Athlone Energy Ltd.
TSX VENTURE : ATH

Athlone Energy Ltd.

December 21, 2006 10:26 ET

Athlone Energy Ltd. Announces Filing of 2006 Third Quarter Interim Report Ending October 31, 2006

CALGARY, ALBERTA--(CCNMatthews - Dec. 21, 2006) - Athlone Energy Ltd. ("Athlone", the "Company") (TSX VENTURE:ATH) is pleased to announce that the Company's third quarter ending October 31, 2006 together with the related management's discussion and analysis has been filed. For a complete copy of the report please visit www.sedar.com or the Company's website at www.athlone.com.

The third quarter represented strong growth in terms of revenue, cash flow, production and reserve additions. Third quarter revenue of $1,164,327 almost equaled the entire revenue of $1,326,933 for the previous fiscal year ended January 31, 2006. Athlone has demonstrated steady growth in the first three quarters of this year with revenues of $636,954, $885,161 and $1,164,327 respectively.

Highlights of the third quarter ended October 31, 2006 include:

- Average production of 300 boepd for the third quarter compared to an average of 191 boepd for the second quarter, an increase of 57%;

- Revenue of $1,164,327 for the third quarter compared to $885,161 in the second quarter an increase of 32%;

- Net Income of $438,297 for the third quarter compared to $222,646 in the second quarter an increase of 97%;

- On October 13, 2006 the National Bank of Canada increased Athlone's total credit line from $2.5 million to $2.9 million based on production and financial performance to date;

- Drilled and completed 2 new wells in the Lloydminster area one of which is a new pool discovery at Wildmere. One well was on production during the quarter, the second well was placed on production subsequent to the end of the quarter; and

- Shot and interpreted 7.23 square kilometers of 3-D seismic at Vermilion.

Subsequent to the quarter end Athlone has completed the following:

- Drilled two new wells at Lloydminster which are awaiting completion; and

- Tied in a new gas well in South Lloyd which is currently producing 100 mcf/d. It is currently rate restricted because of facility capacity

Remaining plans for the fourth quarter include the following:

- Completion of the two new wells at Lloydminster

- Drilling of an exploration well at Vermilion

- 3-D seismic at Wildmere

Athlone's main core area and land position is in a heavy oil area from west of Lloydminster to Vermilion, Alberta with heavy oil comprising approximately 80% of production. Athlone now has producing wells on four separate land areas with multiple play types in the Lloydminster area which means the company has the flexibility of evaluating production of new wells prior to the drilling of follow up development locations. The company has built up an inventory of 15 to 25 drilling locations which will be exploited in 2007.

In west central Alberta Athlone has prepared a farm out package of company lands and has started the process of farming out these prospects to industry partners. The exploration risk is significantly higher in this area compared to Lloydminster and with dry hole costs of $800,000 we believe that it is prudent strategy to mitigate some of the risk. In southern Saskatchewan we are currently working on a development plan with our partner to exploit the land acquired in the second quarter.

The pricing outlook for heavy oil has never been better. Structural changes are occurring in the heavy oil market. A number of projects have been announced to add additional heavy oil refining capacity in the United States. Canadian upgrading projects have also been announced by major companies and a number of independent upgrading projects have also been announced. New export pipeline projects from Canada to the United States have been proposed to meet the additional refining capacity. Light oil is increasingly more difficult and expensive to find therefore this has never been a better time to develop heavy oil.

The term barrels of oil equivalent "boe" may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet (6 mcf) to one barrel (1 bbl) 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 information contains forward-looking statements (forecasts) under applicable securities laws. Forward-looking statements are necessarily based upon assumptions and judgments with respect to the future including, but not limited to, the outlook for commodity markets and capital markets, the performance of producing wells and reservoirs, and the regulatory and legal environment. Many of these factors can be difficult to predict. As a result, the forward-looking statements are subject to known or unknown risks and uncertainties that could cause actual results to differ materially from those anticipated or implied in the forward-looking statements.

Athlone Energy Ltd. is an active junior oil and gas exploration company with core assets in Alberta and Saskatchewan.

For further information, please refer to the Company's website: www.athlone.com or alternatively on www.sedar.com.

Copyright (c) 2006 ATHLONE ENERGY LTD. (TSX VENTURE:ATH). All rights reserved. For more information visit our website at http://www.athlone.com/ or send mailto:info@athlone.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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