Kootenay Energy Inc. Announces Second Quarter Results

    CALGARY, Aug. 22 /CNW/ - Kootenay Energy Inc. ("Kootenay" TSX Venture:
KTY) is pleased to report on its un-audited interim financial and operating
results for the three and six months ended June 30, 2007.

    Financial Results
                                  Three Months Ended  Six Months Ended
                                      June 30               June 30
                                    2007    2006          2007    2006
    Gross Revenue ($,000's)        2,339   1,204   94%   4,693   2,275  106%
    Sales Volumes
    Crude oil and liquids (bbls/d)   334     148  126%     321     158  103%
    Natural gas (mcf/d)              360     314   15%     441     292   51%
    Average (boe/d)                  394     200   97%     394     207   90%

    Product Prices
    Crude oil ($/bbl)              64.39   72.98  -12%   66.88   66.62    0%
    Natural gas liquids ($/boe)    52.95   37.25   42%   37.23   35.43    5%
    Natural gas ($/mcf)             7.73    6.98   11%    7.70    7.09    9%

    Net back analysis ($/boe)
    Oil and gas revenue            60.94   63.60   -4%   62.57   59.65    5%
    Royalties                      11.39   16.72  -32%   12.21   16.87  -28%
    Operating Costs                10.17   13.71  -26%   11.16   11.15    0%
    Netback                        39.38   33.17   19%   39.20   31.63   24%

    Per Share
    Income (loss) before taxes
     ($,000's)                       (74)      (99)         12    (239)
      Per Share (basic)           $    -    $    -      $    -  $    -
    Funds flow from operations
     ($,000's)                       870       291       1,844     599

      Per Share (basic)           $ 0.04    $    -      $ 0.08  $ 0.02

    Share Data (000's)
    Common Shares (weighted
     average)                     22,402    20,056      22,303  20,634
    Options                        2,210     2,010       2,210   2,010

    Additional Information

    Interest Expense ($,000's)       210        31         417      60
    Depletion, depreciation and
     accretion ($,000's)             812       305       1,604     523
    Capital expenditures ($,000's)   587       502       2,283   2,745
    Total Assets ($,000's)                              23,076  13,015
    Working capital (deficiency)
     ($,000's)                                         (11,718) (2,451)
    Asset retirement obligation
     ($,000's)                                             872     681

    Production averaged 394 boepd over the six months ended June 30, 2007, an
increase of 90% over the same period in 2006. For the three month period
ending June 30, 2007 production averaged 394 boepd an increase of 97% over the
same period in 2006.
    The Corporation drilled 1 gross (0.1 net) well in the second quarter of
2007 resulting in 1 oil well. The horizontal well located in the Elswick,
Saskatchewan field was drilled and cased as a Midale oil well. The well is
currently producing 75 barrels of oil per day (net 7.5 bbls/d). The
Corporation re-activated and tested a gas well in the Athabasca area but the
well was unable to sustain economic natural gas flow rates and was abandoned.
A suspended oil well in the Skaro field in central Alberta was re-activated
and brought on production in the second quarter of 2007. The Cooking Lake pool
oil well at 15-21-57-19w4m has been producing into a temporary single well
battery at a rate of 10 bbls/d of 37 degrees API oil and will be pipelined
into the Corporation's main oil battery in the third quarter.
    The Corporation was successful in acquiring one section of land in
central Alberta at a Crown land sale. The land, prospective primarily for oil,
will be evaluated using 3D seismic to be acquired in late 2007 and followed up
with exploratory drilling if the potential for economic reserves are
    The Corporation is presently producing in excess of 475 boepd (82% oil).
A horizontal oil well was drilled in the Elswick field in July, 2007 and
initial oil rates are in excess of 130 bbls/d (net 12 bbls/d).
    The calculations of barrels of oil equivalent ("boe") are based on a
conversion rate of six thousand cubic feet ("mcf") of natural gas to one
barrel of crude oil. Boe's 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.

    The above disclosure contains certain forward-looking statements that
involve substantial known and unknown risks and uncertainties. These
forward-looking statements are subject to numerous risks and uncertainties,
certain of which are beyond the Corporation's control, including: the impact
of general economic conditions in Canada, industry conditions, increased
competition, the lack of available qualified personnel or management,
equipment failures, fluctuations in product prices and in foreign exchange or
interest rates and stock market volatility. The Corporation's actual results,
performance or achievements could differ materially from those expressed in,
or implied by, these forward-looking statements and, accordingly, no
assurances can be given that any of the events anticipated by the
forward-looking statements will transpire or occur, or if any of them do so,
what benefits the Corporation will derive there from.


For further information:

For further information: Kootenay Energy Inc. - Jack Marsh, President
and Chief Executive Officer, (403) 355-9800

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