Celtic Completes Property Acquisition at Kaybob South

    (Stock Symbol "CLT" - TSX)

    CALGARY, June 28 /CNW/ - Celtic Exploration Ltd. ("Celtic" or the
"Company") has closed the acquisition of oil and gas assets located at the
Company's core operating area at Kaybob South, Alberta, for an adjusted
closing price of $52.7 million. The assets acquired by Celtic are comprised of
an operated 49.88% working interest in the Kaybob South Beaverhill Lake Gas
Unit No.2, as well as other assets in the Kaybob South area. In addition, the
acquisition of certain non-unit interests, representing approximately 50 to 60
BOE per day of current production, has closed in escrow, subject to certain
pre-emptive rights to purchase which, unless exercised, expire on July 9,
    The key attributes of the assets acquired, excluding the non-unit assets
which are subject to outstanding pre-emptive rights to purchase, are as

    -  current production capability is approximately 1,040 BOE per day, 63%
       natural gas and 37% natural gas liquids;

    -  oil and gas reserves consist of approximately 2.8 million BOE, proved
       and approximately 4.4 million BOE, proved plus probable;

    -  long-life reserves with a reserve life index of approximately 11.5
       years (on a proved plus probable basis);

    -  complementary fit with a large contiguous land position adjacent to
       Celtic's Kaybob South exploration and development area; and

    -  ownership and operatorship in compressor facilities and a major
       pipeline system that Celtic currently uses to transport its existing
       Kaybob South Montney production from the Kaybob South field to the
       Kaybob South KA Gas Processing Plant.

    Petroleum and natural gas reserves to be acquired were evaluated by
Sproule Associates Limited, effective December 31, 2006. The Company has
reduced the amount of reserves in the Sproule report to reflect production
from January 1, 2007 to April 30, 2007, given that the effective date of the
acquisition is May 1, 2007.

    Facility Upgrades
    During September 2007, for approximately three to four weeks, the unit
production acquired (approximately 1,000 BOE/d) will be shut-in, allowing the
Company to complete upgrades to the pipeline and related facilities. These
upgrades will ensure a more stable production and transportation profile in
the future.

    Equity Financing - Subscription Receipts
    Further to the press release dated June 26, 2007, proceeds of $22.96
million from the issuance of 1.6 million subscription receipts have now been
released from escrow. Celtic has issued 1.6 million common shares in exchange
for the subscription receipts. These common shares are subject to a hold
period expiring on October 27, 2007.
    The common shares of Celtic trade on the Toronto Stock Exchange under the
symbol "CLT" and after this issuance of 1.6 million common shares, Celtic has
approximately 37.4 million common shares issued and outstanding.

    Advisory Regarding Forward-Looking Statements
    The information with respect to Celtic contained herein, contains
forward-looking statements. These forward-looking statements are based on
assumptions and are subject to numerous risks and uncertainties, certain of
which are beyond Celtic's control, including the impact of general economic
conditions, industry conditions, volatility of commodity prices, currency
exchange rate fluctuations, imprecision of reserve estimates, environmental
risks, competition from other explorers, stock market volatility and ability
to access sufficient capital. As a result, Celtic's actual results,
performance or achievement could differ materially from those expressed in, or
implied by, these forward-looking statements and, accordingly, no assurance
can be given that any events anticipated by the forward-looking statements
will transpire or occur. In addition, the reader is cautioned that historical
results are not necessarily indicative of future performance.

    Where amounts are expressed on a barrel of oil equivalent ("BOE") basis,
natural gas volumes have been converted to oil equivalence at six thousand
cubic feet per barrel. The term BOE may be misleading, particularly if used in
isolation. A BOE conversion ratio of six thousand cubic feet per barrel 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: CELTIC EXPLORATION LTD., Suite 500, 505 - 3rd
Street SW, Calgary, Alberta, Canada, T2P 3E6, David J. Wilson, President and
Chief Executive Officer, (403) 201-5340; or Sadiq H. Lalani, Vice President,
Finance and Chief Financial Officer, (403) 215-5310; or visit our website at

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Celtic Exploration Ltd.

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