WaveForm Energy Ltd.
TSX VENTURE : WE.A
TSX VENTURE : WE.B

WaveForm Energy Ltd.

May 30, 2005 19:33 ET

WaveForm Energy Announces Drilling Successes in First Quarter

CALGARY, ALBERTA--(CCNMatthews - May 30, 2005) - WaveForm Energy Ltd. (TSX VENTURE:WE.A) (TSX VENTURE:WE.B) ("WaveForm" or the "Company") was active during the first quarter of 2005 in which it drilled its first two wells on its southeastern Saskatchewan properties. Both wells were drilled into the Middle Bakken zone on the Company's Tableland properties and were logged and tested with initial results that corresponded with WaveForm's expectations.

The properties are considered to be highly prospective for light, sweet oil in the Bakken formation which has already proved up considerable oil reserves and production just south of the border in Richland County, Montana, in parts of North Dakota and also in Canada. The oil produced during the testing of the two wells was light, sweet crude with an API of 42.5 degrees.

The drilling and initial completion data gathered so far from the two wells will significantly improve the effectiveness of the fracture stimulation of the Bakken sand and shale. The two wells had horizontal legs of 1200 and 1145 metres respectively, with both wells encountering oil saturated sandstone and siltstone throughout the drilling.

WaveForm stimulated both wells with large staged fracture treatments during the last week of April with the intention of exposing the maximum amount of shale source rock to the well bore as possible. Approximately 240 tonnes of sand was successfully placed for each well, with pump rates and pressures indicating favorable distribution along the length of each well bore.

The Company has installed pumps on both wells in order to clean up and produce the wells. While initial results indicate high water cuts, the percentage of oil cuts has been increasing. Indications are that the water, which has been liberated by the fracture treatment, will continue to decline while the fractures into the shale clean up, allowing the oil volumes to increase. WaveForm expects both wells will have significant economic production capability as the water cuts decrease, but the Company remains uncertain at this time of specific production rates in this exploratory area. Management will release operational updates periodically, and an update can be expected in early June.

The Company's growth plan involves focusing on this southeast Saskatchewan resource play that has the potential to provide repeatable and highly economic growth. In addition, WaveForm plans to leverage its proprietary technology to identify drilling opportunities throughout western Canada while entering into joint venture agreements with industry partners.



The following are the key financial statistics for the first quarter of
2005:

2005 FIRST QUARTER FINANCIAL STATISTICS
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Total revenue - interest and other income $ 42,565
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Net income (loss) (159,630)
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Net income (loss) per share - basic and diluted (0.01)
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Total assets 14,214,554
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Working capital 5,118,559
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WaveForm's complete Management's Discussion and Analysis as well as Financial Statements will be available on WaveForm's website at http://www.waveformenergy.com and http://www.sedar.com.

CORPORATE DEVELOPMENTS

At the beginning of 2004, WaveForm was a recently formed petroleum and natural gas company that was operating as WaveForm Energy Limited Partnership 1 ("the Partnership"), and WaveForm License Holdings Inc. The Company's initial business opportunity related to an exploration technology called Event Resolution Imaging ("ERI") which was initially licensed on December 20, 2003, and was held in WaveForm License Holdings Inc. In March of 2004, WaveForm became aware of an exploration prospect in the Tableland area of southeastern Saskatchewan. On July 26, 2004 the Partnership entered into a joint venture agreement to obtain pre-owned lands, and to acquire additional lands in the area, of which WaveForm would own 65 percent, and would operate the joint venture lands. Throughout 2004 the Partnership had raised gross proceeds of $4,000,000 from the sale of partnership units. It became clear to the management team that the company would require additional resources to adequately develop the land acreage it had acquired. Therefore, in September of 2004 WaveForm initiated its initial public offering to obtain the necessary capital, and WaveForm Energy Ltd. was created through a name change of WaveForm License Holdings Inc. Throughout the fourth quarter of 2004 the Company recruited the necessary team to explore and develop the land base and acquired additional lands in the area. On December 22, 2004 management had the first closing on the initial public offering, and the net assets of the Partnership were acquired by WaveForm. Upon final closing of the initial public offering, the financing was over allotted raising gross proceeds of $10,632,000. At the end of 2004, WaveForm had the people, the technology, the land base, and the capital to effectively begin the exploration and development of its core area in Tableland.

During the first quarter of 2005, WaveForm drilled two wells into the Middle Bakken zone on its southeast Saskatchewan properties. Both wells have been logged and tested with initial results corresponding to those anticipated by WaveForm. The drilling and initial completion data gathered to date from the two wells will significantly improve the effectiveness of the fracture stimulation of the Bakken sand and shale. The oil produced during the testing was light, sweet crude with an API of 42.5 degrees. The two wells had horizontal legs of 1200 and 1145 metres respectively, with both wells encountering oil saturated sandstone and siltstone throughout the drilling. The geological data gathered throughout the drilling process has been consistent with the Company's expectations, which are based on geological data from existing successful wells of this type in Richland County, Montana and North Dakota where operators have drilled over 150 successful horizontal Bakken wells.

During the last week of April, both horizontal wells were stimulated with large staged fracture treatments. The intent of the fracture treatments was to expose as much of the shale source rock to the well bore as possible. For each well, approximately 240 tonnes of sand was successfully placed, with pump rates and pressures indicating good distribution along the length of each well bore. During the early part of May, load fluid from the fracture treatments was recovered and swabbing continued in order to evaluate each well. While initial results indicated high water cuts, the percentage of oil cuts has been steadily increasing. Indications are that the water, which has been liberated by the fracture treatment, will continue to decline while the fractures into the shale clean up, allowing the oil volumes to increase. The Company has installed pumps on both wells in order to clean up and produce the wells. WaveForm expects both wells will have significant economic production capability as the water cuts decrease, but the Company remains uncertain at this time of specific production rates in this exploratory area. These two wells are the first step in WaveForm establishing the basis for a highly economic and repeatable resource play on its properties.

As at March 31, 2005, WaveForm did not have any reserves or production from operations as the fracture stimulation and completion of the first two wells drilled had not yet occurred.

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2004, the Company had $5,402,907 in cash and $5,118,559 in net working capital in which to fund the 2005 capital program. Management expects the 2005 capital program to consist of a minimum of 10 wells in the core area of Tableland which will result in anticipated capital expenditures of approximately $17.5 million. Management also expects to finance the portion of the capital program which exceeds the existing working capital through a combination of cash flow from the production of the wells drilled early in the year, a portion of the $3.9 million of warrants that are exercised at $1.25 per share prior to expiry on June 22, 2005, and additional equity financings. These plans depend on initial drilling results and the strength of the capital markets.

EQUITY

During the first quarter of 2005, the Company had 118,750 warrants exercised at $1.25 for proceeds of $148,438, and 43,800 broker warrants exercised for $0.20 for proceeds of $8,760. Subsequent to period end, an additional 115,500 warrants and 100,210 broker warrants have been exercised.

During the first quarter the Company issued stock options to employees, management and directors. On January 7, 2005 the Company granted management, employees, and directors a total of 1,720,000 options to purchase Class A shares at an exercise price of $0.40 per share. On February 1, 2005 the Company granted an additional 100,000 options at an exercise price of $1.40. The fair value of the options granted during the period was calculated using a Black-Scholes Option Pricing Model and the total value was $170,552, or $0.10 per option for the January 7th options, and $89,225, or $0.89 per option for the February 1st options. The assumptions used to calculate the value were: risk free rate of 4%, dividend yield of 0%, volatility factor of the market price of the Class A shares of 75%, and an expected life of 5 years. The value of the options was recorded as stock based compensation, with an offsetting amount to contributed surplus based on the vesting terms.

The authorized share capital consists of an unlimited number of Class A and B voting shares. The Class B shares are convertible into Class A shares based on a formula equal to $10 divided by the greater of $1 and the then market price of the Class A shares. The Class B shares are convertible at the option of the Company at any time after January 21, 2008 and before January 31, 2010. The Class B shares are convertible at the option of the shareholder, at any time after February 1, 2010 and before March 1, 2010. Any Class B shares not previously converted will automatically convert to Class A shares on March 1, 2010.

PROPOSED TRANSACTIONS

On May 17, 2005, WaveForm entered into a joint venture agreement with Magnus Energy Inc. ("Magnus") of Calgary, Alberta in order to expedite the exploration and development of lands covering the Bakken Formation in southeast Saskatchewan. In the joint venture, WaveForm will receive a carried working interest in a well to be drilled by Magnus. In return, Magnus will earn a working interest in three sections of land in the northern portion of WaveForm's land base. Magnus will pay 100 percent of the drilling costs to receive a 50 percent working interest in the well after payout. During the payout period the well will be subject to a 5 to 15 percent sliding scale gross overriding royalty.

Magnus can also elect to drill a second well, at its own cost, to earn an additional three sections in the same area under the same terms and conditions. The agreement also anticipates the joint acquisition of additional lands, where Magnus and the WaveForm joint venture will both receive a 50 percent working interest, which is expected to increase the overall net land position of the Company. WaveForm will be the operator of the wells.

WaveForm has an agreement to review a 74 square mile 3D seismic survey in a prospective area in northwest Alberta, as part of an exploratory drilling joint venture. WaveForm will use its proprietary seismic interpretation technology, which it holds the exclusive license for in Canada, to evaluate the best possible drilling locations and the overall potential of this area. The opportunities found from the technical analysis will then be drilled as a joint venture between WaveForm and the company that provided the 3D seismic.



QUARTERLY INFORMATION

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2004 Quarter 1 Quarter 2 Quarter 3 Quarter 4
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Revenue Nil Nil 66,600 5,987
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General & Administrative Nil 22 53,615 183,293
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Tax Expense Nil Nil 2,334 (2,334)
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Net Income (Loss) Nil (22) 10,651 (174,972)
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Operational activity occurred in the Partnership throughout most of 2004. During the late stages of the third quarter and the fourth quarter WaveForm became an operational entity as it began working on the initial public offering and the acquisition of the net assets of the Partnership. The quarterly data does not represent the expected future activity, as the Company began operations late in 2004 and had not yet begun its capital program.

ABOUT WAVEFORM ENERGY

WaveForm Energy is a junior oil and gas company focused on the acquisition, exploration, and development of oil and natural gas in western Canada with a particular emphasis on exploration of the Bakken formation in the Torquay-Tableland area of southeast Saskatchewan. The WaveForm joint venture currently has an undeveloped land base of 26,880 net acres, in the area with the potential for up to 100 drilling locations in the middle Bakken formation alone.

ADVISORY: Certain information regarding WaveForm Energy Ltd. including management's assessment of future plans and operations, may constitute forward-looking statements under applicable securities laws and necessarily involve risks associated with oil and gas exploration, production, marketing and transportation such as loss of market, volatility of prices, currency fluctuations, imprecision of reserve estimates, environment risks, competition from other producers and ability to assess sufficient capital from internal and external source. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements.

19,186,460 Class A Shares

935,616 Class B Shares

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

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