Valkyries Completes Acquisition of North Irael Field in Komi Republic

Valkyries Petroleum has completed the previously announced acquisition of a 50% interest in the North Irael Field in the Komi Republic in the Russian Federation.

Pursuant to the terms of the agreement, RF Energy Investments Limited, which is owned 50% by each of Valkyries and Arawak Energy Corporation, has acquired all of the shares in LLC NK Recher-Komi, which in turns holds a 100% interest in the North Irael field. Valkyries paid US$0.9 million to acquire its 50% interest in Recher and will additionally repay US$7.2 million of existing loans owing by Recher to the vendor. Deferred consideration of up to US$1.4 million is payable over the next three years so that the total consideration payable by Valkyries will be up to US$9.5 million.

The North Irael Field is located on trend and approximately 10 kilometers from the Sotchemyu-Talyu fields owned 100% by RF Energy's wholly owned subsidiary ZAO PechoraNefteGas ("PNG"). The North Irael Field is currently producing approximately 400 barrels of oil per day ("bopd") from the same Devonian reef horizon that is productive at Sotchemyu-Talyu. There are 6 wells in the North Irael Field that have tested oil and gas with 4 of these wells currently on natural flow production. The depth of the reservoir is 1,800 to 1,900 meters and the oil quality is 29.7 degrees API. Ryder Scott Company, L.P., has prepared an independent reserves evaluation effective as of December 31, 2005 respecting the reserves assigned to the North Irael field. Proved and proved plus probable reserves net to Valkyries have been assigned at 0.77 million and 2.41 million barrels of oil respectively, on a constant pricing basis. Net present value of future revenues for proved and probable reserves before income tax net to Valkyries based on constant prices and discounted at 10% is estimated to be US $18.3 million.

The short term plan for the field includes a workover program and the installation of lift on all 6 wells which the company believes will significantly increase production. The oil will be transported initially by truck over the short 35 kilometer route to PNG's existing processing facilities and sold through the pipeline system. The Company believes that the Recher operation can be incorporated into PNG's existing Komi operation at minimal incremental cost. Additional development is also planned for the second half of 2006.

Valkyries Petroleum Corp. is an upstream oil and gas company with exploration and producing interests in the Russia and is currently in advanced stages of evaluation and negotiation on several additional projects in Russia.