage with a BUY recommendation and a $3.00 initial price target.