Valkyries Russian Drilling Program on Track

Valkyries Petroleum updates current development drilling activities on the Pechoraneftegaz ("PNG") project located in the Komi Republic of Russia. The Company holds a 50% interest in the PNG project.

The first three horizontal/high angle wells have now been completed on the Sotchemyu-Talyu Field. The first well drilled in the field as a horizontal well, #236, drilled a total horizontal section of 214 meters with 133 meters of apparent pay on logs and was completed open hole. The well was placed on production with an initial rate of 754 barrels of oil per day with no water cut which was constrained by the size of the downhole pump. The well is currently producing at a stabilized rate of 604 barrels of oil per day with 7% water cut. The second well, #234, drilled at a 75 degree angle, encountered 22 meters of apparent pay on logs. On open hole drill stem testing the well recovered 3.8 m3 of clean oil on an 88-minute flow period which equates to an initial rates of approximately 400 bopd After running a slotted liner and completing the well, the well progressively began to produce significant water. A gyro survey was run which confirmed that the toe end of the well had dipped down below the oil-water contact. Operations are currently underway to isolate the lower portion of the well in order to shut off this water. The third well, #142, was drilled at 71 degrees as a highly deviated well through 2 pay horizons and had a total apparent net pay section of 16 meters. The well was completed over this past weekend and came on production at an initial rate of 291 barrels of oil per day. As a result of the incorporation of these new wells into the production stream, the field has reached a new all time high production capacity of 6,957 barrels of oil per day, an increase of more than 30% over the production rate of 5,326 barrels of oil per day at year end 2004.

With the horizontal well concept proven, the going forward development drilling plan is to ramp up to a 4-rig program and bring 17 new wells on stream in 2006. Presently there are 3 rigs active in the field, drilling 2 horizontal wells (#122 and #237) and 1 deviated test (#141). The two laterals are drilling at 1,890 m. and 1,530 m. respectively while the deviated hole is at 1,253 m. The Company anticipates bringing all 3 wells on line by early-February.

Valkyries President and CEO Keith Hill stated, "We are very pleased that these wells have proven the concept of high rate horizontal wells and will be focusing on these type of wells in our upcoming accelerated development drilling program. We now have 3 rigs drilling ahead on new wells for the first time in the history of the field and are mobilizing a fourth heavy workover rig to do horizontal sidetracks of existing low rate producers. Our goal is increase the field production level to over 10,000 barrels of oil per day as soon as possible."

The Company has also completed drilling wells on its two other production/development projects in Russia. In the onshore Caspian Field in Kalmykia, in which the Company owns a 51% interest, the first horizontal development well has been completed and will undergo production testing in the next two weeks. The well drilled a total horizontal section of 200 meters and had apparent sand pay of 180 meters using downhole logs and cuttings analysis. In the Ashirovskoye Field in Orenburg, where the company is in the process of closing a 50% working interest, the first vertical well was drilled to a total depth of 2584 meters and has run and cemented casing to the base of the well. The well will be tested over the next few weeks. Results on these tests will be announced as they become available.

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 additional projects in Russia.

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