Valkyries Reaches Final Depth with Santos B Morgan #1

Valkyries Petroleum reports that the Santos B Morgan #1 gas exploration well reached final total depth of 8,700 feet. The well was testing the Mew North prospect and encountered a 30-foot section of porous Queen City sands at the prognosed depth but logs show the zone to be water wet.

The Company will now move on to test the Mustang prospect, a large 1,000 acre prospect located 50 miles to the southwest. The Company has a 37.5% working interest in Mustang. Chevron holds 50% and is the operator. The first well on this prospect is expected to spud in July, 2003.

The Company's Queen City gas project encompasses a large land position of over 12,000 acres. It is located within 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 on trend produce an average of 5 million cubic feet of gas per day and provide excellent analogues for prospects in the play area.

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 75% of the drilling of two exploration wells.