Vanoil Energy Ltd.
TSX VENTURE : VEL

Vanoil Energy Ltd.

August 09, 2011 11:00 ET

Vanoil Announces Independent Resource Estimate and Terminates Non Binding Letter of Intent

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 9, 2011) - Vanoil Energy Ltd. ("Vanoil" or the "Company") (TSX VENTURE:VEL) is pleased to announce, an independent assessment of the Company's prospective resources has been completed by Sproule International ("Sproule"). The independent assessment was carried out in accordance with the standards established by the Canadian Securities Administrators in National Instrument ("NI") 51-101 Standards of Disclosure for Oil and Gas Activities. The effective date of the report is May 31, 2011.

Vanoil properties include a 100% working interest in Company operated Production Sharing Contracts (PSCs) in Kenya Blocks 3A and 3B. The Blocks are at the confluence of three Basins, the Anza, the Mochesa and the Lamu containing Jurassic, Cretaceous and Tertiary plays. The Vanoil NI 51 101 report covers the South Anza Basin only which represents approximately one third of the 200 by 110 square kilometres in Blocks A and B combined.

The Sproule report incorporated the results of approximately 2,000 line- kilometre of 1970's vintage seismic shot by Chevron and reprocessed by Vanoil in 2009 as well as 449 line- kilometre of infill seismic shot by Vanoil in 2010. This 5 million dollar program was conducted by the Bureau of Geophysical Prospecting ("BGP") is one of the world's leading geophysical service companies. The chevron 2000 kilometre data contained amplitude anomalies over the leads that were profiled in 2010 with longer spread lengths that confirmed on relative amplitude processing that they were class III Amplitude versus offset (AVO) anomalies. Further chimney analysis of the post seismic attributes indicates sealing faults on some of the leads. A 3D seismic program will be designed targeting the most highly ranked leads which will also be the focus for a 2012 drilling campaign in Block 3A.

As may be seen in the following table, Sproule's Best Estimate of gross unrisked undiscovered petroleum initially in place is approximately 3.6 billion barrels of oil equivalent (MMboe); the associated Best Estimate of gross unrisked recoverable volumes Prospective Resources is approximately 840 million barrels of oil equivalent. The Company cautions that BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 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 Sproule assessment identifies twenty seven leads in the South Anza Basin solely contained in Block 3A, the termination rift segment of the Anza Graben which originates in the Sudan. The Anza Graben is the southern extension of the oil prolific Muglad and Melut rift basins of South Sudan. Analogies of the basin with Sudanese oil fields is observed from similar faulting patterns and geochemical analysis of oil recovered from wells in drilled in the Anza Graben.

The Company also reports that it has completed its due diligence and as a result have terminated all negotiations with respect to a previously announced non-binding letter of intent (see press release dated May 26, 2011), with respect to an arm's length business combination.

BGP was contracted to carry out the 2011 Vanoil seismic program in Block 3B in May, 2011. BGP mobilized in June and vibroseis recording commenced on July 5, 2011. Data quality has been very good and progress has been relatively rapid, averaging 8 kilometres per day. Preliminary processing of the data indicates significant structural leads exist in Block 3B that marks the beginning of the Lamu Embayment Basin. At the end of July, more than 50% of the 395 line- kilometre project had been completed. It is anticipated that the project will complete before the end of August, 2011 at a cost of 5 million dollars. At that time the remaining data will be processed which we expect will identify significant new prospective Leads for Vanoil's 100% owned 24,682 square kilometres in Kenya.

Table S-2
Resource Summary
Block 3A & 3B Area, Anza Graben, East African Rift System, Kenya
As of May 31, 2011
Lead Zones Gross
Unrisked
Undiscovered
Petroleum
Initially
In-Place
1,
MMboe
Gross
Unrisked
Prospective
Resources
2,
MMboe
Geological
COS
3
Gross
Risked
Mean
Prospective
Resources
4,
MMboe
Low Best High Low Best High
(Estimates) (Estimates)
Mean P90 P50 P10 Mean P90 P50 P10 % Mean
1 Ken 8, 10, 12 240.8 38.8 133 520.8 55.8 7.62 28.1 117.9 36.0 20.1
2 Ken 13 71.1 5.04 28.1 168.1 16.8 0.887 5.7 38.3 5.6 0.9
3 Ken 13 42.9 3.62 19.1 99.3 9.78 0.629 3.89 23.5 5.6 0.5
4 Ken 13 36.6 3.47 17.6 84.3 8.45 0.627 3.45 19.3 5.6 0.5
5 Ken 8, 10, 12 231.4 33.8 123.9 513.3 53.4 6.58 25.8 118 36.0 19.2
6 Ken 13 28.8 2.86 13.9 68.5 6.53 0.508 2.75 15.1 5.6 0.4
7 Ken 13 29.8 2.81 14.2 68.6 6.92 0.496 2.84 15.6 5.6 0.4
8 Ken 8, 10, 12, 13 363.8 77.7 233.8 756.3 83.1 15.6 50.1 175.5 39.6 32.9
9 Ken 13 87.7 5.41 32.2 206.6 20 0.951 6.49 46.5 5.6 1.1
10 Ken 8, 10, 12, 13 527.9 112.5 344.1 1127.1 122.1 22.5 74.5 264.9 39.6 48.3
11 Ken 13 70.4 4.89 28.3 165 16.1 0.876 5.64 37.2 5.6 0.9
12 Ken 10, 12, 13 184.1 36.2 114.4 398.8 41.9 7.1 24.4 94 32.3 13.5
13 Ken 10, 12, 13 174.3 35.4 112.9 367.2 39.9 6.86 23.5 87.2 32.3 12.9
14 Ken 13 30.6 2.88 14.2 72.1 6.99 0.516 2.86 15.8 5.6 0.4
15 Ken 13 118.8 7.43 44.9 280.6 28 1.3 9.14 62.8 5.6 1.6
16 Ken 13 145.7 8.58 54.6 346.2 33.3 1.53 11 78.8 5.6 1.9
17 Ken 13 96.8 5.58 35.9 233.2 22 0.988 7.22 52.3 5.6 1.2
18 Ken 10,12 220.5 23.7 105.9 508.6 50.1 4.39 22.1 115.3 20.9 10.5
19 Ken 10,12 294.4 31.7 138.4 661 68.2 5.88 29.2 154.6 20.9 14.2
20 Ken 10,12 53.6 8.91 31.5 118.2 12.4 1.69 6.54 26.9 20.9 2.6
21 Ken 10,12 912.9 47.1 286.5 2037.3 206.3 8.97 59.7 448.6 20.9 43.1
22 Ken 8 28.1 2.01 11.9 65.7 6.42 0.368 2.39 14.8 10.8 0.7
23 Ken 8 15.4 1.37 7.06 35.5 3.47 0.241 1.43 8.17 10.8 0.4
24 Ken 8 103.3 4.1 31 239 23.9 0.739 6.13 52.3 10.8 2.6
25 Ken 8 117.1 5.07 37 267.4 27.7 0.876 7.33 60.1 10.8 3.0
26 Ken 8 21.1 1.77 9.43 49 4.78 0.31 1.86 11 10.8 0.5
27 Ken 8 73.2 3.64 24.7 172.3 16.8 0.64 5.01 37.9 10.8 1.8
Total 4049.9 2401.5 3669.5 5971.2 927.3 521.5 836.1 1386.5 236.1
Ken 13 - Lower Tertiary (Paleocene-Oligocene)
Ken 12 - Upper Cretaceous
Ken 10 - Lower Cretaceous (same prospect closure areas as Upper Cretaceous)
Ken 8 - Upper Jurassic

Notes

1 Undiscovered resources (equivalent to undiscovered petroleum initially-in-place) are those quantities of petroleum that are estimated, as of a given date, to be contained in accumulations yet to be discovered.

2 Prospective resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery (geological chance of success) and a chance of development (economic, regulatory, market and facility, corporate commitment and political risks). The chance of commerciality is the product of these two risk components. These estimates have not been risked for either chance of discovery or chance of development. There is no certainty that any portion of the prospective resources will be discovered and, if discovered, there is no certainty that it will be developed or, if it is developed, there is no certainty as to either the timing of such development or whether it will be commercially viable to produce any portion of the resources. These are gross estimates without consideration of working interest, royalties, or other encumbrances.

3 Individual geological risks were applied to each zone. The risks were aggregated statistically within the Monte Carlo software, GeoX at the individual prospect entity level. In this way, leads with multiple potential target zones have an overall higher chance of geological success. These aggregate risk numbers apply only to the chance of obtaining a minimum amount of some hydrocarbons from some zone to fall on the prospective resource distribution curve. It is not statistically appropriate to apply these chance of geological success numbers to the low, best, and high estimates.

4 These are gross estimates without consideration of working interest, royalties or other encumbrances.

About Vanoil Energy Ltd.
Based in Vancouver, Canada, Vanoil is an internationally diversified Oil and Gas company that has a comprehensive portfolio of oil and gas assets in the African countries of Kenya and Rwanda, and in the Province of Alberta, Canada. In Kenya, Blocks 3A and 3B were acquired in October 2007 through the signing of a Production Sharing Contract with the Government of the Republic of Kenya. Blocks 3A and 3B, which cover 24,682 square kilometers, are part of the vastly under-explored Cretaceous Central African Rift Basin System. In addition, Vanoil controls 1,631 square kilometers of oil and gas concessions in the East Kivu Graben in Rwanda is on the same rift trend with the Albertine Graben where Heritage and Tullow Oil made their historic discovery in neighboring Uganda. Vanoil also owns a 42% working interest in the Sarcee 12-13 gas well and the surrounding four sections (2,560 acres) of land in the Turner Valley Area in South-western Alberta.

On Behalf of the Board of

VANOIL ENERGY LTD.

Dal Brynelsen, President and CEO

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