Valkyries Petroleum Corp.

Valkyries Petroleum Corp.

March 14, 2005 11:16 ET

Valkyries Petroleum Signs New Deal in Southern Russia




MARCH 14, 2005 - 11:16 ET

Valkyries Petroleum Signs New Deal in Southern Russia

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - March 14, 2005) - Valkyries
Petroleum Corp. (TSX VENTURE:VPC) (the "Company") is pleased to announce
the signing of a new deal to acquire a 51% controlling interest in an
oil field in the Kalmykia Republic in Russia. Under the terms of the
agreement, Valkyries would purchase 100% of the shares of Mintley Cyprus
Limited which holds a 51% interest in CJSC Kalmeastern whose principle
asset is a 100% interest in the Caspian Field project. In consideration
for this transaction, Valkyries would replace a US$5.2 million existing
debt facility and provide a loan to Kalmeastern for the next US$5
million of development expenditures. Valkyries will also grant to
Mintley Investments a payment of US$1 million in consideration of past
costs and up to 5 million shares of common stock. In connection with
this transaction, Valkyries will also acquire a 50% interest in the Ulan
Khol rail terminal. The closing of the deal is subject to regulatory

The Caspian Field is located on the flanks of the Caspian Sea in the
semi-autonomous Republic of Kalmykia within the Russian Federation (To
view attached map please click on the following link: It was
discovered in 1960 and had a total of 38 wells drilled between 1961 and
1964 and 7 additional wells drilled between 1987 and 1994. A modest
early production system commenced in 1987 and is currently averaging
approximately 500 barrels of oil per day from 7 wells. Internal
estimates suggest that less than 1% of the oil in place has been
produced to date. Reservoirs are in Aptian carbonates and Jurassic Bayos
sands with 75% of the reserves believed to be contained in the Bayos II
sandstone. The pay thickness averages 15 meters with porosity ranging
from 10 -24% and permeabilities up to 300 md. The oil is light (43 deg
API) with very low sulfur and metals. Production is currently being
exported by rail and investigations are underway to determine the
feasibility of use of nearby export pipelines. A two phase development
plan consisting of the re-entry and workover of existing wells and the
drilling of new horizontal wells is currently being developed. A third
party reserve report has been commissioned and is expected to be
completed by the end of March.

Valkyries President and CEO Keith Hill stated, "We are very pleased to
add this new area to our Russian producing assets and feel there will be
significant upside in the reserves and production targets of this field.
We are in discussions to add additional assets in the area and consider
the proximity to export routes to be a very attractive feature of this
project. We plan to aggressively develop this field and hope to raise
production levels dramatically by the end of this year."

The Company also reports the closing of the private placement announced
on February 14, 2005. The Company sold, on a non-brokered, private
placement basis, 6 million shares of the Company at a price of $3.00 per
share for gross proceeds of $18 million. A 5% finders fee was paid in
connection with the private placement. Net proceeds of the private
placement will be used to finance the acquisition of the Caspian Field
project and for general corporate purposes. The private placement has
received regulatory approval and the securities have now been issued to
the investors.

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


Keith C. Hill, President


Contact Information

    Valkyries Petroleum Corp.
    Sophia Shane
    Corporate Development
    (604) 689-7842
    (604) 689-4250 (FAX)
    The TSX Venture Exchange has not reviewed and does not accept
    responsibility for the adequacy or accuracy of this release.