Valkyries Acquires New Oil Field in Orenburg Region of Russia

Valkyries Petroleum has entered into a protocol with LLC Lanta Invest for the acquisition of 50% + 1 share controlling interest in CSC Oilgaster, a corporation registered under the laws of the Russian Federation and the 100% owner of the Ashirovskoye License Block in the Orenburg Region of the Russian Federation.

The Ashirovskoye Block and field is located in the heart of the Orenburg producing region, which contains the super-giant Orenburg gas field, and is adjacent to the Karachaganak gas condensate field (please see attached map). The Ashirovskoye field was discovered in 1949 but has never been put on sustained production. Fourteen wells were drilled within the field during the late 1950's and early 1960's but were mostly abandoned without testing, despite some wells testing oil at relatively high rates (up to 800+ barrels of oil per day) from several reservoirs.

There are 5 reservoirs within the field which range from Devonian to Permo-Triassic in age and display good apparent porosity and oil saturations on existing Soviet era logs. Permeability and expected flow rates are not well constrained due to the lack of core and test data. The field is well located with respect to infrastructure with oil and gas pipelines within the lease area and a rail terminal nearby. A 3D seismic survey was acquired on the field in 2004 but has not yet been processed and interpreted. The C1+C2 Russian State reserves reported on the field are 14.7 million tons (approx. 100 million barrels of oil). In addition, there are several exploration prospects on the block which have additional potential reserves of 18 million barrels of oil according to Russian State figures.

Third Party Reserve Report

Valkyries engaged DeGolyer and McNaughton to prepare a third party reserve report for the Ashirovskoye Field, entitled "Appraisal Report as of June 30, 2005 for Certain Assets of Valkyries Petroleum Corp. in Russia" dated September 26, 2005. The results for Valkyries 50% + 1 share interest, prepared in accordance with the requirements and standards of the COGE Handbook using a constant price forecast with an effective date of June 30, 2005, are summarized below:

                                      Oil in Recoverable
                                       Place         Oil      NPV@10%
                                  ---------- ----------- ------------

Proven (1P)                         4.2 MMBO    1.2 MMBO US$   8.8 MM
Proven + Probable (2P)(i)          34.4 MMBO    7.0 MMBO US$  37.4 MM
Proven + Probable + Possible (3P) 156.0 MMBO   30.5 MMBO US$ 154.3 MM

(i) Represents expected values. Caution should be exercised when
    referring to the (3P) numbers as these represent a possible range

The Company plans to attempt to re-enter and test the existing wells, process and interpret the existing 3D seismic survey and drill at least one new development well in the next year.

The Acquisition

Under the terms of the Protocol, Valkyries has agreed to pay LLC Lanta Invest US$9 million for the Interest. Valkyries has also agreed to issue 120,000 shares of its common stock to IMD Inc. Oil Ventures as a finder's fee for the acquisition. The transaction is subject to the negotiation and signing of definitive agreements, removal of all conditions precedent including satisfactory legal and financial due diligence, and approval by the Valkyries board of directors and the TSX Venture Exchange.

Valkyries President and CEO Keith Hill stated, "The addition of the Ashirovskoye Field gives Valkyries a new growth area in Russia where we feel there are many additional opportunities for expansion. Our short term goal is to appraise the Ashirovskoye Field in order to move Probable and Possible reserves into the Proven category. Given success in this effort, we will then embark on a development program to quickly bring the field on production."

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