Gastem: Exploration Partnerships With Junex and Petrolia.

MONTREAL -- Gastem (TSX VENTURE:GMR) is pleased to announce the signing of two Letters of Intent proposing an exploration partnership with Junex (TSX VENTURE:JNX) and Petrolia (TSX VENTURE:PEA). These agreements will allow the three companies to pool resources and expertise in order to accelerate the development of oil and gas properties in Quebec.

According to the Letters of Intent, Gastem will conclude a farm-in agreements with Junex on the St-Simon exploration play, located near St-Hyacinthe, and with Petrolia on its Gaspe exploration project located in the Gaspe Peninsula. Furthermore, Junex and Petrolia will both become Gastem shareholders and will have the opportunity of proposing the election of a member to Gastem's Board.

"These partnerships will allow Gastem to participate on very promising exploration projects with a low risk factor. It is in keeping with our strategy which consists of becoming an oil and gas producer at low cost. Gastem's participation in these two wells, which are to be completed before the year's end, will undoubtedly be an exciting period for our shareholders" commented Mr. Raymond Savoie, president of Gastem.

St-Simon project

According to a Letter of Intent signed with Junex, Gastem will obtain a 10% interest into the St-Simon exploration project by issuing to Junex 1,000,000 shares of Gastem at a price of $0.10 per share.

The initial project for the St-Simon project is to re-enter a well, drilled by Shell in 1969, which encountered the presence of natural gas. The well is located 15 km South of St-Hyacinthe and the interest zone tested by Shell is the Beekmantown Group dolomites, the same geological Formation which have produced the St-Flavien natural gas field, located North-East of St-Simon.

The St-Simon objective is to complete the former Shell hole by re-entering and deviating the well in order to reach the production zone at 2 500 meters deep. If this work is successful, the partners expect to initiate in 2006 a development program to drill more wells and improve the production capacity of the potential field.

Gaspe project

Gastem has also signed a Letter of Intent with Petrolia in order to participate in an oil exploration project in the Gaspe area. According to the Letter, Gastem will receive a 10% interest in the Petrolia #3 Well by issuing in favour of Petrolia a total of 1,000,000 shares at a price of $0.10.

The Petrolia #3 Well is expected to be drilled next Fall at a depth of 1,000 meters in order to reach a structural anticline located between two large strike-slip faults. The targeted reservoir rocks are Devonian sandstone similar to those producing hydrocarbons from numerous fields in the US Appalachian Basin.

If the well is successful and identifies probable commercial oil production, Gastem will have an option to participate with a 10% interest in the development of the structure.

The Letters of Intent and subsequent agreements are subject to regulatory approval and to approval by the Board of Directors of each company.Full agreements have to be signed within 45 days of this press release.

Private Placement

Both letters are also subject to the completion of a $110,000 private placement by Gastem, in which directors of Junex and Petrolia will participate for a maximum of $60,000 ($30,000 for each company). The private placement will be composed of 110 units of $1,000 each and each unit will be composed of 10,000 regular shares at $0.10 per share, with an 18 month warrant at $0.15 per share. Gastem intends to close the placement as soon as regulatory authorisation has been obtained.

Gastem is publicly-traded oil and gas exploration company (GMR - TSX Vx, 9 million shares) listed in January 2004.The company owns properties and interests in Quebec and Alberta.

The TSX Venture Exchange has neither approved nor disapproved the information contained in this press release.

Gastem Inc. (TSX VENTURE:GMR)