Cobalt Energy Ltd.
TSX VENTURE : CB.A
TSX VENTURE : CB.B

Cobalt Energy Ltd.

August 21, 2007 17:16 ET

Cobalt Announces 2nd Quarter 2007 Financial Results

CALGARY, ALBERTA--(Marketwire - Aug. 21, 2007) -

NOT FOR DISTRIBUTION TO US NEWSWIRE SERVICES FOR DISSEMINATION IN THE UNITED STATES.

Cobalt Energy Ltd. (TSX VENTURE:CB.A) (TSX VENTURE:CB.B) ("Cobalt" or the "Company") is pleased to announce that it has filed with applicable Canadian securities regulatory authorities its unaudited second quarter financial statements and related Management Discussion and Analysis for the three months ended June 30, 2007. These filings are available for review at www.sedar.com.

Highlights

- Cobalt closed its initial public offering on May 29, 2007, raising gross proceeds of $5,288,000. Following the closing, Cobalt has 7,222,240 Class A Shares and 465,344 Class B Shares outstanding. The Class A Shares and Class B Shares of Cobalt commenced trading on the TSX Venture Exchange ("TSX-V") on June 8, 2007 under the trading symbols CB.A and CB.B, respectively.

- Cobalt is in the pre-production stage of a junior oil and gas exploration company. The Company is active in land acquisition, farm-ins and seismic activity as it executes the initial phase of its exploration and drilling program.

- The Company acquired an additional 1,920 acres, gross (1,056 acres, net) of strategic undeveloped Crown land in its core exploration area in the Peace River Arch. At the end of the second quarter, Cobalt controls a 55-100% working interest in nine sections of contiguous, operated lands in the Peace River Arch which have potential for liquids rich natural gas in multi-zone geological formations.

- At June 30, 2007, Cobalt had $5,325,341 in cash and short term deposits, a working capital surplus of $5,337,752 and no outstanding bank debt.

Activity Update

Cobalt's initial areas of operational focus include the Peace River Arch and East Central Alberta. The Company anticipates activity during the remainder of the year to be directed primarily towards the Peace River Arch. To date, Cobalt has assembled 5,760 acres (9 sections) of undeveloped land in the Peace River Arch at 55-100% operated working interest through Crown land sales and farm-in agreements. Cobalt is currently conducting seismic evaluations, pursuing additional undeveloped lands and expects to operate the drilling of 2 (1.1 net) exploration wells targeting liquids rich natural gas reserves prior to year end.

Subsequent to the second quarter, Cobalt acquired 2,560 acres (4 sections) of undeveloped land in its East Central Alberta core area at 100% working interest. The Company plans to operate the drilling of 2 (2.0 net) exploration wells prior to year end, targeting natural gas at shallow drilling depths.

Acquisitions are also part of the Cobalt's growth strategy and the Company is continually evaluating property or corporate acquisition opportunities which are well-suited to its business plan.

Outlook

Since inception in late 2006, Cobalt has been committed to position itself as a gas weighted company anticipating a rebound in natural gas prices over the coming one to two years. The Company remains bullish in the mid to long term outlook for natural gas prices. Our view is that the longer term demand for energy in North America will reduce the current levels of natural gas storage. This in turn will place pressure for increased natural gas pricing and strengthening of the energy sector markets. Wildcards such as weather and the pending hurricane season in the Gulf of Mexico are considered catalysts to possibly accelerate the natural gas demand cycle.

Cobalt currently has a competitive advantage in conducting its business over the next year. While many competitors are dealing with stressed balance sheets and tight equity/debt markets to execute their business plans, Cobalt has recently completed its IPO and enters the industry with fresh capital in a lower service cost environment.

The Company's focus for the remainder of 2007 and into early 2008 is to fulfill its flow-through obligation of $5.3 million by drilling a portion of our current exploration inventory and by conducting seismic programs in our core areas. For the second half of 2007, Cobalt plans capital expenditures of approximately $3 million. We expect to drill 4 (3.1 net) wells prior to year end, add to our currently established undeveloped land position in multi-zone regions of Alberta, and commence production in the Peace River Arch and in East Central Alberta in late 2007 or early 2008.

Reader Advisory - This news release contains certain forward-looking statements, which include assumptions with respect to future capital expenditures. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect. All such forward looking statements involve substantial known and unknown risks and uncertainties, certain of which are beyond the Company's control. Such risks and uncertainties include, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, the impact of general economic conditions in Canada, the United States and overseas, industry conditions, changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof, and obtaining required approvals of regulatory authorities. The Company's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits, including the amount of proceeds, that the Company will derive therefrom. Readers are cautioned that the foregoing list of factors is not exhaustive. All subsequent forward-looking statements, whether written or oral, attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws."

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.

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