SOURCE: Avalon Energy Corporation

July 25, 2005 06:30 ET

Avalon Energy's LAK Ranch Oil Project Expanding

BELLINGHAM, WA -- (MARKET WIRE) -- July 25, 2005 -- Avalon Energy Corporation (OTC BB: AVLN) reports that further to our News Release dated June 30, 2005, Ivanhoe Energy Inc. and Derek Oil & Gas Corporation have agreed to expand the enhanced oil recovery pilot program at the LAK Ranch field in Weston County, Wyoming.

The Company owns a 0.70% (.70 of 1%) proportionate, reducible, Gross Overriding Royalty interest in the LAK Ranch Oil Project located in Newcastle, Wyoming. This royalty interest equates to $0.35 per barrel based on a price of $50.00 per barrel for Avalon.

The pilot steam flood in the LAK Ranch field will be expanded with the drilling of three steam injection wells. This expansion follows completion of a 3-D seismic survey of the area and a thorough interpretation of the survey results. The new wells will provide for a continuous injection of steam above the existing horizontal wells. The pilot program to date has consisted of three cycles of steam injected into a horizontal well, located approximately 25 feet above the injection well. Oil production has increased with each cycle and is currently about 20 barrels per day following the third steam cycle.

Ivanhoe has reported that it estimates that at the low end of the projected recovery range, the initial development program could grow to more than 20 producing wells and oil production volumes in excess of 4,500 barrels per day. Optimum daily production rates could exceed 10,000 barrels per day.

The LAK Ranch field, originally discovered in the 1920s, covers approximately 7,500 acres in the Powder River Basin. Thirty wells have been drilled by several operators to define the significant oil in place for this project, and a number of small scale attempts have been made to economically recover the oil. Ivanhoe Energy believes the use of horizontal wells and continuous steam injection offers the most promising chance of success and some encouraging results have been achieved to date. The pilot expansion is expected to be completed by August pending drill rig availability.

While the Company maintains its position in the LAK Ranch, its main focus is the Shotgun Draw Uinta Basin overpressured gas project.

/s/ Robert Klein
Robert Klein, President
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: The statements contained herein which are not historical fact are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements, including, but not limited to, certain delays in testing and evaluation of products and other risks detailed from time to time in Avalon's filings with the Securities & Exchange Commission.

Contact Information