MegaWest Energy Corp.
OTC Bulletin Board : MGWSF

MegaWest Energy Corp.

June 26, 2008 14:54 ET

MegaWest Commences Construction of Grassy Creek, the Company's Second Commercial Project in Missouri

CALGARY, ALBERTA--(Marketwire - June 26, 2008) - MegaWest Energy Corp., (the "Company" or "MegaWest"), an independent oil and gas company (OTCBB:MGWSF) (Cusip: #585168 107), specializing in non-conventional oil and gas projects with a focus on North American heavy oil, is pleased to announce the start of facilities construction and the drilling of development wells at its Grassy Creek project. MegaWest is continuing its phased development of heavy oil projects from the Warner sandstone in Vernon County, in southwest Missouri. The Company's existing 10,700 acre land position will support multiple projects, the second of which is Grassy Creek.

MegaWest's experienced team of enhanced oil recovery specialists have completed a detailed technical review of the Upper Warner sandstone, including numerical reservoir simulation, and have updated the Company's geological model with information obtained from recent drilling operations. A steam-flood across an area of 18.75 acres has been chosen as the production method for this development. This is the same process that is in operation at MegaWest's nearby Marmaton River project.

Completion and start-up of the Grassy Creek project is expected during calendar Q4 of 2008. A 50 million BTU/hr steam generator will be installed along with production treating vessels and tanks. As part of the project implementation, MegaWest is drilling and completing 46 production wells, 15 injection wells, 1 source water well, and 1 water disposal well. The total estimated capital expenditure to construct the facility and wells is US $4.0 million.

MegaWest expects to recover up to 45% of the oil in place on the Grassy Creek project. This project is expected to produce up to 150,000 to 200,000 bbls of oil over an 18 to 24 month period. The average production rate over this period is forecast to be 350 to 400 barrels of oil per day ("bopd") with a peak rate of 500 bopd. The produced oil will be sold at the plant gate to a local refinery and is expected to receive over 80% of the WTI posted price.

The Company's President and COO, R. William Thornton, stated, "This is the second project we have undertaken in the area, and evidences our commitment to expanding our operations with duplicate stand-alone projects, each capable of producing up to 500 barrels of oil per day, until we reach the optimum production capacity for current our leases, which we expect to be 5000 to 6000 barrels of oil per day."

The Company's CEO, George Stapleton, stated, "This is another significant step for MegaWest in terms of producing substantial volumes of heavy oil from this core area. The Company's ability to move forward so quickly with the development of this second commercial project demonstrates the MegaWest team's ability to drive shareholder value."

MegaWest's experienced management seeks to prove up significant resources and achieve early production from its world-class suite of operated properties. MegaWest now owns or has the right to earn an interest in over 118,000 acres in Texas, Kentucky, Missouri, Kansas and Montana. The underpinning for MegaWest's strategy is the convergence of the necessity for North American security of energy supply, current world oil prices, and significant commercial developments in thermal recovery technologies. Through delineation drilling and the completion of enhanced recovery production tests, MegaWest plans to establish proven and producing unconventional heavy oil resources in each of its core areas.


George T. Stapleton, II, President & CEO

Forward-Looking Statement Disclaimer

This document contains statements about expected or anticipated future events and financial results regarding the timing and future performance of the Grassy Creek project that are forward-looking in nature (collectively, "forward-looking statements"). When used in this document, the words "could", "expect", "plan", "estimate", "intend", "may", "potential", "should", and similar expressions relating to matters that are not historical facts are forward-looking statements. Although the Company believes that the assumptions underlying, and expectations reflected in, these forward-looking statements are reasonable, such statements involve risks and uncertainties that could cause actual results or outcomes to differ materially from those forward-looking statements. Important factors that could cause the results or outcomes discussed herein to differ materially from those indicated by these forward-looking statements include, among other things: (a) the lack of additional financing to fund the Company's exploration activities and continued operations, including lack of capital to complete the Grassy Creek project; (b) fluctuations in foreign exchange and interest rates; (c) the number of competitors in the oil and gas industry with greater technical, financial and operations resources and staff; (d) fluctuations in world prices and markets for oil and gas, including the heavy oil differential, due to domestic, international, political, social, economic and environmental factors beyond our control; (f) changes in government regulations affecting oil and gas operations and the high compliance cost with respect to governmental regulations; (g) potential liabilities for pollution or hazards against which the Company cannot adequately insure or which the Company may elect not to insure; (h) the Company's ability to hire and retain qualified employees and consultants or to access needed equipment and supplies critical to the success of Grassy Creek project; (i) operational risks in exploration, development and production, including those related to the Grassy Creek project; and (j) other factors beyond the Company's control. For such statements, we claim the safe harbour for forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

The risks and uncertainties that could affect future events or the Company's future financial performance are more fully described in the Company's quarterly reports (on Form 6-K filed in the US and the financial statements and Form 51-102F1 filed in Canada), the Company's annual reports (on Form 20-F filed in the US and the financial statements and Form 51-102F1 filed in Canada) and the other recent filings in the US and Canada. These filings are available at in the US and in Canada.

Contact Information