Safed Koh Concession: Canadian Rally Energy's interest increases to 30 percent

Canadian Rally Energy, through a wholly owned subsidiary, has now closed purchase and sale agreement for acquisition of an additional 7.5 percent interest in Safed Koh Concession in Pakistan, increasing Corporation's interest to 30 percent.
All requisite Pakistan government approvals have been received and 11.4 million-dollar purchase price was satisfied on March 2, by way of 8.55 million dollar in cash and 1,372,846 common shares of Rally Energy Corp. The shares were reserved for issuance in June 2006 at then prevailing price of 2.30 dollars per share.
On December 31, 2006, the corporation's independent reserves evaluator assessed this 30 percent interest as containing 12.7 million dollars net BOE in Salsabil Field. This strategic acquisition represented cost of 3.2 dollars/BOE for proved and probable reserves and also increases the corporation's exposure to large prospective deeper untested zones in Salsabil Field and to two large gas prospects at Afiband and Zindapir, located immediately south of Salsabil Field.
Pakistan recently announced gas price applicable, expected to be 3.47 dollars/MCF, will be governed by proposed the 2007 Petroleum Policy currently awaiting cabinet approval. Construction of pipeline and gas plant is in final stages of completion. Operator announced that first gas production would start on March 21 at the expected rate of 15 to 20 MMCF/D (net 4.5 to 6.0 MMCF/D) from two wells, increasing to 60 MMCF/D (net 18 MMCF/D) by July 2007 following drilling of third development well scheduled to spud within a week.
The development well is also designed to penetrate deeper untested Sembar sandstone that has potential to double reserves of Salsabil Field. Additionally, Afiband and Zindapir structures will be tested by drilling two high impact exploration wells, first of which is scheduled to spud in July 2007 and second in early 2008. These two larger structures, with similar four-way seismically defined closure as encountered at Salsabil, have potential to contain in excess of two TCF of additional liquids-rich natural gas.