SOURCE: Canary Resources Inc.

May 21, 2007 09:35 ET

Canary Resources and K C Clean Energy LLC Form Drilling Program for CBM Gas

STILWELL, KS -- (MARKET WIRE) -- May 21, 2007 -- Canary Resources Inc. (PINKSHEETS: CYRR) ("Canary") today announced that its wholly owned subsidiary Canary Operating Corporation has entered into an agreement for a joint venture Drilling Program with K C Clean Energy LLC which will participate on a turnkey cost basis. The first phase of the Drilling Program involves a commitment for 20 wells. Canary is to drill 16 new wells in which K C Clean Energy LLC will acquire a 50% working interest, and K C Clean Energy LLC will purchase a 50% working interest in 4 of Canary's existing wells. Canary will operate all 20 wells, and will retain a 50% working interest in them. Upon completion of the first phase of the Drilling Program, K C Clean Energy LLC has the right to participate in an additional phase for up to 20 more wells.

"Our agreement with K C Clean Energy enables Canary to speed up drilling and development of coal-bed methane gas in the Eastern Forest City Basin of Kansas and Missouri," explained William Chandler, Chief Executive Officer of Canary. "Our equipment and crews are on location, wells are permitted and Canary is starting to drill immediately," he said.

Canary recently completed construction of its wholly owned tap into the Southern Star Central Gas Pipeline in Kansas, and is finalizing the engineering and regulatory testing for the interconnect facility. Canary has 19 completed gas wells, presently shut-in pending pipeline connection, with 12 wells adjacent to its Southern Star interconnect. The 16 new wells to be drilled under the joint venture Drilling Program will also be located near the interconnect. Initial indications from the wells near the tap are positive: all have good gas shows and are expected to be productive wells. Hook-up of the wells is underway, and Canary expects to achieve commercial gas production, and start realizing transportation fees in the second quarter of 2007.

Canary Resources Inc. is independent Oil and Natural Gas Company engaged in the acquisition, exploitation, production and development of oil and natural gas properties in Johnson and Miami Counties, Kansas, and in Bates and Cass Counties, Missouri, for which it is the operator. Canary has offices in Houston, Texas, and Stilwell, Kansas.

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Portions of this document include "forward-looking statements," which may be understood as any statement other than a statement of historical fact. Forward-looking statements contained in this document are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. We have tried, whenever possible, to identify these forward-looking statements using words such as "anticipates," "believes," "estimates," "expects," "intends," "plans," "potential" and similar expressions. Actual results may vary materially from management's expectations and projections expressed in this document. Certain factors that can affect the Company's ability to achieve projected results include, among others, production variances from expectations, uncertainties about estimates of reserves, volatility of oil and gas prices, the need to develop and replace reserves, the substantial capital expenditures required to fund operations, environmental risks, drilling and operating risks, risks related to exploratory and development drilling, competition, government regulation and the ability of the Company to implement its business strategy.

Copyright 2007. All rights reserved Canary Resources Inc.

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