Kodiak Energy, Inc.
OTC Bulletin Board : KDKN

Kodiak Energy, Inc.

October 16, 2006 09:14 ET

Kodiak Petroleum Acquires Working Interest in a High Impact Gas Project: Northern British Columbia, Potential Reserves in Excess of 100 BCF. Drilling Expected in 4-6 Weeks

CALGARY, ALBERTA--(CCNMatthews - Oct. 16, 2006) - Kodiak Energy, Inc. (OTCBB KDKN), is pleased to announce that its subsidiary, Kodiak Petroleum ULC., has negotiated a working interest from Highwood Exploration (Canada).Inc as one of a consortium of companies who have signed a "Farmout and Participation Agreement" to test the Lucy prospect located 40 miles northeast of Fort Nelson British Columbia. The agreement calls for the test well operator, Pennine Petroleum Corporation of Calgary, subject to certain conditions, to spud the test well in the month of September or October 2006.

The Lucy test well is located approximately 8 miles south of the CDC Mel d-8-I 94-P-04 well which has produced 63 BCF to date. Wells drilled in the giant Yoyo (9 miles south) and Sierra (18 miles south) gas fields have produced an average 80-100 BCF per well from fully developed reefs of the Devonian Pine Point formation.

An independent resource assessment of the Lucy prospect has been completed by a qualified Calgary firm with (if successful) production rate and recovery estimates of 2.5MMscf/d and 3.0 BCF (low case), 6MMscf/d and 8.0 BCF (best estimate) and 10 MMscf/d and 15.0 BCF (high case) per well. The Company's prospect is interpreted to be a lower reef build up than the large pools mentioned above with anticipated recoveries more similar to the smaller pools in the mentioned fields.

The Lucy/Highwood Lands (BC P&NG Lease #44104) consist of approximately three square miles (799 hectares) located in the North Yoyo Otter Park shale basin. Seismic covering the Lucy prospect indicates a possible Pine Point (Keg River) lower level reef build up equivalent in age to the nearby Mel, Yoyo, and Sierra reefs.

The Lucy prospect is in the vicinity of active gas operations. Service and support facilities are readily available. The estimate of capital expenditures of the Lucy test well is $1,708,600 ($170,800 net to Kodiak) to drill and case or abandon the Lucy test well.

Kodiak has signed a "Farmout and Participation Agreement", with Highwood Exploration (Canada).Inc for a 10% working interest. Kodiak has also signed an "Area of Mutual Interest Agreement" and an "Upside Interest Agreement" with Donald W. Hryhor of Calgary.

Kodiak Energy, Inc is a Calgary based oil and gas company focused on creating a portfolio of North American low risk high impact assets that offer immediate production and cash flow. The Company's lease holdings in Montana offer the potential for at least 210 drilling targets and two leases in South Eastern Alberta, which drilling programs have started offer the potential of another 150 drilling locations.

This press release contains forward-looking statements. The words or phrases "would be," "will allow," "intends to," "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," or similar expressions are intended to identify "forward-looking statements." Actual results could differ materially from those projected in the Company's proposed oil and gas related business. The Company's business is subject to various risks, which are discussed in the Company's filings with the Securities and Exchange Commission ("SEC"). The Company's filings may be accessed at the SEC's Edgar system at www.sec.gov. Statements made herein are as of the date of this press release and should not be relied upon as of any subsequent date. The Company cautions readers not to place reliance on such statements. Unless otherwise required by applicable law, we do not undertake, and we specifically disclaim any obligation, to update any forward-looking statements to reflect occurrences, developments, unanticipated events or circumstances after the date of such a statement.

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