Tempest Energy Continues Success in Northern Red Earth Area

Tempest Energy announces the success of its Northern Red Earth area light oil drilling program and provide summary guidance on 2005 forecasts, as well as provide an update on its operating activities.

Continued drilling success at Red Earth confirms major long life light oil discovery-

Since drilling the initial 2-21-88-8W5 Red Earth discovery in February 2003, Tempest has drilled 17 (10 net) delineation wells which have intersected Keg River oil pay. The 2-21 discovery well has now produced over 100,000 barrels of light oil. This winter Tempest had an early start in its Northern area, drilling seven (5.0 net) Keg River oil wells prior to year-end. From December 2004, Tempest has drilled or has spud eleven (6.5 net) wells and has one additional 100% location left to drill in this winter's Northern light oil program before break-up. This year's program was designed to delineate the pool as eight sections of land were drilled, ultimately proving up a significant aerial extension to the Keg River pool. Four of the new wells are on stream with initial production rates ranging between 50 and 200 bopd, six wells (3.0 net) are currently being completed and two wells (1.0 net) are being drilled.

Pressure data from the new wells, combined with an independently prepared reservoir study, which was based on the eight wells drilled early in 2004, indicate that pressure maintenance should enhance the ultimate recovery factors of the pool.

During break-up, Tempest will evaluate its go-forward growth strategy with respect to the entire property including development and exploration drilling, seismic analysis and interpretation, as well as water-flood and facility options. An additional 15-20 development drilling locations have been identified on 3D seismic, with over 10 sections of additional lands prospective from an exploration / extension point of view. Production from this property is long life 40 API oil with strong netbacks reflecting sales prices of Edmonton par less $1.50 per bbl with some wells receiving a royalty holiday. Tempest anticipates that it will average 600 to 800 bbls/d of light oil from this property in 2005, as well as providing additional growth in 2006 and beyond.

2004 Drilling Results and 2005 Drilling Projections
Wells                 Oil            Gas             D&A           Total
Q4, 2004    6.0 (4.0 net)  6.0 (6.0 net)   3.0 (3.0 net) 15.0 (13.0 net)
2004 Total 14.0 (8.5 net)15.0 (14.9 net)  10.0 (9.4 net) 39.0 (32.8 net)
Q1E, 2005                                                16.0 (12.5 net)
2005E                                                    52.0 (45.0 net)

Tempest drilled five wells in the Central area to date in 2005, and we await the arrival of over 200 square kilometres of 3D seismic data. Tempest anticipates that drilling in the Central region will accelerate in H2/05.

Production and Financial Guidance -

Annual forecasts for 2005, target average production of 4,500-5,000 boepd, with corresponding cash flow of $35-$40 million or approximately $1.70-$1.90 per basic share and earnings of $7-$9 million on capital expenditures of $40-$50 million.

Tempest average production for 2004 was 3,611 boepd (61% natural gas), up 34% over 2003 average production. Fourth quarter production was impacted late in 2004 as water cuts from Otter forced Tempest to temporarily suspend production to install water handling facilities.

The Red Earth Gas plant was shut-down for routine repairs for the week of February 7th, 2005. During re-commissioning internal compressor problems were encountered. Operationally, this will shut in over 500 boepd for up to one month. Repairs to damaged equipment are already underway, and business interruption insurance may recover some of the lost revenues.

In the Central area production remained steady at 2,600 boepd (65% natural gas) with Chipman oil representing approximately 900 bbls/d of low decline production. Tempest now has five electric submersible pumps (ESP's) successfully operating in the Chipman oil property. Based on their performance the Company plans to install 2-4 more ESP's in 2005. As well, Tempest is planning to drill an additional 2-3 horizontal infill wells during break-up to complete the delineation of these pools.

3D Seismic programs to provide low risk growth-

Tempest's commitment to exploration driven growth translated to a large 3D seismic investment early in 2005, covering significant land acreage already held by the Company. There are four distinctive parts to our investment: (1) a 86.5 square kilometre 3D seismic program west of Chipman in Central Alberta, which has now been completed; (2) a 12 square kilometre 3D program on 100% lands on the northern edge of the Red Earth Keg River oil pool, now completed; (3) a 113 square kilometre 3D seismic program at Fort Saskatchewan / Redwater in Central Area, which will be completed by mid-March; and (4) a 13 square kilometre 3D program over lands held in Red Water in Central Alberta, which will be completed by the end of March. The data from these programs will be interpreted during break-up, leading into an extensive follow-up drilling program.

Emerging new core area developments-

Tempest has recently drilled a 100% working interest well in its emerging west-five multi-zone area that encountered two primary and two secondary zones. Results from completion operations, which commenced on February 4th, 2005, will determine the approach applied to developing these reserves. The Company has over 15 sections of contiguous land and has initiated plans for a multi-well follow-up program to develop these long life reserves. Additional data will be released following full testing of the prospective zones. As well, the Company has spud a 70% working interest exploration well near Edson, Alberta, which is expected to reach target depth by February 21st, 2005.