Rally Energy Announces Major 2004 Reserves

Rally Energy reports that drilling programs conducted in 2004 have more than doubled proved, probable and possible reserves to 9.7 million barrels of oil equivalent.

- In Egypt, proved oil reserves nearly tripled to 4.0 million barrels, probable reserves increased over 30% to 3.3 million barrels and possible reserves increased nine fold to 1.6 million barrels.

- The developed portion of the Issaran field has an estimated 558 million barrels of oil in place.

- In Canada, Rally Energy's activities established 388,000 boe of proved reserves and 420,000 boe of probable reserves, a 13 fold increase from 2003.

- Total Proved and Probable reserves additions of 4.8 million boe in 2004 exceeded 2004 production of 732,000 boe by a factor of 6.5 times.

- Total Proved and Probable reserves at December 31, 2004 were estimated to have a value of $122 million discounted at 5% ($108 million discounted at 10%) with Canadian reserves accounting for approximately 14% of those estimated values.

Rally Energy's corporate reserves as at December 31, 2004 were independently evaluated by DeGolyer & MacNaughton Canada Limited in accordance with the requirements of Canadian National Instrument NI 51-101. On a consolidated basis, recognized reserves in Egypt and Canada as at December 31, 2004 are as follows:

BOE(6:1)                 Dec. 31,       Dec. 31,       Increase
                            2004           2003          Factor
  Egypt                3,967,076      1,416,179            2.8x
  Canada                 387,638         31,805           12.2x
 Total Proved          4,354,714      1,447,984

Proved plus Probable
  Egypt                7,260,559      3,947,687            1.8x
  Canada                 807,997         61,527           13.1x
 Total 2P              8,068,556      4,009,214

Proved, Probable and
  Egypt                8,855,469      4,121,780            2.1x
  Canada                 807,997         61,527           13.1x
 Total 3P              9,663,466      4,183,307

Reserves Outlook For 2005

Egypt - Ras Issaran

Rally Energy produced and sold in excess of 723,000 barrels of oil in Egypt during 2004 and managed to nearly triple Proved oil reserves and nearly doubled Proved and Probable oil reserves. Oil production in 2003 was approximately 414,000 barrels. Substantial additional reserves are expected to be added in Egypt during 2005 as drilling activities continue. Currently, the Corporation plans to drill 21 Ras Issaran wells in 2005, with a majority of those wells directed at high productivity potential in fractured Upper and Lower Dolomite formations. This program may be expanded once confirmation is received from The General Petroleum Company regarding our right to commence drilling in a 40 square kilometer extension area south of our current 72 square kilometer contract area.

Canada - Alberta Focus

In Canada, follow-up drilling in Alberta, particularly on our new Harmattan area discovery acreage (50% working interest), is expected to materially increase recognized Canadian reserves. Our current acreage in the Harmattan area, including farm-in acreage, is 1,280 acres (640 net acres). An additional 1,280 acres has been tied-up through a farm-in option agreement under which the Corporation can earn an average net working interest of 30%. A second well on our Harmattan acreage is planned immediately after spring breakup road bans are lifted. Up to two additional wells are expected to be drilled on our Harmattan acreage by year-end. During 2004, Rally Energy produced and sold 8,700 boe in Western Canada. Significant production increases are expected to be achieved in 2005, commencing with the placing on-stream by mid-year of an additional 400 boe/d.

Pakistan - Safed Koh

In Pakistan, the recently announced "Notice of Discovery" confirms the presence of hydrocarbons in the deeper horizons of the Safed Koh Range, located in the Middle Indus Basin of Pakistan. No reserves were attributed to Safed Koh as at December 31, 2004, however, the Corporation believes this is a significant gas discovery. As activities progress on the Safed Koh Block, significant additional reserves may be recognized during 2005. The timing and characterization of reserves additions may be affected by the requirement to complete formal steps leading to approval of a Development Plan and the Delineation of the initial Discovery Area.