Kodiak Begins Drilling in Montana

Kodiak Energy has commenced its drilling programs in Montana targeting in excess of 500 bcf of low cost shallow drilling initiatives on the 100,000 acre leases in north central, Montana.

Kodiak, via its joint venture partner in Montana, has spudded the first well in a two well drilling program with one option well targeting the Sawtooth formation.

An extensive gravity acquisition program revealed the acreage is prospective for natural gas production from multiple formations, with the primary objective being the Sawtooth formation. On the basis of the gravity data, a 25 mile 2D seismic program was acquired prior to undertaking the drilling program.

The expected initial gross production rates are 1- 2 MMcf/d per well with gross reserves of 2 to 5 Bcf per well over multiple zones. The acreage is well defined and offsets in excess of 10 bcf of current production in the surrounding gas fields.

Kodiak has a 50% earning position based on 100% funding of the seismic and drilling of the first two wells with a total commitment of up to $600,000. After the completion of the first two wells, all costs are shared on a 50% earned in basis.

The company along with its Montana joint venture partner expect to progressively drill and develop their 100,000 acre project in Montana, as well as its 100% owned Manyberries prospect in southeast Alberta.

Kodiak's 2006 work program will focus on a drilling program of high quality, low-risk drillable inventories in Montana and Alberta, with a long term potential of up to 350 low-cost drilling opportunities that can bring relatively immediate production.

Kodiak Energy, Inc is a Calgary based oil and gas company focused on creating a portfolio of North American low risk high impact assets that offer immediate production and cash flow. The Company's lease holdings in Montana offer the potential for up to 200 drilling targets and two leases in South Eastern Alberta, which drilling programs have started offer the potential of up to another 144 drilling locations.


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