Valkyries Closes Onshore Orenburg Deal

Ashirovskoye Field
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Valkyries Petroleum has obtained all necessary approvals and that closing of the acquisition of a 50% interest in Closed Joint Stock Company Oilgaztet has occurred. Oilgaztet holds a 100% interest in the Ashirovskoye oil field license which is estimated to contain proven reserves of 2.3 million barrels of oil and possible reserves of 60 million barrels of oil (third party independent 51-101 reserves report prepared by DeGolyer and McNaughton dated November 29, 2005).

The Company has recently drilled a new well on the field which is currently undergoing production testing. Based on the analysis of the electric logs on this well, the Company plans to test 3 distinct zones in the Devonian section. Preliminary results of this testing are expected by the end of February and will be the subject of a future announcement. Operations are also underway to drill a second well in the eastern part of the structure in an area which appears to be prospective in older existing wells but which has not been flow tested to date. Preparations for an early production system are also being finalized.

Valkyries President and CEO Keith Hill stated, "We are pleased to close this transaction and look forward to the results of the two new delineation wells. Upon successful confirmation of the main reservoir targets, we plan to aggressively pursue development of this field and hope to reclassify the majority of the existing possible reserves to proven reserves by year end."

Under the terms of the share purchase agreement, Valkyries has paid US$9 million to acquire a 50% ownership interest in Oilgaztet and has agreed to arrange financing for the Ashirovskoye development plan. A US$1 million bonus will be due to the vendors following the first calendar year in which annual oil production from the Ashirovskoye field exceeds 100,000 metric tons per year (730,000 barrels). A further US$1 per metric ton of oil bonus will be due to the vendors for each additional commercial discovery with approved reserves of at least 50,000 tons on the Ashirovskoye license block. As part of this transaction, a finder's fee of 120,000 shares of Valkyries common stock will be issued to IMD Resources under a previously disclosed agreement.

Valkyries Petroleum Corp. is an upstream oil and gas company with exploration and producing interests in Russia and is currently in advanced stages of evaluation and negotiation on several additional projects in Russia.

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