Valkyries Petroleum Corp.

Valkyries Petroleum Corp.

January 24, 2006 16:17 ET

Valkyries Completes Sale of U.S. Properties

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Jan. 24, 2006) - Valkyries Petroleum Corp. (the "Company") (TSX VENTURE:VPC) announces that it has completed the sale of all of its U.S. oil and gas properties to Newmex Minerals Inc. ("Newmex"). Conditional approval from the TSX Venture Exchange has been received for the transaction previously announced on December 22, 2005.

The properties sold to Newmex comprise leasehold and royalty interests in California, Texas and Louisiana (including production from oil and gas wells in the South Texas Queen City trend), the rights to an offshore OCS block (Mustang Island Area, East Addition, Area Number TX3A, Block 736), and a strategic working interest investment in Rincon Energy Partners LLC, a U.S. based oil and gas prospect generation company specializing in Gulf Coast and California oil and gas exploration. The net remaining reserves associated with these assets are approximately 99 Mboe Proved (46 Mbbl of oil and 320 MMcf of gas) and 48 Mboe Probable (9 Mbbl of oil and 236 MMcf of gas), based on an independent evaluator's assessment of working interest plus royalty interest production in accordance with National Instrument 51-101 (Ryder Scott September 1, 2005 - Constant Price Parameters).

In consideration, the Company has received an upfront cash payment of US $5.8 million (as adjusted) and may receive a potential deferred bonus payment. Any bonus payment will be calculated on the basis of US $1 per oil equivalent barrel of additional net proved reserves in respect of 3 selected properties, effective on the second anniversary of the transaction and as certified by an independent reserves evaluator acceptable to both parties. The adjustment date for the transaction is September 1, 2005. No finder's fee was payable in respect of the transaction.

Valkyries Petroleum Corp. is an upstream oil and gas company with exploration and producing interests in Russia and is currently in advanced stages of evaluation and negotiation on several additional projects in Russia.

Forward-looking statements: This document contains statements about expected or anticipated future events and financial results that are forward-looking in nature and, as a result, are subject to certain risks and uncertainties, such as general economic, market and business conditions, the regulatory process and actions, technical issues, new legislation, competitive and general economic factors and conditions, the uncertainties resulting from potential delays or changes in plans, the occurrence of unexpected events, and the Company's capability to execute and implement its future plans. Actual results may differ materially from those projected by management.

Cautionary statement regarding BOEs: BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

On Behalf of the Board

Keith C. Hill, President

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

Contact Information

  • Valkyries Petroleum Corp.
    Sophia Shane
    Corporate Development
    (604) 689-7842
    (604) 689-4250 (FAX)