Galleon Energy Inc. provides update based on Alberta royalty announcement

    CALGARY, Oct. 29 /CNW/ - Galleon Energy Inc. ("Galleon") has prepared an
estimate of the potential effect on its cash flow of the announced Alberta
royalty rate changes. If enacted, the changes to the royalty rates would
become effective only on 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 0.6% effect on
cash flow. As oil prices increase beyond $80 WTI USD, the incremental effect
on cash flow would be minimal.
    Galleon has seen a reduction in service costs in 2007 as compared to
2006. Costs will continue to decrease in proportion to the anticipated
reduction in industry wide cash flow, and consequently, oil field activity,
created by the increased royalty structure and other factors.
    Given the methodology used in the proposed royalty regime, the effect on
cash flow will be affected by depths and productivity of wells. The actual
effect of the Alberta royalty rate changes on Galleon will be determined based
on, among other things, the actual legislation enacted, the production rates,
commodity prices, foreign exchange rates, product mix, service costs and the
percentage of production from Alberta after January 1, 2009.
    Galleon has a diverse inventory of numerous opportunities in the Peace
River Arch area which is known to contain high quality, long life reserves and
production. Key growth projects at Puskwa and Eaglesham, Alberta remain highly
economic under the proposed new royalty regime. Galleon has access to
approximately 1 million gross acres of land with over 550 locations identified
on this land base.
    As previously announced, Galleon's exit 2007 production is expected to
exceed 17,000 Boepd. This represents a growth rate of over 30% from year end
    In the course of developing the 2008 budget, Galleon will review the
allocation of capital in order to maximize return on capital. Galleon is well
positioned financially to achieve growth and deliver value.
    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 (, at
Galleon's website ( 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

For further information:

For further information: see or contact: Steve
Sugianto, President and Chief Executive Officer, (403) 261-9287,; Glenn R. Carley, Executive Chairman, (403) 261-9277,; Shivon Crabtree, Vice President and Chief Financial
Officer, (403) 261-9276

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