Magnus Energy Inc.

Magnus Energy Inc. is a junior oil and gas company engaged in the acquisition, exploration, development and production of crude oil and natural gas in western Canada. The company’s current areas of focus are located in southeast Saskatchewan, and east central and southern Alberta. Magnus was formed in early 2005 and became publicly traded in August 2005 through a listing on the TSX Venture Exchange.

Effective January 31, 2006, Magnus acquired all of the issued and outstanding shares of KVR Resources Ltd., a private company, for $5.75 million plus 6,218,808 Class A Magnus shares. At the time of acquisition, KVR’s assets included several properties in east central and southern Alberta which were producing about 65 boepd. The KVR properties also included another 250 - 300 boepd behind pipe which has since been tied in.

The company is currently producing in excess of 700 boepd and has a land position of 131,000 (86,500 net) acres. Since its inception, Magnus has drilled 34 (25.2 net) wells at an 88% success rate. Thirty of these wells have been cased and completed, two were abandoned and two wells have been suspended. The company has a significant drilling inventory of more than 370 (233 net) locations. As at March 31, 2006, Magnus had proved plus probable reserves of 1,299 mboe.

Core Areas

Magnus currently operates in five core areas, namely, the southeast Saskatchewan region of Antler, and the eastern Alberta areas of Paradise Valley, North Esther, Leahurst and Retlaw.

To date, Magnus has drilled 17 (9.2 net) wells into a new light oil field in the Antler area. All 17 wells have been successfully completed in the Devonian Torquay formation, which produces sweet light oil that receives a stellar sale price. Ten of these wells are currently on stream with the remaining seven expected to be tied in by the end of July 2006. Antler provides solid netbacks which are further improved by the royalty and tax incentives offered in Saskatchewan. Magnus is currently building a central oil battery in Antler which is anticipated to improve production efficiencies and reduce operating costs. This battery is expected to be operational by early July 2006. On company lands currently mapped within the Torquay oil field, Magnus has an inventory of Torquay drilling locations conservatively estimated at more than 300 (163 net) wells.

At Paradise Valley, Magnus has reached full production of 2,000 mcf/d. To date, Magnus has drilled, cased and completed 8 net operated wells and purchased 3 (2.9 net) suspended wells. In addition, Magnus has 41 square km of 3D seismic, 31 km of 2D seismic and 11,840 gross acres of land to explore in the area. The company's 100%-owned infrastructure in the area consists of a compressor, dehydrator, 27 km of gathering system and a 6.4 km sales line. Management intends to keep this infrastructure fully utilized at 2,000 mcf/d by drilling additional gas prospects from an extensive inventory of locations in the area.

Magnus currently has additional production awaiting tie-in at North Esther, Leahurst and Antler.

In March 2006, Magnus completed a bought deal private placement of 2,304,445 Class A common shares at a price of $1.35 per share and 3,954,800 Class A flow-through shares at a price of $1.77 per flow-through share. Gross proceeds from this bought deal financing totalled $10.1 million and will be used to expand and accelerate the development of the company’s core properties.

In late June 2006, Magnus announced that it has secured credit facilities from the National Bank of Canada in the amount of $11 million. The facilities consist of a revolving operating demand loan of $7.5 million and a nonrevolving acquisition and development demand loan of $3.5 million. These funds will be used to retire existing secured debt and to finance continuing exploration and development projects.