Mr. Donald Benson reports

AVILA ENERGY CORPORATION ANNOUNCES CORPORATE UPDATE

The statement of claim recently reported regarding a dispute with Avila Energy Corp.'s secured creditor has been discontinued. The company is currently working with the lawyer for the secured creditor in anticipation of having a final agreement concluded.

The company is pleased to announce that it has placed one of its oil wells on production. This well had been shut in for a couple of years and its return to service comes at a great time as oil prices, the company believes, are set to rise. In addition, some natural gas production from the West Central area has resumed and third party natural gas processing began last week. Natural gas production from Avila Energy's East Central area is expected to return to production later this summer.