February 10, 2010

Iteration Energy Ltd. (“Iteration” or the “Company”) has announced that its Board of Directors has initiated a process to identify, examine and consider a range of strategic alternatives available to Iteration, with a view to maximizing shareholder value. This process could result in, among other alternatives, a sale of the Company, a sale of a material portion of the Company’s assets, or a corporate reorganization. The Company has engaged FirstEnergy Capital Corp. (“FirstEnergy”) and Scotia Waterous Inc. (“Scotia Waterous”) as co-financial advisors to assist in this strategic review process. Current production is in line with November 2009 production of 13,348 BOE/d consisting of 56.7 MMcf/d and 3,897 bbl/d oil and NGL from five core areas: West Central Alberta, Peace River Arch / British Columbia, Northeast Alberta, Southern Alberta and Rainbow. Certain information contained herein regarding reserves and drilling inventory are confidential and are for information purposes only.

KEY ATTRIBUTES OF THE CORE AREAS

West Central Alberta

• 90% operated with 88% average W.I.
• 67.4% average W.I. in 292,318 total acres; 107,088 net acres are undeveloped
• Significant Nikanassin potential at Knopcik, as evidenced by Iteration’s 16-27-073-10W6M well with an IP of 4 MMcf/day, 15 month rate of 2.7 MMcf/day
• Other opportunities include:
  • 19 (13.8 net) booked oil locations and 84 (70.3 net) upside oil locations
  • Four (4.0 net) booked gas locations and 126 (104.2 net) upside gas locations
  • Nikanassin downspacing potential – applying for up to four wells per section in 34 sections

Peace River Arch / British Columbia

• 87% operated with 75% average W.I.
• 80.8% average W.I. in 313,376 total acres; 155,037 net acres are undeveloped
• Montney potential in Gordondale and Monias with up to 25 to 50 Bcf per section of original gas in place and 28 identified drilling locations 
• Area upside opportunities include:
  • Two (2.0 net) booked oil locations and 52 (52.0 net) upside oil locations
  • 16 (13.8 net) booked gas locations and 100 (90.0 net) upside gas locations

Northeast Alberta

• 92% operated with 76% average W.I.
• 80.6% average W.I. in 447,776 total acres; 195,567 net acres are undeveloped
• Multiple drilling and recompletion opportunities in a variety of plays and zones including horizontal wells with multi-stage completions 
• Multiple opportunities in a variety of play-types including drilling and recompletions
  • Eight (7.0 net) booked gas locations and 46 (41.0 net) upside gas locations
  • Drilling costs estimated to be $500 to $650 M through tie-in (eligible for up to $160 M drilling credit)

Southern Alberta

• 82% operated with 65% average W.I.
• 68.0% average W.I. in 172,428 total acres; 71,476 net acres are undeveloped
• 12 horizontal locations targeting the Glauconitic offsetting vertical producing wells
• 107 gross (84.1 net) identified drilling locations
• Recent area consolidation results in improved ability to develop waterflood efficiently and realize upside associated with improved recovery from numerous existing oil pools
  • 38o API oil with 42 MMbbl original oil in place at Manyberries
  • Recently increased injection rates will improve reservoir pressures, giving production response in offsetting producers
  • Potential for ASP and CO2 enhanced recovery
  • Horizontal drilling potential in the Swift formation

Rainbow

• 91% operated with 91% average W.I.
• Predominantly Keg River light oil (38-40o API)
• 81.1% average W.I. in 170,356 total acres; 105,369 net acres are undeveloped
• Area upside opportunities include:  
  • Currently completing third well of a seven well Keg River oil drilling program
  • 16 vertical Jean Marie and Pekisko drill locations at Black
  • Approximately 85 square miles of 3-D seismic
  • 120 net sections in the emerging Muskwa shale gas/oil opportunity

Reserve evaluations have been completed by GLJ Petroleum Consultants Ltd. (“GLJ”) and McDaniel & Associates Consultants Ltd. (“McDaniel”). The effective date of the evaluations is December 31, 2009 and it uses McDaniel’s January 2010 price forecast.

Interested transaction candidates are encouraged to contact the Advisors for more detailed information including a Confidentiality Agreement (CA). Iteration and the Advisors reserve the exclusive right to provide access to information and there are no guarantees that interested candidates will be granted access to the data room.

Qualified parties who execute a CA will have access to the confidential information available in the physical and online data rooms, which will open the week of February 16, 2010. The data rooms will include the reserve reports, well lists, lease operating statements, marketing summaries, geological mapping, a seismic workstation, well files, and other relevant information. Detailed bidding instructions will be provided to parties who have executed a CA in advance of the deadline. The CA can be obtained by contacting FirstEnergy or Scotia Waterous directly.

Technical and management presentations will be available to parties who have executed a CA.

 
CONTACTS

Please direct all correspondence and inquiries relating to the opportunity: