Kootenay Energy Inc. provides corporate update

    CALGARY, Jan. 25 /CNW/ - Kootenay Energy Inc. ("Kootenay") announces that
in respect of it's previous news release dated November 28, 2007, it has
completed the sale of an initial tranche of non-operated Saskatchewan assets,
in the amount of one million four hundred thousand dollars ($1,400,000). All
sale proceeds were applied to reduce the Corporation's bank debt. A further
closing in respect of the second tranche of remaining assets in the amount of
five million six hundred thousand dollars ($5,600,000) is being held in
abeyance pending review of a legal dispute concerning a right of first refusal
in respect of the remaining assets. It is not certain at this point in time as
to if or when the sale of these remaining assets will be concluded.
    In December 2007, Kootenay participated in a Keg River oil well (net 15%)
in the Shekilie, Alberta field. The development well was cased and tested and
will be brought on production following the reconfiguration of the oil
reservoir water flood pattern and the addition of water handling facilities.
These changes will reduce operating costs and increase the ultimate oil pool
recovery factor.
    The Corporation's current production following the sale of the initial
tranche of assets is approximately 420 boe/d consisting of 89% oil. A 3-D
seismic program has been completed at Hastings, south east Saskatchewan.
Following favorable results of the interpretation of the seismic data, the
Corporation expects to drill one to two horizontal oil wells. The Corporation
also plans to drill two to three wells in the Skaro field in central Alberta
to continue with its successful delineation of the Cooking Lake oil pool which
is currently producing 160 barrels per day of 37 degree API oil.
    The calculation 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 base on energy 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.


    %SEDAR: 00020600E

For further information:

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

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