Kodiak Energy Begins Drilling on New Mexico Properties

Kodiak Energy, Inc. has received all the required permits and licenses for its drilling program in New Mexico.

Work has begun to build leases and it is expected that the first well will be spudded by March 1/2008. A 3 to 4 well program is planned on these properties. Cost to drill per well is estimated at $320,000.

Kodiak is operator and 100% working interest owner in the project in northeastern New Mexico comprising approximately 62,000 acres and letters of intent for another 22,000 acres.

Kodiak continues to define the New Mexico CO2 project in multiple parallel paths. We have acquired additional lands through the state land auction process and have letters of intent to private holders of mineral leases, which if closed, will increase our land position by approximately 22,000 acres. A 38 mile seismic program has been defined and the program is expected to commence within 20 days.

These drilling and seismic programs will further define the project with testing for deliverability, pay thicknesses, reserve estimates, helium potential and other hydrocarbons and thus overall project economics.

Target dates are subject to change as new information becomes available.