Kroes Energy Inc.

Kroes Energy Inc.

January 30, 2007 18:01 ET

Kroes Energy Updates on Western Canada New Production of 51 BOE/D

CALGARY, ALBERTA--(CCNMatthews - Jan. 30, 2007) - Kroes Energy Inc. (TSX VENTURE:KRS) announced today the results of its 2006 Western Canada shallow gas drilling program. The combined gross initial production rate from three producers is approximately 1430 Mcf/D of which the Company's net share of sales gas is 305 Mcf/D or 51 BOE/D.

During 2006, Kroes participated in the drilling of two wells and the recompletion of two shut in wells. Kroes participated at a 12.5% interest in the first well drilled which was unsuccessful. The second well (Kroes 25%) was drilled late in the year, completed and placed on production in January 2007 at approximately 1 Mmcf/D from two zones. Kroes has a 12.5% interest in one of the recompleted wells and a 25% interest in the other. These recompleted wells were placed on stream late in 2006 at nominal volumes pending the installation of pumps to remove formation water. The pumps were activated early in 2007 and gas volumes have increased significantly.

With the three successful wells, it is estimated that Kroes' share of current sales gas is approximately 305 Mcf/day or 51 barrels of oil equivalent per day (BOE/D). At a Crown land sale in December, Kroes participated to its 25% interest in acquiring a section of land adjacent to one of the successful wells.

In addition to the wells that have been drilled, Kroes has committed to participate in two follow up wells and two new prospects where 3D seismic will be shot prior to drilling. With this program, Kroes has already earned interests in 3,200 acres (800 acres net to Kroes) and has committed to participate in prospects that will add an additional 1,280 acres (320 acres net to Kroes). All of this activity should occur in the first half of 2007.

Expenditures to the end of January on the entire program total $600,000 and an additional $200,000 has been committed for seismic and drilling in the first few months of 2007.

Kroes Energy is a junior oil and gas producer and explorer participating in the Lelyaki Oilfield redevelopment project in Ukraine, one of Eastern Europe's fastest growing economies. It also has a Joint Venture agreement in central Alberta. Kroes has a strong management team, with extensive international experience. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6Mcf: 1bbl is based on an energy equivalency conversion method primarly applicable at the burner tip and does not represent a value equivalency at the wellhead.


This disclosure contains certain forward-looking estimates that involve substantial known and unknown risks and uncertainties, certain of which are beyond Kroes' control, including: the impact of general economic conditions in the areas in which the Company operates, industry conditions, changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in commodity prices, foreign exchange or interest rates, stock market volatility and obtaining required approvals of regulatory authorities. In addition, there are risks and uncertainties associated with oil and gas operations; therefore, Kroes' actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking estimates and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking estimates will transpire or occur, or if any of them do so, what benefits, including the amounts of proceeds, that Kroes will derive from that.

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