SignalEnergy Inc.

February 27, 2006 23:59 ET

SignalEnergy Inc. Closes First Stage of Asset Sale

CALGARY--(CCNMatthews - Feb. 27) - SignalEnergy Inc. (TSX:SGI) ("Signal" or the "Company") is pleased to announce that it has closed the first stage of a previously announced transaction to sell a significant portion of its assets. The sale of assets valued at $44,000,000 was completed today with closing of the sale of the remaining assets, valued at $56,000,000, scheduled for March 9, 2006.

The entire transaction involves the sale of 4.84 million boe of proven and probable reserves, 70,952 acres (40,910 net acres) of undeveloped land and related facilities in the Kaybob, Carrot Creek and Redwater areas for $100 million cash (subject to certain adjustments). Signal has approximately $110 million of tax pools and tax credits which it intends to apply against the receipt of the proceeds from the asset sale for the purpose of minimizing tax liability (to the extent permitted under prevailing legislation).

Upon the completion of the entire transaction, it is the intention of the Company to distribute the net proceeds, after pay down of existing indebtedness, to shareholders. The distribution is subject to regulatory approval. It is the intention of the Company to payout the net proceeds in a tax efficient manner which may include a return of some or all of the Company's stated capital. Prior to the sale the Company's total indebtedness is approximately $26.5 million of which all of the debt will be reduced by the net proceeds from the sale.

Signal will retain its assets in the Buick Creek area located in North East British Columbia, and Chigwell/Bashaw area located in Central Alberta. After completion of the proposed cash distribution, Signal will consist of the following attributes:

- Current production of 400 boe/d with 100% weighting to natural gas and natural gas liquids.

- Total proven reserves of 1.27 MMboe and total proven plus probable reserves of 1.96 MMboe as at September 30, 2005.

- Reserves net present value discounted at 10% of $27.3 MM total proven ($0.39 per share) and $38.8 MM$ total proven plus probable ($0.55 per share).

- Reserve life index of 8.7 years on a total proven basis and 13.7 years on a total proven plus probable basis.

- 13,633 acres (7,887 net acres) of undeveloped land independently evaluated at $1.6 MM in value.

- Prospect inventory of 12-18 gross CBM locations and 4-6 gross conventional drilling prospects within its core areas.

- High net-back properties with operating costs estimated at $5.00/boe.

- No production hedges or long-term marketing contracts.

The reserve and present worth value referenced herein are based on an independent reserve evaluation prepared by Gilbert Laustsen Jung Associates Ltd. and Sproule Associates Limited as at October 1, 2005 ("The Reserve Report").

Caution to Reader

This news release contains forward-looking statements and the reader is cautioned not to place undue reliance on these statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predications, forecasts, projections and other forward-looking statements will not occur.

This news release is not for dissemination in the United States or to any United States news services. The common shares of Signal have not and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold in the United States or to any U.S person except in certain transactions exempt from the registration requirements of the U.S. Securities Act and applicable state securities laws.

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