MegaWest Energy Corp.
OTC Bulletin Board : MGWSF

MegaWest Energy Corp.

January 08, 2008 11:00 ET

MegaWest Energy Announces Combined Independent and Management High Estimate of 2 Billion Barrels of Gross Original Resources (OOIP)

CALGARY, ALBERTA--(Marketwire - Jan. 8, 2008) - MegaWest Energy Corp., (the "Company" or "MegaWest") (OTCBB:MGWSF), an independent oil and gas company (Cusip: #585168 107), specializing in non-conventional oil and gas projects with a focus on North American heavy oil, today announced that GLJ Petroleum Consultants ("GLJ"), has completed an independent engineering report of the reserves and resources associated with certain of its key projects. The combined GLJ and Management high estimate of combined recoverable Reserves, Contingent Resource and Prospective Resource is 332 million barrels out of a high estimate of Gross Original Resource (OOIP) of over 2 Billion barrels.

GLJ has independently estimated the oil reserves and resources attributable to MegaWest's interests in its Chetopa Kansas Project, the Upper Warner Sand at its Deerfield Missouri Project and the Big Clifty Sand at its Kentucky Reserves Project, encompassing only 43,982 of the total of over 115,000 mineral acres leased by MegaWest. Volume estimates have been completed, with Net Present Value estimates to be finalized at fiscal year-end. The GLJ reserves and resource estimates were prepared in accordance with the requirements of Canadian National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). Capitalized terms related to reserve and resource classifications used in this press release are based on the definitions and guidelines in the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook").

GLJ Reserves and Resource Estimates

- Total high estimate (P10) Gross Original Resource (OOIP) is 983 million barrels

- Total best estimate (P50) Gross Original Resource (OOIP) is 709 million barrels

- Total high estimate recoverable resource is 210 million barrels. This includes:

-- Proved plus Probable plus Possible Reserves of 0.84 million barrels

-- High estimate (P10) Contingent Resource of 131 million barrels, and

-- High estimate (P10) Prospective Resource of 78 million barrels

- Total best estimate recoverable resource is 123 million barrels. This includes:

-- Proved plus Probable Reserves of 0.35 million barrels

-- Best estimate (P50) Contingent Resource of 77 million barrels, and

-- Best estimate (P50) Prospective Resource of 46 million barrels

The portion classified as resources has not been classified as reserves at this time, pending further delineation drilling, development planning, project design and receipt of regulatory approvals. Criteria other than economics may require classification as resources rather than reserves. Contingencies affecting the classification as reserves versus resources relate to the following issues as detailed in COGE Handbook: ownership considerations, drilling requirements, testing requirements, regulatory considerations, infrastructure and market considerations, timing of production and development, and economic requirements. There is no certainty that any portion of contingent resources will be commercially viable to produce. There is no certainty that any portion of the prospective resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.

Management Estimates

In addition to the GLJ estimated resources, MegaWest has identified the presence of oil accumulations in the Blue Jacket Sand at its Deerfield Missouri Project and in the Tar Springs and Hardinsburg Sands at the Kentucky Reserves Project not included in the GLJ report. MegaWest also has an interest in over 67,500 acres of leases in its Trinity Sands Texas and Big Sky Montana projects, which also have not been evaluated by GLJ at this time. Independent third party reserve and resource estimates will be completed on these resources after the initial round of exploration drilling and analysis is completed in each area.

MegaWest's management has undertaken a statistical estimate of the resource potential of the zones and projects which have not been completed by GLJ.

Combining the GLJ results with Management estimates indicates:

- Total high estimate (P10) Original Resource (OOIP) is 2.004 billion barrels. This includes:

-- GLJ high estimate (P10) Original Resource is 983 million barrels

-- Management high estimate (P10) Original Resource is 1.021 billion barrels

- Total best estimate (P50) Original Resource (OOIP) is 1.228 billion barrels. This includes:

-- GLJ best estimate (P10) Original Resource is 709 million barrels

-- Management high estimate (P10) Original Resource is 519 million barrels

- Total high estimate recoverable resource is 332 million barrels. This includes:

-- GLJ Proved plus Probable plus Possible Reserves of 0.84 million barrels

-- GLJ High estimate (P10) Contingent Resource of 131 million barrels, and

-- GLJ High estimate (P10) Prospective Resource of 78 million barrels

-- Management estimate (P10) Prospective Resource of 122 million barrels

- Total best estimate recoverable resource is 171 million barrels. This includes:

-- GLJ Proved plus Probable Reserves of 0.35 million barrels

-- GLJ Best estimate (P50) Contingent Resource of 77 million barrels, and

-- GLJ Best estimate (P50) Prospective Resource of 46 million barrels

-- Management Best estimate (P50) Prospective Resource of 48 million barrels

Additional potential exists in MegaWest's 37.5% interest in the deep gas rights underlying 35,217 acres of the Kentucky leases and its interest in the deep gas rights on 22,903 acres in the Texas Trinity Sands Project leases. This additional potential has not been estimated by MegaWest's management at this time and is not included in the figures shown above.

MegaWest owns or has the right to earn an interest in over 115,000 acres in Kansas, Missouri, Kentucky, Texas and Montana. MegaWest's strategy is to grow shareholder value through the selective acquisition of projects with large resource potential located in the vicinity of existing infrastructure and the application of emerging and proven commercial developments in thermal recovery technologies. Delineation drilling and the completion of thermal and enhanced recovery production demonstration projects may increase the value of the unconventional heavy oil resources in each of its core areas.

ON BEHALF OF THE BOARD OF DIRECTORS

R. William Thornton, COO

For further information please visit the Company's Website at www.megawestenergy.com.

Forward-Looking Statement Disclaimer

Except for statements of historical fact relating to the company, this news release contains certain "forward-looking information" within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate", "potential", "prospective" and other similar words, or statements that certain events or conditions "may" "will" or "could" occur. Forward-looking statements such as the combined independent and management estimates of gross original resources and recoverable resources are based on the opinions and estimates of management and the Company's independent evaluators at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking statements, which include but are not limited to risks inherent in the heavy oil and oil sands industry, regulatory and economic risks, and risks associated with the company's ability to implement its business plan. There are numerous uncertainties inherent in estimating gross original resources and recoverable resources, including many factors beyond the company's control. In general, estimates of gross original resources and recoverable resources are based upon a number of factors and assumptions made as of the date on which the estimates were determined, such as geological, technological and engineering estimates which have inherent uncertainties. Contingencies affecting the classification as reserves versus resources relate to the following issues as detailed in COGE Handbook: ownership considerations, drilling requirements, testing requirements, regulatory considerations, infrastructure and market considerations, timing of production and development, and economic requirements. There is no certainty that any portion of contingent resources will be commercially viable to produce. There is no certainty that any portion of the prospective resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources. MegaWest Energy undertakes no obligation to update forward-looking information if circumstances or management's estimates or opinions should change, except as required by law. Readers should also refer to MegaWest Energy's current annual report or other document filings, which are available at www.sedar.com and at www.sec.gov for additional discussion of risks and uncertainties. The reader is cautioned not to place undue reliance on forward-looking statements.

COGEH DEFINITIONS OF OIL AND GAS RESOURCES AND RESERVES

Original Resources

Original resources are those quantities of oil and gas estimated to exist originally in naturally occurring accumulations. They are, therefore, those quantities estimated on a given date to be remaining in known accumulations plus those quantities already produced from known accumulations plus those quantities in accumulations yet to be discovered.

Contingent Resources

Contingent resources are defined as those quantities of oil and gas estimated on a given date to be potentially recoverable from known accumulations but are not currently economic. Contingent resources include, for example, accumulations for which there is currently no viable market.

Prospective Resources

Prospective resources are defined as those quantities of oil and gas estimated on a given date to be potentially recoverable from undiscovered accumulations. They are technically viable and economic to recover.

Classification of Resources

When evaluating resources, in particular contingent and prospective resources, the following mutually exclusive categories are recommended:

- Low Estimate: This is considered to be a conservative estimate of the quantity that will actually be recovered from the accumulation. If probabilistic methods are used, this term reflects a P90 confidence level.

- Best Estimate: This is considered to be the best estimate of the quantity that will actually be recovered from the accumulation. If probabilistic methods are used, this term is a measure of central tendency of the uncertainty distribution (most likely/mode, P50/median, or arithmetic average/mean.)

- High Estimate: This is considered to be an optimistic estimate of the quantity that will actually be recovered from the accumulation. If probabilistic methods are used, this term reflects a P10 confidence level.

Reserves

Those quantities of oil and gas anticipated to be economically recoverable from discovered resources are classified as reserves.

Proved Reserves

Proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.

Probable Reserves

Probable reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved + probable reserves.

Possible Reserves

Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. It is unlikely that the actual remaining quantities recovered will exceed the sum of the estimated proved + probable + possible reserves.

Classification of Reserves

Reported Reserves should target the following levels of certainty under a specific set of economic conditions:

- at least a 90 percent probability that the quantities actually recovered will equal or exceed the estimated proved reserves;

- at least a 50 percent probability that the quantities actually recovered will equal or exceed the sum of the estimated proved + probable reserves;

- at least a 10 percent probability that the quantities actually recovered will equal or exceed the sum of the estimated proved + probable + possible reserves.

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