Kroes Energy Inc.

Kroes Energy Inc.

November 29, 2006 16:34 ET

Kroes Energy Announces Third Quarter Results; Work Continues on Central Alberta Prospects

CALGARY, ALBERTA--(CCNMatthews - Nov. 29, 2006) - Kroes Energy Inc. (TSX VENTURE:KRS) announced today that net earnings for the first nine months of 2006 were $301,451 compared to $799,571 for the same period in 2005. Cash flow from operations was $796,789 for the first nine months compared to $1,135,576 in the previous year.

Net earnings for the three months ended September 30, 2006 were $242,495 compared to net earnings of $374,226 for the same period in 2005. Cash flow from operations was $403,703 in the third quarter compared to $540,321 last year. Kroes President, Fred Callaway, stated that: "We are very pleased that Kroes has returned to profitable operations compared to the first half results, but we continue to be concerned about the high level of royalties in Ukraine".

Crude oil production for the nine months of 2006 averaged 237 barrels per day compared to 241 barrels per day in 2005. Crude oil prices for the period averaged $63.09 per barrel compared to $50.64 per barrel the prior year.

Kroes has participated in 5 shallow gas prospects in central Alberta to date, earning interests ranging from 12.5% to 25%. Four wells have been drilled or recompleted. Two wells in which the company has a 25% interest are connected to pipeline, but production has not yet reached its optimum level, pending installation of pumps to remove produced water. Drilling of a third well (Kroes interest 25%) was completed in November and the well is presently being perforated and stimulated. It is expected that this well will be tied in and commence production before the end of the year. A fourth well in which the Company had a 12.5% interest was dry and abandoned, but by participating in this well, Kroes earned the right to farmin to a prospective offsetting location that will be evaluated for possible drilling early in 2007. A fifth drilling location in which the Company also has a 25% interest has been surveyed and licensed. Drilling is expected to occur in March 2007. Kroes has committed approximately $510,000 on this program to date. In addition to the prospects described above, Kroes is currently reviewing three new prospects for possible participation.

In Ukraine, preparations are underway to begin drilling development well No. 306 in the Lelyaki oilfield with completion expected in February of 2007.

Kroes Energy is a junior oil and gas producer and explorer participating in the Lelyaki Oilfield redevelopment project in Ukraine, one of Eastern Europe's fastest growing economies. It also has a Joint Venture agreement in central Alberta. Kroes has a strong management team, with extensive international experience. Shares trade on the TSX Venture Exchange under the symbol KRS.


This disclosure contains certain forward-looking estimates that involve substantial known and unknown risks and uncertainties, certain of which are beyond Kroes' control, including: the impact of general economic conditions in the areas in which the Company operates, 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 commodity prices, foreign exchange or interest rates, stock market volatility and obtaining required approvals of regulatory authorities. In addition, there are risks and uncertainties associated with oil and gas operations; therefore, Kroes' actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking estimates and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking estimates will transpire or occur, or if any of them do so, what benefits, including the amounts of proceeds, that Kroes will derive from that.

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

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