Verenex Energy On Track with Libyan Exploration Program

Verenex Energy has made significant progress in firming its near term seismic and drilling program in Libya including the necessary approvals. A seismic contract has been awarded for a planned start in late December 2005 and tender documents will be issued by mid-November aimed at securing a drilling rig early in the first quarter of 2006.

	    Third Quarter Highlights

	    Libya

	    -   The Company has identified four drill-ready prospects, based on
	        existing seismic and well control, for potential drilling in 2006.
	        Discussions have been underway with a number of Libya-based drilling
	        companies to secure at least one rig to commence drilling as soon as
	        possible in the first quarter of 2006. An additional two prospects
	        have been identified that could be drilled in the second half of
	        2006, contingent on early drilling success in Area 47 and
	        availability of a second rig. Drilling tender documents will be
	        issued by mid-November.

	    -   A seismic contract has been awarded to acquire 480 square kilometres
	        of 3-D and 1,500 kilometres of 2-D seismic in Area 47. The program is
	        targeted to commence in late December 2005 and proceed concurrently
	        with drilling, with completion in the third quarter of 2006.

	    -   A baseline Environmental Impact Assessment was completed on Area 47
	        in September 2005. The results indicate there are no unusual
	        sensitivities or issues that would impact the seismic program.

	    -   The first meeting of the Area 47 Management Committee, including
	        representatives from Verenex, Medco and the Libyan National Oil
	        Company ("NOC"), was held on September 28, 2005. The Committee
	        approved the 2005 budget and reviewed four bids received for the
	        seismic program. A second meeting is planned for late-November to
	        review and approve the 2006 budget.

	    -   The Company's Tripoli office is now functional with an initial
	        complement of six employees, including an expatriate Drilling and
	        Completions Superintendent.

	    -   Libya held its Second Exploration Bid Round on October 2, 2005. After
	        a detailed review of selected contract areas, the Company chose not
	        to bid based on its risk and investment criteria. The bidding was
	        extremely competitive with 16 of the 23 contract area awards being
	        secured with a contractor production allocation share at less than
	        the 13.7% in the Company's Area 47 contract.

	    France

	    -   The Company completed a water shut-off workover on the St. Lazare 2H
	        well and placed it on pump on October 20, 2005. The well is currently
	        producing approximately 140 to 150 barrels of oil per day with no
	        water. The Company is planning an extended production test to
	        determine deliverability and stabilized production rates before
	        making a determination on commerciality and the potential for
	        follow-up drilling.

	    -   Petroleum Geo-Services ("PGS") completed the 3-D and 2-D offshore
	        seismic acquisition program over the Aquitaine Maritime permit on
	        October 14, 2005, which was on time and on budget. PGS is currently
	        processing the data.

	    -   The Lundin operated La Tonnelle 1 exploration well in the Nemours
	        Permit (Verenex 31.67%) spudded on September 18, 2005. Drilling,
	        including a sidetrack operation, was completed on October 30. The
	        operator has cased the well and is preparing to test the sidetrack.
	        The Company participated in the drilling down to the original program
	        depth of 2,245 metres but chose not to participate in the sidetrack
	        operation after the initial wellbore failed to find productive
	        hydrocarbons. If the sidetrack operation is successful, the Company
	        can exercise an option to participate in the sidetrack by paying its
	        share of the sidetrack costs plus a penalty of 600%.

	    -   The St. Lazare 2H, Parentis 222H and La Tonnelle 1 wells will be
	        included in the asset impairment review at year end. In the event
	        that the well results are not commercial, a non-cash write-down will
	        be required that would be material to the Company. As at the end of
	        the third quarter, approximately $13.1 million has been invested in
	        the St. Lazare 2H, Parentis 222H and La Tonnelle 1 wells.

	    <<
	    Highlights
	                                                  Three Months   Nine Months
	                                                         Ended         Ended
	                                                  September 30, September 30,
	    (unaudited)                                           2005          2005
	    -------------------------------------------------------------------------
	    Financial (thousands of Cdn $,
	     except share and per share amounts)

	    Royalty income                                 $       272   $       939
	    Cash flow from operations                              218           207
	    Net loss                                              (262)       (2,743)
	    Capital expenditures                                 3,840         6,901
	    Working capital surplus                                           12,382
	    Common shares outstanding
	      Basic                                                       22,667,933
	      Diluted                                                     26,301,683

	    Weighted average common shares outstanding
	      Basic                                                       22,595,107
	      Diluted                                                     24,296,634

	    Share trading
	      High                                                       $      7.25
	      Low                                                        $      3.25
	      Close                                                      $      4.60

	    Operations

	    Production
	      Natural gas liquids (bbls/d)                          15            21
	      Natural gas (mcf/d)                                  359           421
	      Boe/d (6:1) (x)                                       75            91

	    Average reference price
	      WTI (US per bbl)                             $     63.19   $     55.40
	      Brent (US per bbl)                                 61.51         53.53
	      AECO (Cdn per mcf)                                  9.37          7.88

	    Average selling price
	      Natural gas liquids (Cdn per bbl)            $     60.31   $     44.51
	      Natural gas (Cdn per mcf)                           5.80          5.96

	    Operating Netback (per BOE at 6:1)             $     39.77   $     37.76

	    (x) Includes 2004 production allocation adjustment increase from a gross
	        overriding royalty ("GORR") at Bottrel, Alberta but excludes test oil
	        production from France, the proceeds from which were offset against
	        cumulative well costs.

The above table includes non-GAAP measurements, which may not be comparable to other companies. See MD&A for further discussion.

Capital Expenditures (Cdn $)

During the third quarter of 2005, the Company invested $3.8 million. In France, $2.5 million was invested in the Aquitaine Maritime offshore seismic program, $0.2 million in the St. Lazare 2H well workover and approximately $0.7 million in the La Tonnelle 1 exploration well. These amounts were partially offset by the value of Parentis oil production of $0.1 million for the quarter. In Libya, the Company invested $0.3 million in Area 47 related to capitalized costs and the baseline Environmental Impact Assessment ("EIA"). In Canada, a further $0.2 million was spent on office equipment and capitalized G&A related to New Ventures activities.

The Company's 2005 investment program of $6.9 million to September 30 included $1.7 million to tie-in the Parentis 222H and St. Lazare 2H wells, $0.7 million in drilling the La Tonnelle 1 well, $0.2 million in workover costs on the St. Lazare 2H well, $3.2 million in seismic data acquisition and geological and geophysical studies and $1.1 million in capitalized costs, related to ongoing projects, and office equipment purchases.

	    Outlook

	    Libya

The Company has identified four drill-ready prospects, based on existing seismic and well control, for potential drilling in 2006. Discussions have been underway with a number of Libya-based drilling companies to secure at least one rig to commence drilling as soon as possible in the first quarter of 2006. An additional two prospects have been identified that could be drilled in the second half of 2006, contingent on early drilling success in Area 47 and availability of a second rig. Drilling tender documents will be issued by mid-November.

A seismic contract has been awarded to acquire 480 square kilometres of 3-D and 1,500 kilometres of 2-D seismic in Area 47. The program is targeted to commence in late December 2005 and to be completed in the third quarter of 2006. This program exceeds the minimum seismic commitment under the Exploration and Production Sharing Agreement ("EPSA") for Area 47. The seismic program is scheduled to proceed concurrently with the planned drilling program, given the significant seismic data base that is currently available to support an early start to drilling.

The Company completed a baseline Environmental Impact Assessment in September 2005 relating to areas covered by the proposed 3-D and 2-D seismic programs. The results indicate that there are no unusual sensitivities or issues that would impact the planned seismic program.

In August 2005, the Libyan National Oil Company ("NOC") appointed its two representatives to the Area 47 Management Committee ("MC"). The MC also includes one member from each of Verenex and Medco. The first meeting of the MC was held on September 28, 2005 at which the 2005 budget was approved. Four bids received for the planned seismic program were also reviewed. A second MC meeting is scheduled for late-November to review and approve the 2006 work program and budget, and to review the status of securing drilling equipment.

A staff of six employees has been hired for the Tripoli office. This includes an expatriate Drilling and Completions Superintendent who has 12 years experience in working in North Africa, including six years in Libya. It is anticipated that the Company will have an eight to ten person Tripoli organization, including an in-country General Manager by early 2006.

Based on the success of Bid Round 1 in January 2005, the NOC held Bid Round 2 on October 2, 2005. The Company purchased data packages on a number of areas and undertook a detailed technical review. The Company chose not to bid based on its risk and investment criteria. However, the review has significantly enhanced the Company's knowledge of a number of Libya petroleum basins and better positioned it to pursue future opportunities.

Bidding in the 2nd Bid Round was extremely competitive and validates the prospectivity of Libya and the potential value of the Company's interest in Area 47. Four contract areas in the Ghadames Basin, each with an average size of about 38% of Area 47, were awarded to Japanese, Indian and Russian oil companies at contractor production allocation shares ranging from 7.5% to 11.8% and signature bonuses of US $6 million for each area. This compares to the Area 47 contractor production allocation share of 13.7% and a signature bonus of US $0.3 million. Furthermore, the contractor production allocation share for 16 of the 23 contract areas awarded in the second Bid Round was lower than for Area 47.

Capital expenditures in Libya in 2005 are projected to be $1.5 to $2.5 million, of which $0.9 million has been invested to September 30, 2005. Investments during the fourth quarter of 2005 will be related primarily to initial expenditures under the seismic acquisition program and the Tripoli office G&A.

France

The Company re-entered the suspended St. Lazare 2H well (Verenex 95%) on September 21, 2005 to carry out a water shutoff workover. A liner was cemented in the 488 metre open-hole horizontal section of the well and selectively perforated near the toe of the well. The well was placed on pump on October 20, 2005 and is currently producing approximately 140 to 150 barrels of oil per day with no water.

Due to prior difficulties with water inflow at St. Lazare 2H, the Company is planning an extended production test to determine the deliverability of the well and stabilized oil and water production rates before making a determination on commerciality and the potential for follow-up drilling.

A workover decision on the Parentis 222H well is pending. The well is currently producing about 30 to 35 barrels of oil per day gross (Verenex 95%) with a 65% water cut. Reservoir simulation work is progressing to determine the potential benefits of injecting water in offsetting suspended wells in the Parentis field to increase reservoir pressure and production rates and/or a selective acid stimulation workover. A decision on pursuing remedial actions on the well is expected to be made during the fourth quarter.

Petroleum Geo-Services ("PGS") commenced shooting a 3-D and 2-D seismic program in the offshore Aquitaine Maritime exploratory permit in the Bay of Biscay on September 3, 2005. The acquisition phase was completed on October 14, 2005, on time and on budget, and included 760 square kilometres of 3-D and 462 kilometres of 2-D seismic. PGS is also processing the data and interpreted results are expected in January 2006. The France affiliates of Verenex and Vermilion Energy Trust ("Vermilion") each hold a 50% participating interest in the permit.

The Lundin-operated La Tonnelle 1 well spudded on September 18, 2005 on the Nemours exploratory permit (Verenex participating interest 31.67%) in the Paris Basin. The well is targeting both the Chaunoy Triassic zone and the uphole Dogger zone. Drilling, including a sidetrack operation, was completed on October 30. The operator has cased the well and is preparing to test the sidetrack wellbore. The Company participated in the drilling down to the original program depth of 2,245 metres but chose not to participate in the sidetrack operation after the initial wellbore failed to find productive hydrocarbons. If the sidetrack operation is successful, the Company can exercise an option to participate in the sidetrack by paying its share of the sidetrack costs plus a penalty of 600%.

The Company is projecting net capital expenditures in France to be $8.0 to 9.0 million in 2005, of which $5.2 million has been invested to September 30, 2005. During the fourth quarter of 2005, funds will be invested to complete the acquisition and processing of the offshore seismic at Aquitaine Maritime, complete exploratory drilling of the Lundin operated La Tonnelle 1 well, complete the workover and testing at the St. Lazare 2H well and to carry out further geological and geophysical studies on the onshore exploration permits to confirm a go forward strategy.

Other North Africa

The Company is continuing to pursue other exploration and production opportunities in North Africa through future bid rounds and possible farm-ins or acquisitions.

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