OILEXCO INCORPORATED
AIM : OIL
TSX : OIL

OILEXCO INCORPORATED

May 17, 2006 07:00 ET

Oilexco Spuds Halibut Prospect

CALGARY, CANADA--(CCNMatthews - May 17, 2006) - Oilexco Incorporated ("Oilexco") (TSX:OIL) (AIM:OIL) and Faroe Petroleum ("Faroe") (LSE-AIM: FPM.L) announce that they have commenced drilling a well at the Halibut prospect located in Blocks 14/21a and 14/22a in the UK Central North Sea. The well will be drilled by Dolphin Drilling's semi-submersible Bredford Dolphin to an expected depth of approximately 4,500 feet. The primary objective targets Upper Jurassic Sandstones, with secondary targets in Lower Cretaceous Sandstones.

Oilexco is paying 80% of the drilling and historic survey costs to earn a 55% interest in the blocks, and will be designated the Operator if the well is successful. Faroe will pay the remaining 20% of costs to retain a 45% interest in the blocks. In the event that production occurs in the Halibut prospect, Oilexco and Faroe will pay a combined 10% royalty to Shell and ExxonMobil, (the previous owners of the blocks) once total production revenue from Halibut surpasses US$2 billion.

"We originally viewed the data for this prospect in 2003 and were impressed by the previous owners' technical evaluations, but the timing wasn't right for our company", said Oilexco President and CEO Arthur Millholland. "When Faroe approached us last year to participate in Halibut by bringing one of our contracted semi-submersibles we didn't hesitate. While this is the highest risk prospect in our portfolio for 2006, we're excited about it and look forward to working with the people at Faroe."

Forward Looking Statements

This disclosure contains certain forward-looking statements that involve substantial known and unknown risks and uncertainties, certain of which are beyond Oilexco's control, including: the impact of general economic conditions in the areas in which Oilexco operates, civil unrest, industry conditions, changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in commodity prices, foreign exchange or interest rates, stock market volatility and obtaining required approvals of regulatory authorities. In addition there are risks and uncertainties associated with oil and gas operations, therefore Oilexco's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements will transpire or occur, or if any of them do so, what benefits, including the amounts of proceeds, which Oilexco will derive therefrom. All statements included in this press release that address activities, events or developments that Oilexco expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements include future production rates, completion and production timetables and costs to complete wells, and production facilities. These statements are based on assumptions made by Oilexco based on its experience perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances.

Oilexco is listed on the Alternative Investment Market of the London Stock Exchange plc and the Toronto Stock Exchange, in each case trading under the symbol OIL.


Contact Information

  • Oilexco Incorporated
    Arthur S. Millholland
    President
    (403) 262-5441
    or
    Oilexco Incorporated
    Brian L. Ward
    Chief Financial Officer
    (403) 262-5441
    or
    Oilexco Incorporated
    Gerry L. Roe
    Chief Operating Officer
    (403) 262-5441
    or
    Oilexco Incorporated
    Rob Elgie
    Manager Investor Relations
    (403) 262-5441
    Website: www.oilexco.com