SOURCE: Sky Petroleum, Inc.

October 16, 2006 04:00 ET

Sky Petroleum Announces 25,000 Barrels of Oil Produced

Receiving Revenue From Mubarek H2 Well Production

AUSTIN, TX -- (MARKET WIRE) -- October 16, 2006 -- Sky Petroleum, Inc. (OTCBB: SKPI), an oil and gas company with a development project in the United Arab Emirates, is pleased to announce that as of September 30, 2006, the Mubarek H2 well has produced 24,998 barrels of oil since it went into production on May 16, 2006. The company also announces that it will receive USD 588,356.00 from its first allocation of production revenue from the H2 well. The proceeds represent the sale of 15,873 barrels of oil net to Sky Petroleum at a net back to the wellhead price of USD 61.59 per barrel. The revenue will be received in mid-October 2006, or approximately 40 days from the first lifting of crude from the H2 well, which occurred on September 11, 2006. As of September 30, 2006, 9,125 barrels of oil net to Sky Petroleum were on the storage vessel Mubaraka.

Mubarek Field Program

The Participation Agreement with Crescent gives Sky Petroleum the right to participate in a share of the future production revenue by contributing up to $25 million in drilling and completion costs related to two obligation wells in the Mubarek Field, offshore United Arab Emirates. The $25 million commitment for both wells was fully paid by the end of the first quarter of 2006. It is anticipated that the second obligation well, which will spud in the fourth quarter of 2006 will be completed within 45 days. On completion of the two obligation wells a further well development program will be evaluated. Sky Petroleum believes that there is potential for additional wells to be drilled and anticipates production from these wells to commence in late 2007 or 2008 subject to a positive evaluation and rig availability.

About Sky Petroleum

Sky Petroleum (OTCBB: SKPI) is an oil and gas exploration company. Sky Petroleum's primary focus is to seek opportunities where discoveries can be appraised rapidly, and developments can be advanced either by accessing existing infrastructure, or by applying the extensive experience of established joint-venture partners. In addition, the company also plans some higher risk, higher reward exploration prospects. For additional information please visit www.skypetroleum.com

Safe Harbor

Except for historical information, the matters set forth herein, which are forward-looking statements, involve certain risks and uncertainties that could cause actual results to differ. Potential risks and uncertainties include, but are not limited to, the ability to stabilize the surging of the well, the ability to shut off zones which are producing water, the ability to carry out additional stimulation of the zones producing oil, the accuracy of estimated production rates and the price of crude oil, the accuracy of operating costs and monthly revenue forecasts, the timing and success of other proposed infill drilling programs, the contemplated continued production at the Mubarek Field, if any, the competitive environment within the oil and gas industry, the extent and cost effectiveness with which Sky Petroleum is able to implement exploration and development programs in the oil and gas industry, obtaining drilling equipment on a timely fashion, commodity price risk, and the market acceptance and successful technical and economic implementation of Sky Petroleum's intended plan.

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