OILEXCO INCORPORATED
AIM : OIL
TSX : OIL

OILEXCO INCORPORATED

May 15, 2006 07:00 ET

Oilexco to Acquire Additional Interest in Nicol Oil Development

CALGARY, ALBERTA--(CCNMatthews - May 15, 2006) - Oilexco Incorporated ("Oilexco") (TSX:OIL)(AIM:OIL) announces that it has signed a Sale and Purchase Agreement with ConocoPhillips and ENI, that upon satisfaction of its terms will increase Oilexco's ownership of the Nicol Field in Block 15/25a in the UK North Sea to 100% from its current 70% interest. Under the terms of the Sale and Purchase Agreement, ConocoPhillips and ENI will lift a joint total of 1.25 million barrels of oil from their current combined 30% equity interest in the Nicol Field. After this production milestone is reached, ConocoPhillips and ENI will relinquish their equity in the property, thereby giving Oilexco 100% ownership of the Nicol Field and Block 15/25a. In addition, Oilexco has agreed under the terms of the Sale and Purchase Agreement to pay ConocoPhillips and ENI's combined 30% portion of the capital expenses for the development of the Nicol Field, currently estimated to be approximately Pounds Sterling 9,000,000.

"We are very excited to sign this agreement as it will eventually give us full ownership of the Nicol Field, which we believe holds significant production and reserve upside," said Arthur Millholland, Oilexco CEO and President.

The Nicol Field will be developed concurrently with Oilexco's 100% owned Brenda development located 10 km to the southeast. Development operations on the Nicol Field are expected to commence in June with the drilling of a single horizontal production well. Field development operations at Brenda are on schedule and under budget. First oil from the combined Brenda-Nicol developments continues to be targeted for October. Peak production rates net to Oilexco form the combined Brenda-Nicol developments are expected to be 35,000 barrels of oil per day.

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