Rival Energy Ltd.

Rival Energy Ltd.

November 28, 2007 09:15 ET

Rival Energy Ltd. Corporate Update

CALGARY, ALBERTA--(Marketwire - Nov. 28, 2007) - Rival Energy Ltd. (TSX VENTURE:RGY) is pleased to release its operating and financial performance for its fiscal third quarter and first nine months of 2007.

Corporate Highlights

- Production for the year to date continues to average over 1000 boe/d.

- As oil prices remain firm, cash flow remains strong and Rival continues to forecast cash flow per share of at least $0.45 per share for 2007.

- The recently drilled Bellshill well has been independently evaluated and adds significant new reserves to Rival. This well adds 4-6 drilling locations for 2008 which are expected to be pursued once spacing approvals have been obtained.

- The Company has completed four individual seismic programs that have all contributed to expanding Rival's inventory of drilling prospects.

- Subsequent to the end of fiscal Q3, Rival and Zargon Energy Trust entered into an Arrangement Agreement, pursuant to which Zargon will acquire all of the shares of Rival in a cash and unit transaction.

Highlights Table

Three Months Ended Nine Months Ended
September 30 September 30
Percent Percent
Financial 2007 2006 Change 2007 2006 Change
Oil & gas
sales $4,957,224 $3,766,536 32 $15,447,459 $11,294,210 37
Cash flow
operations 2,371,034 1,249,209 90 7,441,023 4,270,747 74
Net income (53,943) 5,365 (1,105) 336,340 303,434 11
Cash flow
per share 0.11 0.06 77 0.33 0.22 51
Net income N/A
per share (0.00) 0.00 0.02 0.02 0
(000) 22,349 19,809 13 22,338 19,809 13

(6:1 BOE)
Natural gas
(mcfd) 2,211 2,568 (14) 2,118 2,592 (18)
Oil and NGL
(bblsd) 627 403 56 697 394 77
Barrels of
(boe) 996 831 20 1,050 826 27

Average Sales
Natural gas
($/mcf) $ 5.28 $ 5.81 (9) $ 6.73 $ 6.43 5
($/bbl) 67.02 65.75 2 60.45 61.56 (2)

Rival's Q3 performance showed substantial growth in all areas. Production averaged 996 barrels of oil equivalent per day ("boe/d") over this time period, a 20% improvement over the same quarter of 2006 and, over the nine month period, averaged 1050 boe/d - a 27% increase over the same period of 2006. This production growth, fuelled by continued strong oil prices, resulted in a 32% growth in oil and natural gas sales for the third quarter compared to Q3 of 2006 and a 37% increase for the respective nine month periods.

These revenues, over a lower cost base, drove a dramatic rise in cash from operations for this three month period. Cash from operations for the most recent quarter was $2.4 million, up 90% quarter over quarter (2006) and 74% for the first three quarters of 2007 over the same time frame of last year. This increase provided a 77% growth in cash flow per share, to $0.11 for this calendar quarter versus $0.06 for the same time period of 2006, and a 51% increase, to $0.33 per share, for the first nine months of the 2007 over $0.22 for the same period last year.

During the third quarter, the Company drilled and placed on production only one development oil well. However, in October of this year in a follow-up to that well, Rival drilled a pool extension well into this pool in our core area of Bellshill Lake. This well encountered a significant increase in pay thickness and, as a result, has added 4-6 drilling locations to Rival's inventory. In conjunction with this well, Rival has 4-6 prospective locations identified in the Culp area and another 2-3 locations at Morinville.

Rival embarked on a modified growth strategy this year. Due to the uncertainty facing our industry, the Company's focus was to curtail natural gas spending, develop a high quality inventory of oil prospects, reduce our corporate indebtedness and pursue a corporate or property acquisition strategy that would enable Rival to grow and become a stronger corporate entity. Rival achieved all of these objectives this year. It controlled its capital spending and reduced corporate debt by $3.5 million. Rival's inventory of quality oil prospects, through the extensive use of 3D seismic, has grown substantially. Today the Company has Beaverhill Lake prospects in the Culp area of northern W5M, Leduc prospects in the Morinville area of central Alberta and a number of new oil prospects in the Bellshill lake area of east-central Alberta.

On the heels of a strong nine month performance, Rival discussed plans for a business combination with Zargon Energy Trust, and these discussions resulted in the execution of a mutually beneficial Arrangement Agreement. Subject to Court, stock exchange and shareholder approval, this arrangement will see Zargon acquire all of the shares of Rival for a combination of cash and units. Zargon will pay $1.35 (to a maximum of $16.4 million in cash) or 0.0562 of a Zargon unit (to a maximum of 0.69 million Zargon units) for each Rival common share. Shareholders have the right to request all cash, all units or any proportion of each they choose. However, since the offer stipulates a maximum of cash and units, should either of the maximum allocation of cash or units be reached, all shareholders requesting such category would be pro-rated accordingly and would receive the other category of compensation for the pro-rated amounts. Rival intends to mail a Circular to its shareholders in mid-December seeking approval of the arrangement at a shareholders meeting in late January, 2008.

The Board of Directors of Rival has approved the arrangement and unanimously recommends it to all of our shareholders. We believe this transaction provides Rival with a valuation that is economically fair to both sides of the transaction and provides the Rival shareholder with the benefits of more valuation certainty, improved market support and the stability of a larger corporate entity. Zargon is managed by an excellent group of individuals that have a proven track record of meeting shareholder expectations and efficiently extracting the most value from assets under their management. With your support, we look forward to the completion of this arrangement.

The term barrel of oil equivalent (BOE) may be misleading, particularly if used in isolation. A BOE conversion ratio of six thousand cubic feet to one barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead

This press release contains forward-looking information. Estimates provided for 2007 and beyond are based on assumptions of future events, and actual results could be significantly different than these estimates. Events or circumstances may cause actual results to be materially different from these predictions. The reader is cautioned not to place undue reliance on this forward-looking information.

Company information applicable to Canadian securities regulations has been filed on the Sedar system at www.sedar.com and the Company's website at www.rivalenergy.com.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

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