Galleon delivers 46% production growth year over year



    CALGARY, Nov. 13 /CNW/ - Galleon Energy Inc. ("Galleon" or the
"Corporation") is pleased to announce strong financial and operating results
in Q3 2007.
    The third quarter of 2007 was the best drilling quarter in Galleon's
history. Galleon had significant discoveries in 2 new major growth areas
(McLeans Creek light sweet oil and Kimiwan light sweet oil) and one existing
core area (Eaglesham light sweet oil and deep gas) in the Peace River Arch
area.
    Today, Galleon has 5 rigs drilling. The drilling program in the next six
months continues to target light sweet oil and long reserve life deep gas with
natural gas liquids. Based on drilling success and new discoveries in the
third quarter of 2007, the fourth quarter drilling program has been expanded
by 10% to potentially 30 wells.

    
    Key accomplishments in third quarter 2007 include:

    -   Production averaged 13,726 Boe/d, an increase of 46% from Q3 2006.
        Compared to Q3 2006, Q3 2007 production volumes increased as follows:
        light oil 85%, natural gas 48%, and natural gas liquids 132%. Heavy
        oil production volumes remained the same year over year.

    -   Funds from operations were $32.6 million ($0.54 per basic share), a
        54% increase from Q3 2006.

    -   Quarterly earnings were $1.6 million with year to date earnings of
        $8.8 million.

    -   Operating costs were $8.35/Boe, a decrease of 22% from Q3 2006.

    -   33 gross wells were drilled of which 32 (27.4 net) were cased for
        production including 11 light oil wells (9.4 net), 3 heavy oil wells
        (2.1 net) and 18 natural gas wells (15.9 net); resulting in a success
        rate of 97%.

    -   Spent $54.3 million on exploration and development activities and
        raised $60 million in equity financing to fund the exploration
        program and reduce bank debt to $136.3 million at September 30, 2007.
    

    Core area review
    ----------------
    At Puskwa, production averaged 2,056 Boe/d (15% of corporate production)
during Q3 2007. Puskwa generated 29% of corporate funds from operations in Q3
2007 with an operating netback (being revenues less royalties and operating
costs) of $55.90/Boe.
    In the Montney gas project at Dawson, production averaged 3,580 Boe/d or
21.5 Mmcfe/d (26% of corporate production) during Q3 2007. This project made
up 20% of funds from operations and had an operating netback of $24.64/Boe or
$4.11/Mcfe.
    At Eaglesham, average production in Q3 2007 was 1,776 Boe/d (13% of
corporate production). The operating netback for third quarter 2007 was
$25.42/Boe or $4.24/Mcfe. Eaglesham generated 10% of corporate funds from
operations during Q3 2007.

    Puskwa operations update
    ------------------------
    One well drilled in Q1 2007 has now been tested and a new deep gas pool
has been confirmed with this successful production test. The zone tested had
over 50 feet of gas pay. The well (100% interest) has flowed at 1.1 Mmscf/d
with significant natural gas liquids. Galleon intends to drill 2 or 3 follow
up wells this winter.
    In the main Puskwa light oil pool, 5 further development wells (100%
interest) have been drilled and cased. The continued drilling success in the
main Puskwa pool further confirms the significant reserve accumulation of
light oil from the Beaverhill Lake formation.
    Galleon plans to drill up to 4 Beaverhill lake light sweet oil locations
in fourth quarter 2007. Galleon has access to 45 sections (99% interest) on
the Puskwa Beaverhill Lake fairway.

    Dawson Montney gas operations update
    ------------------------------------
    In 2007, 32 Montney gas wells have been drilled with 29 wells being cased
(91% success). The proven gas fairway is currently estimated to be 35 miles
long by 12 miles wide with a number of distinct pools identified. This gas
fairway has been confirmed by drilling over 70 wells in the area. Galleon
expects to be producing over 25 Mmscf/d (4,167 Boe/d) from this area by year
end 2007 and has a large drilling inventory of over 350 locations to support a
multi-year drilling program.

    Eaglesham operations update
    ---------------------------
    In 2007, Galleon has drilled 15 wells and cased 13 wells. Galleon's
excellent drilling results have been supported by owning 100 square miles of
proprietary 3D seismic data. Galleon has identified a minimum of 40 locations
for future drilling and has access to over 70 sections (average working
interest of 72%) of land in the Eaglesham area.
    Eaglesham has seen production growth from 0 to over 2,000 Boe/d (net) in
less than one year. Galleon also controls the infrastructure, having built a
15 Mmscf/d natural gas plant (100% working interest) in 2006. This gas plant
is currently being expanded to 22 Mmscf/d in December 2007. Galleon is also
currently building a 10,000 Boe/d oil battery to handle the recent drilling
success in the light oil program. This oil battery is scheduled to be on
stream in January 2008.
    Up to 5 wells will be drilled in fourth quarter 2007 targeting deeper
targets with large reserve potential.

    New exploration areas update
    ----------------------------
    Galleon will continue to aggressively drill for high net back light oil
in fourth quarter 2007 in the 2 new areas of Kimiwan and McLeans Creek. In
2007, Galleon has drilled 7 wells and cased 6 oil wells (86% success) in these
two project areas. The wells have an average productivity of 130 Boe/d.
Galleon plans to drill a 15 well program this winter with the potential to
expand up to a 25 well program in the remainder of 2008. These projects are
targeting large light oil pools.
    In another new core area at Kakut, Galleon plans to drill 2 wells to test
multi zone structures. An extensive 3D seismic program is being acquired to
further expand the drilling program into 2008. In Kakut, Galleon controls the
infrastructure by owning an oil battery and a natural gas plant.

    Outlook
    -------
    Galleon has achieved considerable growth in production, reserves,
revenues and cash flow since inception four years ago. The most significant
factors affecting the success of an oil and gas company are drilling success,
commodity prices and control of costs.
    Galleon has an extensive drilling inventory which is balanced between
light oil and natural gas projects. These projects have and will continue to
deliver multi-year production and reserve growth. To date, drilling success
has exceeded 90%.
    As a result of the drilling success, production has grown over 46% from
Q3 2006. Exit 2007 production is expected to exceed 17,000 Boe/d. Available
bank credit facilities are currently $210 million which, subject to final
approval, are expected to increase.
    Current oil prices are at record high levels. Galleon's major oil
projects are economic at prices as low as $25.00 WTI USD. Current natural gas
prices deliver solid returns on our major projects. Galleon's gas projects are
economic at prices of approximately $3.00/Mcf Cdn.
    The control of costs affects the profitability of the company as well as
the level of cash flow generated for reinvestment. Galleon has invested in
infrastructure which allows it to control production and costs. Galleon has
seen a significant reduction in drilling and service costs in 2007 as compared
to 2006. Galleon anticipates that costs will continue to decrease in
proportion to the anticipated reduction in industry wide cash flow created in
part by the increased royalty structure.
    Galleon is positioned to reach its goal of continuing to build a premium
oil and gas company with sustainable growth.

    
    Results of Operations
    ---------------------

    Three months ended September 30       2007                   2006
    -------------------------------------------------------------------------
                                     1,262,772 BOE            866,646 BOE
    ($000s)                                    $/BOE                   $/BOE
    -------------------------------------------------------------------------
    Revenues                      60,156       47.64      39,921       46.06
    Royalties                    (12,608)      (9.98)     (7,638)      (8.81)
    ARTC and GCA(1)                1,988        1.57       1,397        1.61
    Transportation costs          (1,430)      (1.13)     (1,080)      (1.25)
    Operating costs              (10,547)      (8.35)     (9,243)     (10.66)
    -------------------------------------------------------------------------
    Net                           37,559       29.75      23,357       26.95
    Other revenue                      -           -           2           -
    G&A                           (1,507)      (1.19)       (692)      (0.80)
    Interest costs                (2,707)      (2.14)     (1,202)      (1.39)
    Capital and other taxes         (229)      (0.18)       (287)      (0.33)
    Realized loss on financial
     derivative                     (551)      (0.44)          -           -
    -------------------------------------------------------------------------
    Funds from operations(2)      32,565       25.80      21,178       24.43
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Nine months ended September 30        2007                   2006
    -------------------------------------------------------------------------
                                      3,549,542 BOE          2,420,216 BOE
    ($000s)                                    $/BOE                   $/BOE
    -------------------------------------------------------------------------
    Revenues                     173,864       48.98     112,667       46.55
    Royalties                    (37,233)     (10.49)    (23,479)      (9.70)
    ARTC and GCA(1)                7,225        2.04       5,967        2.47
    Transportation costs          (4,424)      (1.25)     (3,135)      (1.30)
    Operating costs              (30,533)      (8.60)    (24,024)      (9.93)
    -------------------------------------------------------------------------
    Net                          108,899       30.68      67,996       28.09
    Other Revenue                      -           -           3           -
    G&A                           (4,568)      (1.29)     (2,920)      (1.21)
    Interest costs                (7,634)      (2.15)     (3,040)      (1.26)
    Capital and other taxes         (951)      (0.27)       (745)      (0.31)
    Realized loss on financial
     derivative                     (178)      (0.05)          -           -
    -------------------------------------------------------------------------
    Funds from operations(2)      95,568       26.92      61,294       25.31
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) GCA means Gas Cost Allowance
    (2) See "Non-GAAP Measurements"


    Production
                             Three months ended         Nine months ended
                                 September 30              September 30
                              2007         2006         2007         2006
    -------------------------------------------------------------------------
                                    %            %            %            %
    Light oil (Bbls/d)     3,375   25   1,823   19   3,273   25   1,809   20
    Heavy oil (Bbls/d)     1,949   14   1,984   21   2,092   16   1,760   20
    NGLs (Bbls/d)            237    2     102    1     233    2      98    1
    Natural gas (Mcf/d)   48,989   59  33,068   59  44,421   57  31,186   59
    -------------------------------------------------------------------------
    BOE/d (6:1)           13,726  100   9,420  100  13,002  100   8,865  100
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Prices (net of transportation)
                                   Three months ended      Nine months ended
                                      September 30            September 30
                                    2007        2006        2007        2006
    -------------------------------------------------------------------------
    Light oil ($Bbls/d)            78.43       75.65       71.33       72.27

    Heavy oil ($Bbls/d)            40.04       47.01       37.41       38.99
    Total oil including Hedge      63.25           -       57.98           -
    Total oil without Hedge        64.38           -       58.10           -
    NGLs ($Bbls/d)                 64.05       69.83       60.29       64.63
    Natural gas ($Mcf/d)            5.73        5.58        6.68        6.28
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Performance by Property
    Three months ended
     September 30             2007                  2006
    ------------------------------------- ---------------------
                                Operating             Operating     2007
                                netbacks/             netbacks/  Funds from
                     Production   BOE(1)   Production   BOE(1)  operations(2)
    -------------------------------------------------------------------------
                     BOE/d    %         $  BOE/d    %         $            %
    Puskwa           2,056   15     55.90    648    7     58.75           29
    Dawson Montney
     gas             3,580   26     24.64  1,894   20     22.09           20
    Eaglesham        1,776   13     25.42    325    4     30.10           10
    Dawson           3,231   24     29.26  3,341   36     28.58           22
    Edam and other
     heavy oil       1,949   14      9.48  1,985   21     14.18            5
    B.C.               214    2     30.74    226    2     26.83            2
    Calais             744    5     22.76    774    8     22.19            4
    Other              176    1     10.26    227    2      9.61            8
    -------------------------------------------------------------------------
                    13,726  100     28.18  9,420  100     25.34          100
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Nine months ended
     September 30             2007                  2006
    ------------------------------------- ---------------------
                                Operating             Operating     2007
                                netbacks/             netbacks/  Funds from
                     Production   BOE(1)   Production   BOE(1)  operations(2)
    -------------------------------------------------------------------------
                     BOE/d    %         $  BOE/d    %         $            %
    Puskwa           1,905   15     52.08    440    5     65.75           27
    Dawson Montney
     gas             3,413   26     28.66  1,401   16     23.03           25
    Eaglesham        1,682   13     29.34    199    2     46.49           13
    Dawson           2,982   23     28.15  3,591   41     29.36           21
    Edam and other
     heavy oil       2,092   16     10.01  1,760   20     10.05            6
    B.C.               214    2     26.68    241    3     26.70            1
    Calais             533    4     24.76    993   11     23.17            3
    Other              181    1     12.66    240    2     16.43            4
    -------------------------------------------------------------------------
                    13,002  100     28.64  8,865  100     25.62          100
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Capital Expenditures
                                                                      ($000s)
    -------------------------------------------------------------------------
    Property & equipment balance at December 31, 2006                577,758
    Additions to property and equipment                              139,903
    Change in equipment inventory                                        (68)
    Acquisition of property and equipment                             51,457
    Asset retirement obligation acquired                                 980
    Asset retirement obligation incurred                               2,874
    Depletion and depreciation                                       (72,416)
    -------------------------------------------------------------------------
    Property & equipment balance at September 30, 2007               700,488
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Three months ended
     September 30                   2007                    2006
    -------------------------------------------------------------------------
    ($000s)                                        %                       %
    Land                           3,158           6       3,425           4
    Geological and geophysical     3,925           7         929           1
    Drilling and completion       36,971          68      45,028          56
    Plant and facilities          10,116          18      30,652          39
    Other assets                     131           -          28           -
    Inventory                        385           1           -           -
    -------------------------------------------------------------------------
    Exploration and Development
     Expenditures                 54,686         100      80,062         100
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Nine months ended
     September 30                   2007                    2006
    -------------------------------------------------------------------------
    ($000s)                                        %                       %
    Land                           8,603           6      15,654           7
    Geological and geophysical    10,055           7      18,000           9
    Drilling and completion       92,764          67      97,412          48
    Plant and facilities          28,164          20      72,953          36
    Other assets                     317           -         (58)          -
    Inventory                        (68)          -           -           -
    -------------------------------------------------------------------------
    Exploration and Development
     Expenditures                139,835         100     203,961         100
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Quarterly Highlights
     (unaudited)                                 2007                   2006
    ------------------------------------------------------------- -----------
                                      Q3          Q2          Q1          Q4
    Production
    Light oil (Bbl/d)              3,375       3,317       3,127       2,419
    Heavy oil (Bbl/d)              1,949       2,247       2,081       2,100
    Natural Gas (Mcf/d)           48,989      45,314      38,845      36,733
    Liquids (Bbl/d)                  237         256         206         230
    BOE/d                         13,726      13,372      11,888      10,869
    Total BOE produced         1,262,762   1,216,855   1,069,915     999,982
    Daily BOE of production
     per million Class A
     shares - basic(1)               229         226         206         191

    Prices (net of
     transportation)
    Light oil ($/Bbl)              78.43       70.12       63.24       61.12
    Heavy oil ($/Bbl)              40.04       35.89       36.55       31.16
    Crude oil ($/Bbl)              63.25       56.30       52.57       47.19
    Natural Gas ($/Mcf)             5.73        7.14        7.36        6.84
    NGLs ($/Bbl)                   64.05       59.67       56.64       56.02

    Per BOE ($)
    Revenues                       47.64       49.91       49.51       45.26
    Royalties, net of ARTC & GCA   (8.41)      (9.04)      (7.84)      (6.02)
    Transportation costs           (1.13)      (1.16)      (1.47)      (1.37)
    Operating costs                (8.35)      (8.63)      (8.86)      (9.65)
    Net                            29.75       31.08       31.34       28.22
    Other revenue                      -           -           -           -
    G&A                            (1.19)      (1.48)      (1.18)      (2.67)
    Interest                       (2.14)      (2.20)      (2.10)      (1.49)
    Capital and other taxes        (0.18)      (0.41)      (0.21)      (0.21)
    Realized loss on financial
     derivative                    (0.44)          -        0.35           -
    Funds from operations(2)       25.80       26.99       28.20       23.85
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Quarterly Highlights
    (unaudited)                                  2006                   2005
    ------------------------------------------------------------- -----------
                                      Q3          Q2          Q1          Q4
    Production
    Light oil (Bbl/d)              1,823       1,753       1,859       2,271
    Heavy oil (Bbl/d)              1,984       1,705       1,580       1,135
    Natural Gas (Mcf/d)           33,068      30,014      30,445      32,212
    Liquids (Bbl/d)                  102         100          93          99
    BOE/d                          9,420       8,560       8,606       8,874
    Total BOE produced           866,646     778,992     774,578     816,420
    Daily BOE of production
     per million Class A
     shares - basic(1)               172         165         173         186

    Prices (net of
     transportation)
    Light oil ($/Bbl)              75.65       75.63       65.66       67.44
    Heavy oil ($/Bbl)              47.01       42.69       24.71       29.31
    Crude oil ($/Bbl)              53.35       59.39       46.78       54.73
    Natural Gas ($/Mcf)             5.58        5.97        7.36       11.16
    NGLs ($/Bbl)                   69.83       65.71       57.62       58.84

    Per BOE ($)
    Revenues                       46.06       46.88       46.77       63.68
    Royalties, net of ARTC & GCA   (7.20)      (4.34)     (10.18)     (15.01)
    Transportation costs           (1.25)      (1.22)      (1.43)      (1.48)
    Operating costs               (10.66)      (9.91)      (9.12)      (7.73)
    Net                            26.95       31.41       26.04       39.46
    Other revenue                      -           -           -           -
    G&A                            (0.80)      (1.37)      (1.50)      (1.82)
    Interest                       (1.39)      (1.41)      (0.95)      (0.91)
    Capital and other taxes        (0.33)      (0.30)      (0.29)      (0.40)
    Realized loss on financial
     derivative                        -           -           -           -
    Funds from operations(2)       24.43       28.33       23.30       36.33
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Restated to reflect a three-for-two Class A share split in June 2006.
    (2) See "Non-GAAP Measurements"



    GALLEON ENERGY INC.
    Consolidated Balance Sheets as at
                                                  September 30,  December 31,
    ($000s) (unaudited)                                   2007          2006
    -------------------------------------------------------------------------
    ASSETS

    CURRENT
      Accounts receivable                               24,849        24,639
      Deposits and prepaid expenses                      2,573         1,839
      Fair value of financial derivative                     -           190
    -------------------------------------------------------------------------
                                                        27,422        26,668

    Goodwill                                            16,022        10,139
    Property and equipment                             700,488       577,758
    -------------------------------------------------------------------------
                                                       743,932       614,565
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES

    CURRENT
      Accounts payable and accrued liabilities          49,900        54,695
      Bank loan                                        136,295       122,996
      Fair value of financial derivative                 1,288             -
    -------------------------------------------------------------------------
                                                       187,483       177,691

    Asset retirement obligation                         25,487        21,432
    Future income taxes                                 55,310        32,287
    -------------------------------------------------------------------------
                                                       268,280       231,410
    -------------------------------------------------------------------------
    SHAREHOLDERS' EQUITY

    Share capital                                      418,352       339,869
    Contributed surplus                                 16,851        11,619
    Retained earnings                                   40,449        31,667
    -------------------------------------------------------------------------
                                                       475,652       383,155
    -------------------------------------------------------------------------
                                                       743,932       614,565
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    GALLEON ENERGY INC
    Consolidated Statements of Earnings, Comprehensive Income and
     Retained Earnings

    ($000s, except per share amounts)
    (unaudited)
                                   Three months ended      Nine months ended
                                      September 30            September 30
                                    2007        2006        2007        2006
    -------------------------------------------------------------------------
    REVENUE
    Petroleum and natural
     gas revenue                  60,156      39,923     173,864     112,670
    Royalties, net of ARTC
     and GCA                     (10,620)     (6,241)    (30,008)    (17,512)
    -------------------------------------------------------------------------
                                  49,536      33,682     143,856      95,158

    EXPENSES
    Operating                     10,547       9,243      30,533      24,024
    Transportation                 1,430       1,079       4,424       3,135
    General and administration     1,507         692       4,568       2,920
    Interest                       2,707       1,202       7,634       3,040
    Stock-based compensation       2,083       2,007       6,137       6,018
    Accretion                        370         168       1,043         464
    Depletion and depreciation    25,414      14,875      72,416      41,039
    Realized loss on financial
     derivative                      551           -         178           -
    Unrealized loss on
     financial derivative          1,930           -       1,477           -
    -------------------------------------------------------------------------
                                  46,539      29,266     128,410      80,640

    Earnings before taxes          2,997       4,416      15,446      14,518
    Income taxes
    Capital and other taxes          229         287         951         744
    Future income taxes            1,177       1,933       5,713       1,853
    -------------------------------------------------------------------------
                                   1,406       2,220       6,664       2,597
    NET EARNINGS AND
     COMPREHENSIVE INCOME          1,591       2,196       8,782      11,921
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    RETAINED EARNINGS,
     BEGINNING OF PERIOD          38,858      27,566      31,667      17,841
    -------------------------------------------------------------------------

    RETAINED EARNINGS,
     END OF PERIOD                40,449      29,762      40,449      29,762
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    NET EARNINGS AND
     COMPREHENSIVE INCOME
     PER SHARE
    Basic                           0.03        0.04        0.15        0.23
    Diluted                         0.03        0.04        0.14        0.22
    Weighted average
     Class A shares
      - basic                 59,880,135  54,854,334  58,969,425  52,192,152
      - diluted               61,724,550  57,447,555  60,845,685  54,783,056



    GALLEON ENERGY INC.
    Consolidated Statements of Cash Flows

    ($000s) (unaudited)
                                   Three months ended      Nine months ended
                                      September 30            September 30
                                    2007        2006        2007        2006
    -------------------------------------------------------------------------
    Cash provided by
     (used in):

    OPERATING ACTIVITIES
      Net earnings                 1,591       2,196       8,782      11,921
      Items not requiring cash:
        Future income taxes        1,177       1,933       5,713       1,853
        Depletion and
         depreciation             25,414      14,875      72,416      41,039
        Accretion                    370         168       1,043         464
        Stock-based compensation   2,083       2,007       6,137       6,018
        Unrealized loss on
         financial derivative      1,930           -       1,477           -
      Abandonment costs             (386)       (227)       (842)       (417)
      Change in non-cash
       working capital             2,689       1,048        (993)      6,885
    -------------------------------------------------------------------------

                                  34,868      22,000      93,733      67,763
    -------------------------------------------------------------------------
    FINANCING ACTIVITIES
      Issue of common shares      60,578      80,437      92,757     138,124
      Share issue costs           (3,279)     (4,359)     (4,915)     (7,817)
      Bank loan                  (31,796)    (29,175)     13,298      17,150
    -------------------------------------------------------------------------

                                  25,503      46,903     101,140     147,457
    -------------------------------------------------------------------------
    INVESTING ACTIVITIES
      (Additions to) disposal
       of equipment inventory       (385)      1,833          68      (1,615)
      Additions to oil and
       gas properties            (54,301)    (80,062)   (139,903)   (203,961)
      Acquisition of oil and
       gas properties            (15,687)        435     (50,293)    (25,421)
      Change in non-cash
       working capital            10,002       8,541      (4,745)     15,777
    -------------------------------------------------------------------------

                                 (60,371)    (69,253)   (194,873)   (215,220)
    -------------------------------------------------------------------------
    CHANGE IN CASH                     -         350           -           -
    CASH, BEGINNING AND
     END OF PERIOD                     -         350           -           -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    SUPPLEMENTARY INFORMATION
      Cash interest paid           2,357       1,079       7,524       1,646
      Cash taxes paid                265         167         542         632
    -------------------------------------------------------------------------
    

    Alberta Government Announces New Royalty Framework

    The Government of Alberta announced changes to oil and gas royalties
effective January 1, 2009. Based on the interpretation of publicly available
information, Galleon estimates that the potential effect of the proposed
changes on cash flow from current production would be approximately 9% to 9.5%
(based on benchmark prices of $70 WTI USD and $7.00/Mcf CDN). An increase in
the oil price to $80 WTI USD is estimated to result in an additional
approximate of 0.6% effect on cash flow. As oil prices increase beyond
$80 WTI USD, the incremental effect on cash flow would be minimal.
    Based on interpretation of publicly available information utilizing the
December 31, 2006 reserves of the Corporation and the external engineer's
price forecast at that date and rerunning such reserves as evaluated as of
December 31, 2006, Galleon estimates that the royalty changes would have less
than a 10% reduction to the net present value of future net revenues from
proved plus probable reserves (at a 10% discount rate) and would have no
effect on reserve volumes.
    Given the methodology used in the proposed royalty regime, the effects
will be affected by depths and productivity of wells. The actually effect of
the Alberta royalty changes on Galleon will be determined based on, among
other things, the actual legislation enacted, the production rates, commodity
prices, foreign exchange rates, production risks, service costs and percentage
of Galleon's production from Alberta after January 1, 2009.
    Galleon has approximately 63.2 million Class A shares and 922,500 Class B
shares issued and outstanding which trade on the TSX under the symbols "GO.A"
and "GO.B".

    ADVISORY: Certain information regarding Galleon in this news release
including management's assessment of future plans and operations, the effect
on Galleon and its cash flow from changes to royalty rates in Alberta,
expected reductions in service costs and production estimates may constitute
forward-looking statements under applicable securities laws and necessarily
involve risks including, without limitation, risks associated with oil and gas
exploration, development, exploitation, production, marketing and
transportation, changes to the proposed royalty regime prior to implementation
and thereafter, loss of markets, volatility of commodity prices, currency
fluctuations, imprecision of reserve estimates, environmental risks,
competition from other producers, inability to retain drilling rigs and other
services, capital expenditure costs, including drilling, completion and
facilities costs, unexpected decline rates in wells, delays in projects and/or
operations resulting from surface conditions, wells not performing as
expected, delays resulting from or inability to obtain required regulatory
approvals and ability to access sufficient capital from internal and external
sources. As a consequence, actual results may differ materially from those
anticipated in the forward-looking statements. Readers are cautioned that the
foregoing list of factors is not exhaustive. Additional information on these
and other factors that could effect Galleon's operations and financial results
are included in reports on file with Canadian securities regulatory
authorities and may be accessed through the SEDAR website (www.sedar.com), at
Galleon's website (www.galleonenergy.com). Furthermore, the forward-looking
statements contained in this news release are made as at the date of this news
release and Galleon does not undertake any obligation to update publicly or to
revise any of the included forward-looking statements, whether as a result of
new information, future events or otherwise, except as may be required by
applicable securities laws.

    The news release contains the term cash flow which is commonly used in
the oil and gas industry. This term is not defined by GAAP and should not be
considered an alternative to, or more meaningful than, cash provided by
operating activities as determined in accordance with Canadian GAAP as an
indicator of Galleon's performance. Management believes that cash flow is a
useful financial measurement which assists in demonstrating the Corporation's
ability to fund capital expenditures necessary for future growth or to repay
debt. Galleon's determination of cash flow may not be comparable to that
reported by other companies. All references to cash flow throughout this news
release are based on cash flow from operating activities before changes in
non-cash working capital and abandonment expenditures.

    Disclosure provided herein in respect of barrels of oil equivalent (boe)
may be misleading, particularly if used in isolation. A boe conversion ratio
of 6 Mcf:1 Bbl is based on an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a value equivalency at the
wellhead.





For further information:

For further information: SEE www.galleonenergy.com OR CONTACT: Steve
Sugianto, President and Chief Executive Officer, (403) 261-9287,
steves@galleonenergy.com; Glenn R. Carley, Executive Chairman, (403) 261-9277,
glennc@galleonenergy.com; Shivon Crabtree, Vice President and Chief Financial
Officer, (403) 261-9276

Organization Profile

GALLEON ENERGY INC.

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