RedStar Oil & Gas Inc.
TSX VENTURE : RED
TSX VENTURE : RED.NV

RedStar Oil & Gas Inc.

April 10, 2006 09:00 ET

RedStar Oil and Gas Inc. Increases Production to 2,050 BOED and Releases December 31, 2005 Period End Results

CALGARY, ALBERTA--(CCNMatthews - April 10, 2006) -

Not for distribution to U.S. newswire services or for dissemination in the United States of America.

RedStar Oil and Gas Inc. (TSX VENTURE:RED)(TSX VENTURE:RED.NV) ("RedStar" or the "Company") is pleased to provide an operations update and present its financial and operating results for the seven month period ended December 31, 2005.

Highlights:

- Record 2005 operating and financial results in line with forecast

- RedStar's current production rate is 2,050 BOE/D (12.3 mmcf/d) with an additional 450 BOE/D (2.7 mmcf/d) behind pipe;

- 3 additional net wells have been completed and are expected to be tied in prior year end;

- Completion of our $33 million winter 3-D seismic program remains on schedule to be completed and processed early in the second quarter;

- Drilling locations are currently being finalized for our summer program.



Financial Summary


For the
Three Three seven For the
months months months twelve
ended ended ended months
($ thousands, except December November December ended May
per share amounts) 31, 2005 30, 2004 31, 2005 31, 2005
------------------------------------------------------------------------
Petroleum and natural
gas sales, net
of royalties 2,684 12 4,099 107
Funds flow from
operations 1,523 (196) 2,207 (488)
Per share - basic 0.05 (0.15) 0.10 (0.10)
- diluted 0.05 (0.15) 0.10 (0.10)
Net income (loss) (569) (395) (925) 3,923
Per share - basic (0.020) (0.300) (0.044) 0.826
- diluted (0.020) (0.300) (0.044) 0.826
Net capital expenditures 14,348 1,227 42,144 15,878
Total assets 99,230 20,571
Weighted average shares
outstanding (000s) 28,596 1,305 21,061 4,751


Operating Netback Summary

Seven Months Ended Three Months Ended
(on a $/boe basis) December 31, 2005 December 31, 2005
------------------------------------------------------------------------
Oil and natural gas
Revenue $ 64.01 $ 68.67
Royalties (17.33) (18.61)
Production costs (4.79) (2.35)
Transportation costs (8.92) (10.65)
------------------------------------------------------------------------
Operating netback $ 32.97 $ 37.06


RedStar has filed the Company's year-end 2005 financial statements and Management's Discussion and Analysis on SEDAR. The reports can be accessed electronically from the SEDAR system at www.sedar.com, or the Company's website at www.rstar.ca.

Stock Options

Pursuant to the stock option plan of RedStar, the Company has granted stock options to acquire up to a total of 80,000 and 100,000 common shares of RedStar exercisable at $2.74 and $2.99 respectively. The options are for a five-year term and pursuant to a vesting schedule, one-third vest on the first anniversary, one-third on the second anniversary and the remaining one-third on the third anniversary of the grant date.

TSX Listing

Pursuant to the Company's proposal to graduate to the TSX, the Company has been advised by the TSX that only its common shares would be permitted to be listed on the TSX and the alternatives provided by the TSX with respect to the issued non-voting shares were not acceptable to the Board of Directors. As a result in order to simplify the Company's share structure and facilitate the listing of all the Company's issued shares on the TSX, the shareholders will be asked to approve the conversion of the non-voting shares into common shares on a one for one basis at the Company's annual shareholders meeting on May 24, 2006.

About RedStar

RedStar is a junior, natural gas producer, focusing on the production and development of shallow gas reserves in Western Canada.

Cautionary Statements

Certain information set forth in this document, including management's assessment of future plans and operations, contains forward-looking statements. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond this party's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. Actual results, performance or achievement could differ from those expressed in, or implied by, these forward-looking statements, and accordingly, no assurance 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 will be derived there from. RedStar disclaims any intention or obligation to update or revise any forward-looking statements that are a result of new information, future events, or otherwise.

Per barrel of oil equivalent amounts have been calculated using a conversion of six thousand cubic feet of natural gas to one barrel of oil equivalent (6:1). (Barrel of oil equivalents (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of 6mcf:1bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.)

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

Contact Information

  • RedStar Oil & Gas Inc.
    Chester J.R. Krala
    President & CEO
    (403) 262-3130
    (403) 239-0621 (FAX)
    or
    RedStar Oil & Gas Inc.
    Lawrence F. Walter
    Vice President, Finance & CFO
    (403) 262-3130
    (403) 239-0621 (FAX)