Rally Energy Appoints VP, Production and Engineering

Rally Energy has appointed Doug Brown to the position of Vice-President, Production and Engineering. In this important position, Mr. Brown will be responsible for international and Canadian production operations. Prior to accepting this appointment, Mr. Brown provided technical consulting services to Rally Energy in connection with production optimization and operations management. Mr. Brown is a professional engineer with approximately 20 years experience in senior management positions, including experience with Amoco Canada (14 years), BP Canada (2 years) and Flint Energy Services (2 years). Since 2003, Mr. Brown has provided production and exploitation engineering services to oil and gas companies, with recent projects focused on heavy oil reservoir and production optimization in Eastern Alberta and new gas pool exploration and development.

Rally Energy also announces the resignation of John G.F. McLeod from the position of Vice-President, Operations. Mr. McLeod continues to sit as a Director of Rally Energy.

New Options Issuance

Rally Energy's Board of Directors has granted 175,000 new options at an exercise price of $1.85 each, for a term of five years, to an officer of the Corporation. All new options vest over a period of two years with one-third vesting immediately. There are currently 6,240,090 options outstanding representing approximately 8% of outstanding common shares.

Debenture Conversions in 2005

Since the beginning of 2005, $2.2 million of Rally Energy's $6.0 million of outstanding 12% Convertible Debentures have been converted to common shares at a conversion price of $1.00 per share.