MAGNUM ENERGY INC. (TSX VENTURE:MEN) - 

THIS PRESS RELEASE DOES NOT CONSTITUTE AN OFFER TO SELL SECURITIES OR A
SOLICITATION FOR PURCHASERS TO BUY SECURITIES. THIS PRESS RELEASE IS NOT TO BE
CONSTRUED AS A PUBLIC OFFERING IN ANY PROVINCE IN CANADA UNLESS A PROSPECTUS
RELATING THERETO HAS BEEN ACCEPTED FOR FILING BY A SECURITIES COMMISSION OR
SIMILAR AUTHORITY IN SUCH PROVINCE.


NOT FOR DISSEMINATION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN
THE UNITED STATES


MAGNUM ENERGY INC. (the "Corporation") is pleased to announce that it has
engaged a Canadian investment dealer (the "Agent") to sell, on a commercially
reasonable efforts agency basis, up to a maximum of $2,500,000 aggregate
principal amount of 11% subordinated secured convertible debentures (the
"Debentures") at a price (the "Issue Price") of $1,000 per Debenture (the
"Offering"). 


The Debentures will mature three years after the Closing Date (the "Maturity
Date") and will bear interest at an annual rate of 11%, payable semi-annually
commencing six months after the Closing date. Each Debenture will be convertible
into Class A common shares of the Corporation (the "Common Shares") at the
option of the holder at any time prior to the Maturity Date at a conversion
price of $0.25 per Common Share, being a conversion rate of 4,000 Common Shares
per $1,000 principal amount of Debentures. Holders converting their Debentures
will receive accrued and unpaid interest thereon from the period of the last
interest payment date on their Debentures prior to the date of conversion to the
date that is one day prior to the date of conversion.


The Debentures will be redeemable by the Corporation at any time after two years
from issuance for a cash payment consisting of the outstanding principal amount
of the Debentures, the outstanding accrued and unpaid interest to the date of
redemption and a premium of 2% of the principal amount of the Debentures.


The Debentures will be secured against all of the assets of the Corporation and
will rank second after the Corporation's secured lenders. The net proceeds of
the Offering will be used for expansion of the Corporation's oil production and
reserves in its Provost Viking Oil Project, where it has recently added oil
production from its first horizontal well.


The Agent will be paid a cash commission (the "Agent's Commission") equal to 10%
of the gross proceeds of the Offering. The Agent will also receive warrants to
purchase 10% of the number of Common Shares issuable pursuant to conversion of
the debentures at an exercise price of $0.25 per share (1,000,000 Common Shares
if the Offering is fully subscribed). 


Pursuant to the terms of the engagement, Magnum is required to qualify the
Debentures pursuant to a Short Form Prospectus to be filed in Ontario,
Saskatchewan, Alberta and British Columbia and to make application to have the
Debentures listed and posted for trading on the TSX Venture Exchange. The
Offering is subject to completion of due diligence by the Agent, formal
documentation and regulatory approval.


About Magnum Energy Inc.

Magnum is a junior oil and gas producer with operations located in the Western
Canadian Sedimentary Basin. The Corporation produces from Viking oil operations
in Alberta, gas operations in Alberta and maintains a 100% ownership of the
Sedalia gas facility in East-Central Alberta. 


This press release shall not constitute an offer to sell or the solicitation of
an offer to buy any securities, nor shall there be any sale of securities in any
state in the United States in which such offer, solicitation or sale would be
unlawful. The securities referred to herein have not been and will not be
registered or sold under the United States Securities Act of 1933, as amended,
and may not be offered or sold in the United States absent registration or an
applicable exemption from registration requirements. 


Forward looking statements:

The information and statements in this news release contain certain
forward-looking information relating to: (i) the proposed issuance of the
Debentures; and (ii) the use of proceeds of the Offering. All statements other
than statements of historical fact may be forward-looking information. This
forward-looking information is subject to certain risks and uncertainties and
may be based on assumptions that could cause actual results to differ materially
from those anticipated or implied in the forward-looking information. These
assumptions include market acceptance of the terms of the Offering, the proposed
use of proceeds, and that historical costs and expenses will be representative
of future costs and expenses. The outcome and timing of the proposed Offering,
as well as the Corporation's actual results, performance or achievement could
differ materially from those expressed in, or implied by, such forward looking
information, and accordingly, no assurances can be given that any of the events
anticipated by the forward-looking information will transpire or occur or, if
any of them do, what benefits the Corporation will derive from them. The
Corporation's forward-looking information is expressly qualified in its entirety
by this cautionary statement. Except as required by law, the Corporation
undertakes no obligation to publicly update or revise any forward looking
information.