Flagship provides fourth quarter 2007 activity update

    CALGARY, Jan. 15 /CNW/ - Flagship Energy Inc. ("Flagship" or the
"Company") (TSXV - FG.A and FG.B) is pleased to report the following
operational and Corporate update:
    During the fourth quarter 2007, Flagship drilled nine (8.25 net)
exploration wells. In addition, 46.5 kilometers of 2D seismic was shot at
Wildmere, Mannville and Sedalia in Alberta. Flagship has now met all of its
2007 flow-through expenditure obligations.
    Two exploration wells were drilled and evaluated at Veteran. Both wells
are capable of economic production and are awaiting tie-in.
    Four (3.65 net) additional exploratory wells were drilled and cased for
multiple potential producing horizons at Harmattan, Ferrier, Pembina and
Windfall. The initial tested zones at the Ferrier and Pembina wells indicate
economic production.
    The Calmar exploratory well (0.6 net) was drilled and abandoned and the
Knopcik exploratory well was junked and abandoned prior to reaching the
primary objective. The Crystal exploratory well has been suspended awaiting
further completion work.
    The Crossfire Nisku well, where Flagship has a 15% carried working
interest, was not drilled before year-end due to licensing complications.
Currently it is expected to be drilled in the second quarter of 2008.
    Flagship is currently in early stage discussions with several parties
regarding recapitalization and/or a potential corporate transaction.

    NOTE: Natural gas and liquids reserves and volumes are converted to a
common unit of measure on a basis of six thousand cubic feet ("Mcf") of gas to
one barrel (bbl) of oil. 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.

    ADVISORY: Certain information regarding Flagship Energy Inc. in this news
release including management's assessment of future plans and operations,
reserve and production estimates, drilling inventory and wells to be drilled,
timing of drilling and tie in of wells, productive capacity of new wells,
capital expenditures and timing thereof, 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, 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, incorrect assessment of
the value of acquisitions, failure to realize the anticipated benefits of
acquisitions, 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 affect Flagship'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), or
Flagship's website (www.flagshipenergy.ca). Furthermore, the forward looking
statements contained in this news release are made as at the date of this news
release and Flagship 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 TSX Venture Exchange does not accept responsibility for the adequacy
    or accuracy of this release.

    %SEDAR: 00003847E

For further information:

For further information: Glenn R. Carley, Executive Chairman, (403)
513-8300, gcarley@flagshipenergy.ca; Bradley Maynes, President and Chief
Operating Officer, (403) 513-8301, bmaynes@flagshipenergy.ca; Stuart Jaggard,
Vice President Finance and Chief Financial Officer, (403) 513-8302,

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