SOURCE: Avalon Energy Corporation

June 30, 2005 06:30 ET

Avalon Energy's LAK Ranch Oil Project - Update

BELLINGHAM, WA -- (MARKET WIRE) -- June 30, 2005 -- Avalon Energy Corporation (OTC BB: AVLN) reports an update on its 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.

Further to our news release dated January 12, 2005, the project joint venture partner, Derek Oil and Gas Corporation, reports that the 3-D seismic survey has been completed and been prepared for initial interpretation. In addition, the third steaming cycle has been successfully completed with noticeable improvements and will provide valuable information on the ultimate field production rate and recovery factors for the field. An independent geotechnical firm has completed a development plan proposal and presented it the project operator, Ivanhoe Energy (USA) Inc. ("Ivanhoe") for review.

In the meantime, after soaking from the third steam cycle, the existing well 1-P returned to production in mid-May with continued improvement in oil production. The development program will now continue to include drilling additional horizontal wells, new steam injection wells (vertical and/or horizontal) and expansion of surface facilities. The geotechnical firm is determining viable well locations while Ivanhoe reviews the proposed development plan.

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.

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

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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 and Exchange Commission.

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