Kodiak to Buy Majority Stake in Thunder River

Kodiak Energy, Inc. said that it has signed an agreement to purchase a majority share of Thunder River Energy, Inc. subject to final due diligence.

Thunder River Energy, Inc. is an Alberta company which currently owns a 50% working interest in the 200,000 acre Exploration License 413 in the North West Territories and 95% of CIMA holdings of New Mexico which has 55,000 acres of mineral rights in North East New Mexico. Estimated value of the transaction when complete is $13.5 million US.

An independent evaluation of the Little Chicago Exploration license was recently completed by a qualified engineering analyst. This report bases its evaluation of potential reserves in only one of the several seismic structures observed on the property. The report compares the potential of this feature to the Keg River B pool at Rainbow Lake Alberta and concludes a "best estimate" of 107 MMBOE of potential reserves. The 200,000 acre Mackenzie River block is believed to potentially contain up to 1 billion barrels/oil and in excess of 600 bcf of natural gas.

Kodiak has an existing farm in agreement with Thunder and Dual Exploration on the North West Territories license. This farmin is progressing very well. A seismic program is to be implemented upon final approval of Kodiak's applications. Final approval is expected by the end of January 2007. At the completion of the first phase of the farmin and the purchase of the majority interest of Thunder River, Kodiak's Working Interest in the EL413 will be 56.25% with options to increase that interest based on a drilling program in winter of 2007/2008.

The New Mexico properties have potential of finding substantial economical oil, gas, CO2 (and possible helium) reserves in the near term. These high impact prospects are well documented and located near existing infrastructure and at shallow to medium drilling depths.

Currently, land title searches are near complete on the New Mexico property, and a seismic and drilling program is planned for the end of the first quarter and the beginning of the second quarter of 2007.

Kodiak has entered into agreements to acquire a majority interest in Thunder River Energy Inc. Kodiak will subscribe for 5 % of the total outstanding shares of Thunder by way of a private placement. Subsequent to the private placement, Kodiak will also acquire 52% of Thunder's shares from five shareholders. After the private placement and the purchase of shares Kodiak will own 57% of the shares of Thunder. Kodiak will pay the shareholders eight common shares of Kodiak for every ten shares of Thunder. Kodiak anticipates issuing a total of up to 6,867,412 common shares at $1.75 US per share of Kodiak. Estimated value of the first phase of the transaction $12.02 million US.

Kodiak in the second phase of the agreement will offer to purchase the balance of the shares of Thunder when and if Kodiak becomes domiciled in Canada. The second phase of the transaction would be an additional issuance of up to 6,612,588 shares of Kodiak for an estimated value of $11.57 million US.

Kodiak Energy, Inc is a Calgary-based oil and gas company focused on creating a portfolio of North American assets that offer not only immediate production and cash flow but growth through exploration. The Company has lease holdings in Montana, South Eastern Alberta, North Eastern Alberta, a farmin agreement in the North West Territories and a joint venture in New Mexico.


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