Habanero Starts Up Alberta Oil Sands Project

Habanero Resources has been notified by the operator that operations are underway on the Alberta Oil Sands Prospect. Currently the prospect is being prepared for the seismic to be completed. It's expected that the seismic data will be collected over the coming weeks. The property is very close to infrastructure including roads and power, as well as a pipeline running directly through the property. There is likely a supply of condensate in the area for treating and blending for pipeline sales. The Company is planning a pilot plant for testing the recoverable reserve via Steam Assisted Gravity Drainage (SAGD) and the Company plans to file application to AEUB for the pilot plant during the 1st quarter of 2006. The Company also plans to drill two additional wells as part of its current program and will undertake the 3-D seismic survey of the lands that will enable the Company to re-assess the size and extent of its reserves and administer its pilot project.

According to the Canadian Association of Petroleum Producers web site, "production from Canada's vast oil sands reserves now exceeds 1 million barrels per day and is forecast to increase to 2.7 million barrels per day by 2015. Reserves exceed 175 billion barrels of economically viable oil. With current technology, Canada's oil sands are second only to Saudi Arabia in global oil reserves. Capital spending on both in situ areas (too deep to mine) and mining projects in the oil sands totaled more than $28 billion US from 1996 to 2004. Canadian companies will spend close to $7 billion US on oil sands capital investment in 2005. There are close to 35 projects in the planning or expansion process."

Habanero is in the process of further increasing its interest in the Alberta Oil Sands Project, and a response is expected this month. At this time Habanero has taken a 2.5% equity interest in the Company.

Habanero recently announced a participation agreement on a potential multi-well oil and gas prospect in Alberta (press release dated December 19, 2005). The first well is in a development location within the Cardium Burnstick Member reservoir trend in the area located south of Edmonton, Alberta. Habanero has secured a 10% working interest in this prospect. Drilling is expected to commence in the first quarter 2006.

Habanero is also negotiating on new potential multi-well oil and gas prospects in Alberta. A decision on one or more of these new oil and gas prospects is expected shortly.

Jason Gigliotti, President of Habanero stated, "The commencement of operations on the Oil Sands Prospect could not come at a better time. When you look at the exposure the Alberta Oil Sands have been receiving in terms of the global market, it is clear that the future development for Habanero will be largely based on the Alberta Oil Sands. When you couple the excitement of the Oil Sands with the fact that we are in our best financial condition in years and that our conventional drilling has not even started yet, 2006 is shaping up to be a potential breakout year for Habanero's corporate development."


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