Derek Oil & Gas Corporation
TSX VENTURE : DRK

Derek Oil & Gas Corporation

January 18, 2007 08:30 ET

Derek Extends & Oversubscribes Its Non-Brokered Private Placement Announced January 11, 2007 to One of Its Institutional Investors

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Jan. 18, 2007) -

THIS NEWS RELEASE IS NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA

Derek Oil & Gas Corporation (TSX VENTURE:DRK) is pleased to announce that, due to a committed and strong relationship with one of Derek's long standing institutional investors, the Company has decided to extend the January 11, 2007 private placement for an additional 500,000 units. The placement, subject only to regulatory approval, is a non-brokered private placement of 500,000 units at a price of $0.35 per unit. Each unit will consist of one common share and one half share purchase warrant, with each full warrant exercisable into a further common share of the Company at a price of $0.50 for two years from closing. This addition to the placement of January 11, 2007 oversubscribes Derek's original closing target of 5,000,000 units by 205,000 units.

The Company will pay a finders' fee on all or a part of this financing to an arms length registered dealer. The registered dealer will receive a finders' fee of 7% cash or units. The closing of this non-brokered placement and the finders' fee is subject to regulatory approval. The securities in connection with this financing will have a four-month hold period from the date of regulatory approval.

The Company will use these proceeds to pay its share of LAK Ranch costs towards an upcoming thirteen well drill program and for general working capital. This vertical well program will consist of a pattern of four injector and nine producer wells targeted to produce from the Newcastle sandstone formation. Derek's consultants have selected the well placements based on targets identified in the $1.1 million USD, high definition 3D seismic survey completed over 2880 acres (4 1/2 square miles) of the 8000 plus acre LAK Ranch property. Within the program area, the pay zone is estimated to be 40 to 70 feet thick. Budgeted costs of the program are estimated to be US two million five hundred thousand dollars (US$2.5 Million).

This upcoming 13 well program will be conducted jointly with a third party on a fifty-fifty cost basis, with the third party receiving fifty percent of the revenue until payback on their initial investment is met. Once payback is met, the third party's revenue interest (only on the 13 well program production) will revert to forty percent. Derek will have a 95% working interest in any future development and production on the property outside this 13 well program area.

Derek Oil & Gas Corporation is a Canadian based, publicly traded oil exploration, development and production company that utilizes enhanced oil recovery (EOR) techniques to develop new production from reservoirs in North America.

Derek's current focus is on the further development and increasing production from their prime property located in NE Wyoming's prolific Powder River Basin located approximately five miles from the Newcastle refinery.

Derek Oil & Gas Corporation is trading in Canada on the TSX Venture Exchange with the symbol DRK.

ON BEHALF OF THE BOARD

Mr. Barry C.J. Ehrl, President and C.E.O.

This document includes forward-looking statements. Forward-looking statements include, but are not limited to, the continued advancement of Derek Oil and Gas's LAK Ranch project. When used in this document, the words "potential", "plan", "could", "estimate", "expect", "intend", "may", "should", and similar expressions are intended to be among the statements that identify forward-looking statements. Although Derek believes that their expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Important factors that could cause actual results to differ from these forward-looking statements include the potential that Derek's LAK Ranch project will experience technological and mechanical problems, geological conditions in the reservoir may not result in commercial levels of oil and gas production, and other risks.

The TSX Venture Exchange has neither approved nor disapproved the information contained herein.

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