Valkyries Completes Two Wells as Producers

Valkyries Petroleum says the first two development wells drilled in the recently acquired Pechoraneftagas project in Russia have been completed as producers. The #232 well was drilled in the Talyu portion of the field and encountered a thick porous reservoir section in the main Devonian reef objective. The well is currently producing 280 barrels of oil per day with no water cut from a 4.5 meter perforated section. Based on the success of this well, the rig has been skidded to test an updip location immediately to the south. This well, #231, is currently drilling ahead in the section above the reservoir. An additional well on the East Sotchemyu portion of the field, #151, was also completed in late December and encountered several thick reservoir packages in the Devonian reef section. It was placed on production last week and is currently producing 350 barrels of oil per day with no water cut.

The Kadzherom exploration discovery previously announced is undergoing long term testing to determine reservoir continuity and productivity. A decision on a further development program will be made once this testing information has been obtained.

A 3D seismic program is currently being acquired to infill those portions of the field not covered by the previous 3D survey conducted last year. This survey will assist in identifying areas of porous reservoir for the upcoming development drilling campaign. It is planned to drill 12 additional development wells, including at least 2 horizontal wells, to significantly raise field production levels.

Valkyries President and CEO, Keith Hill, stated, "We are pleased to see the first development drilling successes in Russia and will continue to aggressively pursue production acceleration from this field. We feel there is a large amount of upside in the field which the 3D seismic should help us to develop."

Valkyries has a 50% interest in the Pechoraneftagas project.