OILEXCO INCORPORATED
AIM : OIL
TSX : OIL

OILEXCO INCORPORATED

March 23, 2007 15:24 ET

Oilexco Announces Extension of Rig Contact and Updates Its North Sea Operations

CALGARY, ALBERTA--(CCNMatthews - March 23, 2007) - Oilexco Incorporated ("Oilexco") (TSX:OIL) (AIM:OIL) announces that it's wholly owned subsidiary Oilexco North Sea Limited has exercised the one year option in it's contract with a subsidiary of Diamond Offshore Drilling, Inc. (NYSE: DO) for the semi-submersible Ocean Guardian. Oilexco had contracted the Ocean Guardian in December of last year for a one year period commencing in April 2007, with an option to extend the contract for an additional year ending in April 2009. The contracted rig rate for the additional one year period is $350,000 US per day. Total value of the contract extension is $127.75 million US.

The Ocean Guardian is scheduled to commence appraisal drilling at the Ptarmigan oil accumulation in mid to late April. At Ptarmigan the Company is paying 100% of the cost of a three leg well to appraise a 1994 oil discovery which flowed on drill test 1,889 barrels of 43 degrees API oil per day and 1.4MM cubic feet per day of gas through a 28/64" choke, at 1112 psi flowing pressure, from 20 feet of perforations, in a 54 foot thick oil bearing Paleocene Forties sand at a depth of 7100 feet. Upon completion of the appraisal well, Oilexco will earn 60% interest in the Ptarmigan oil accumulation.

At the Company's Brenda/Nicol development the remaining work scope is limited to the laying and connecting of the Umbilical between the Brenda manifold and the Balmoral facility. This operation has been delayed due to ongoing bouts of severe weather, and vessel availability during weather windows in March. The Company's sub sea contractor has indicated a sub sea installation vessel and dive support vessel are now available to lay and connect the Umbilical. This operation is scheduled to commence at the end of next week. Weather permitting; this operation should take three to four days to complete. Commissioning and final inspections of the facilities will then begin allowing oil production from the Brenda and Nicol developments to commence by the third week in April, weather permitting.

"First oil from Brenda and Nicol appears to be within our grasp" said Arthur Millholland, President and CEO of Oilexco. "With this milestone past we can then fully concentrate on our 2007 development at Ptarmigan and our 2007 to mid 2008 development project at Shelley. The long term drilling contract for the Ocean Guardian is a key piece in our strategy as it and our other long term contracted rig the Sedco 712 will allow the Company to continue its aggressive program of exploration, appraisal and development drilling in the UK North Sea well into the future" added Mr. Millholland. "Having these two rigs will allow Oilexco to continue to create significant shareholder value".

Forward Looking Statements

This disclosure contains certain forward-looking estimates 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 the Company 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 estimates 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. 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.

In accordance with the guidelines of the AIM market of the London Stock Exchange, Arthur Millholland P.Geol, President and CEO of Oilexco Incorporated, is the qualified person that has reviewed the technical information contained in this press release.

Oilexco is listed on the Alternative Investment Market of the London Stock Exchange plc ("LSE-AIM") and the Toronto Stock Exchange ("TSX"), 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