Rally Sets Earnings Record

Rally Energy Corp. announced record operational and financial results for year-end 2006. The company reported net income for 2006 of $6.1 million, up 307% from $1.5 million the previous year.

Rally's 2006 capital program of $70.1 million included the drilling of 34 wells, construction of production facilities in Egypt and Pakistan and the acquisition of an additional interest in the Safed Koh concession in Pakistan.

In Egypt, 28 conventional and thermal wells were originally planned for 2006, but 31 wells were actually drilled, resulting in 31 oil wells. In Canada, three wells were drilled resulting in three oil/gas wells (.82 wells net). In Egypt, a 5,000 BOPD central production facility and a 50 million BTU steam generating plant are in the final stages of construction. Commissioning is scheduled to begin in a few weeks. In Pakistan, an 18 km gas pipeline and a 60 MMCF/D gas plant have been completed; the first 30 MMCF/D gas plant train is expected to commence operations later this month and the second train will be completed by June of this year.

Successful drilling combined with successful Cyclic Steam Stimulation performance results at the Issaran field in Egypt and increased ownership in Pakistan resulted in a 129% increase in recognized year-end 2006 proved and probable oil and gas reserves to 104 million BOE.

Other highlights of 2006 include a proved and probable finding and development cost, including facility costs of $4.80/BOE (proved - $6.04/BOE), achievement of a proved reserves replacement ratio of 16 times and operating costs averaging $7.88/BOE.

The Corporation ended the year with $23.3 million long term debt, $6.5 million of capital inventory and $3.3 working capital, of which $18.9 million was cash.

Based in Calgary, Alberta, Canada, Rally Energy is an oil and gas exploration, development and production company. The Corporation's primary area of operations is in Egypt, where it has a 100% operating interest in the Issaran Oilfield, a significant heavy oil development opportunity with strong growth potential. In Pakistan, the Corporation holds a 30% interest in the Safed Koh Block, where it is participating in the development of a large natural gas/condensate discovery.