Admiral Bay Resources Inc.
TSX VENTURE : ADB

Admiral Bay Resources Inc.

July 12, 2005 08:00 ET

Admiral Bay Begins to Flow Gas at New Tap/Compressor Site at The Shiloh Project, Kansas

TORONTO, ONTARIO--(CCNMatthews - July 12, 2005) -

Company starts producing 550 thousand cubic feet per day as new facility comes onstream

Admiral Bay Resources Inc. (TSX VENTURE:ADB) is pleased to announce that the Company's new tap/compressor facility at the Shiloh Project in the Neosho and Allen Counties, Kansas, is now operational.

Admiral Bay has completed all pipelines, tap and compressor facilities necessary to flow gas into Southern Star's major pipeline, from 24 of Shiloh's 35 wells. Until this new tap was operational, Admiral Bay had only 13 wells producing approximately 290 thousand cubic feet per day (MCFGPD) flowing into independent producer Quest Petroleum's gathering system. Production from these 13 wells had been constrained due to high line pressure in the gathering system. With the completion of this new tap/compressor facility and a new water disposal well, Admiral Bay will now be selling gas directly into Southern Star's 400 million cubic feet per day main pipeline and will have no further water disposal or pipeline constraints.

Admiral Bay began flowing into the new tap at the Shiloh Project on a continuous basis as of July 8th. Initial production was 138 MCFGPD and after five days the production is at 512 MCFGPD and continuing to increase. The project is presently producing from 24 wells. Eleven of the wells are newly completed and are flowing back frac fluid. As fluid production drops gas production is expected to increase. At least 11 of the presently producing wells are old wells with limited production rates. The remaining thirteen wells are in varying stages of completion or in the process of pipelines being laid to them.

Admiral Bay has finished its sixth well at the Mound Valley Project in Labette County, Kansas. The Froebe 14-32, the Froebe 4-7, Vareraka 10-31, Johnson 4-24, Keeslar Trust 10-16 and the Nelson Trust 4-24 all encountered significant gas shows in the Excello and V shale and the Mineral, Drywood, Rowe and Riverton coals. Significant shows based on mudlogs, mechanical logs and samples were also encountered in the Upper Bartlesville Sandstone, Cattleman Sandstone and Mississippian Limestones. The project is presently producing 40 MCFGPD from four existing wells that were purchased with the project in March. Admiral Bay is continuing to expand its acreage position and is presently holds 13,000+ acres at the project.

At the Devon Project, in Bourbon County, Kansas, 15 wells are dewatering from the coals and flowing gas into the pipeline at rates in excess of 160 MCFGPD. The Company is presently refracing a number of the wells with water only, to solve the problem of coal fines in the well bores. As an example, the Schaff14-15 was recently fraced utilizing water only and gas production increased to 21 MCFGPD, from just a minimal amount. This same problem is being seen by other operators in the area and is being solved by utilizing similar measures. The amount of production at the project is expected to continue to increase, as the wells continue the dewatering process.

At the Revloc Project in Cambria County, Pennsylvania, Admiral Bay has been informed by the drilling contractor that drilling is expected to begin in late August. The initial test wells target Allegheny and Pottsville coals that are low volatile in rank and have an estimated gas content, based on State of Pennsylvania publications, 450 standard cubic feet per ton. Admiral Bay plans to core the coals for testing purposes and complete them as coal bed methane wells.

At the Swordfish Project, in Chautauqua County, Kansas Admiral Bay is presently waiting for the purchase of right of ways in order to lay pipelines and complete the first six wells drilled under the agreement with Charter Capital Corp of New York. Admiral Bay expects operations to resume in August or September.

Admiral Bay wishes to clarify a press release that the Company previously issued announcing the appointment of Mr. Patrick Quinn of Quinn & Associates, P.C. as C.F.O. for the Company. Mr. Quinn's firm, Quinn & Associates, P.C., will be providing the Company with accounting and financial management services, however Stephen Woodhead remains the Company's C.F.O.

The Company has received final approval from the TSX Venture Exchange for its recently completed private placement. Gross proceeds of $5,000,000 were raised through the issuance of 5,000,000 units at $1.00 per Unit. Each Unit consisted of one common share and one half of one common share purchase warrant. Each whole warrant entitles the holder to purchase one common share at $1.40 until June 28, 2006. Each of the shares and warrants issued under the private placement is subject to a hold period which will expire on October 29, 2005

Admiral Bay has recently updated its photo gallery with new pictures of the equipment at the Shiloh project's new compressor station/tap facility along with pictures of the ongoing development at the Devon project, including the new solar powered pumps being used at the project. To view, go to http://www.admiralbay.com/projects/gallery.cfm

Admiral Bay Resources Inc. (www.admiralbay.com) is a Canadian listed oil and gas exploration and development company focused on developing its U.S. projects in the Cherokee Basin in southeast Kansas and the Appalachian Basin, in Pennsylvania. Coalbed methane (CBM) and conventional oil & gas production has begun at the Shiloh, Devon and Quest projects in Kansas and Utah. The Company is listed on the TSX Venture Exchange.

Statements in this release that are not historical facts are "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Readers are cautioned that any such statements are not guarantees of future performance and that actual developments or results may vary materially from those in these "forward-looking statements".

The TSX Venture Exchange does not accept responsibility for the adequacy of this release

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