Valkyries Acquires Large Gas Exploration Project

Valkyries Petroleum Corp. has acquired a large gas exploration project in one of the newest major gas producing regions in Texas. The project encompasses a large land position of over 12,000 acres. It is located in the prolific Queen City gas trend which has yielded significant gas discoveries in recent years for operators such as Chevron in the vicinity of the 120 billion cubic feet (Bcf) Mestena Grande field. The play consists of deltaic Queen City sands trapped along a regional fault trend. Individual wells directly on trend produce an average of 5 million cubic feet of gas per day and provide excellent analogues for prospects in the play area.

New 3D seismic has identified several strong prospects on VPC's property that range in size potential from 7 to over 30 Bcf of gas. The presence of seismic amplitude anomalies with an Amplitude Versus Offset (AVO) signature characteristic of gas sands, greatly reduces the prospect risk profile.

The Company plans to drill two wells in the first quarter of 2003. The strong local gas market, nearby infrastructure and low drilling costs result in very favorable project economics.

Several additional 2D seismic leads exist on the properties. These will be further delineated by a new 3D seismic survey upon success of the first two wells. Upon drilling success, cash flow from this play can be used to help finance additional exploration and production projects currently being evaluated in the international arena with the aim of building a sizable, well-balanced portfolio of oil and gas assets.

President and C.E.O. Keith Hill commented, "The Queen City Trend Project is an exciting start for Valkyries. Queen City is an emerging major gas trend and the combination of a favorable risk profile, high profitability potential, high drilling success rates in the area and a ready gas market, provide for an excellent first project for the Company."

The Queen City concessions, located in Duval and Jim Hogg counties, Texas, are held by a private company. VPC is acquiring 75% of the company's various interests in these concessions in exchange for paying 75% of the lease acquisition cost and the drilling of two exploration wells at an estimated drilling cost of US$2 million.

Mr. Adolf H. Lundin, Chairman and Director of Valkyries Petroleum Corp. has agreed to advance a portion of the acquisition cost of the Queen City project by providing a non-interest bearing bridge loan to the Company in the amount of Cdn $1,105,020. The loan has a term of up to 30 days. At the option of the Company, the loan may be paid out at any time without penalty. As consideration for the loan, the Company has agreed to issue to Mr. Lundin a bonus consisting of common shares of the Company with a total market value of up to 5% of the amount of the loan or Cdn $55,251.