OILEXCO INCORPORATED
AIM : OIL
TSX : OIL

OILEXCO INCORPORATED

August 12, 2005 21:30 ET

Oilexco Announces its 2005 2nd Quarter Results

CALGARY, ALBERTA--(CCNMatthews - Aug. 12, 2005) - Oilexco Incorporated ("Oilexco") (TSX:OIL) (AIM:OIL) announces its Financial Results for the 2nd Quarter, and for the 6 month period ending June 30, 2005.

Oilexco has evolved substantially due to its activities in the UK North Sea. High levels of activity in the United Kingdom have continued to cause significant changes in the financial status and trends of the Company over the second quarter of 2005 relative to the same period of 2004. During the second quarter Oilexco strengthened its financial position by concluding an offering of 31,000,000 Common Shares of the Company at Pounds Sterling 0.98 or $2.22 per share. Aggregate gross proceeds of the share issue were Pounds Sterling 30.4 million, or $68.8 million. These funds will be directed towards Oilexco's 2005 UK North Sea drilling program. In addition to the offering of common shares, the Company also strengthened its financial position by concluding a Pounds Sterling 10 million "Bridge facility" loan with its principal Banker, the Royal Bank of Scotland. This loan facility is to be applied to the Company's "Brenda" development in the UK North Sea. The Bridge facility can be drawn to permit the ordering of certain equipment that has a long lead time or to accommodate other Brenda development expenditures before the overall Project Facility is put in place. The initial draw on the Bridge facility is expected to occur in the third quarter of 2005.

The Company's principal focus continues to be development of the "Brenda" Field. The initial Draft Brenda Field Development Plan and Environmental Assessment was filed with the UK Department of Trade and Industry ("DTI") by the Company in April. The review process has been ongoing, with the Final Field Development Plan expected to be filed in mid August, with final DTI approval expected later in the month.

Subsequent to the end of the period the Company signed a "Heads of Agreement" with CNR International (UK) Ltd, a subsidiary of Calgary-based Canadian Natural Resources Limited, relating to the construction and tie-in of the "Brenda" Field to the Balmoral Floating Production Facility and for the provision of production and operating services to the Brenda Field. In addition to the Agreement with CNR International, the Company also signed several letters of intent with a view toward awarding contracts to leading sub-sea contractors for the provision of services and sub-sea production equipment for the Brenda development. These agreements have allowed Oilexco to finalize the Brenda Field Development Plan. The Company's contracted drilling rig, the Transocean semi-submersible Sedco 712, is expected to move to the Brenda field area in January of 2006 to begin the drilling of the Brenda horizontal production wells. The target for the first oil production from Brenda continues to be the third quarter of 2006. The drilling and completion program for the productions wells at Brenda is expected to take 5 months to complete.

Oilexco commenced drilling operations at the end of March on the first well of its 2005 UK North Sea drilling program. Well 15/25a-13 was successful, testing 4,194 bbl/d of 39 degrees API sweet crude oil from the Paleocene Balmoral sandstone. This new oil accumulation (called "Nicol") was drilled on a farm-in, whereby the Company paid 100% of the costs of the well for a 70% interest in Block 15/25a. Oilexco has proposed to its partners that a single horizontal production well be used to develop the "Nicol" oil accumulation. Also, Oilexco has proposed that this production well be tied back to the Brenda production manifold, which will be located approximately 10 km to the southeast, and that development at Nicol proceed concurrently with the development at Brenda. Drilling and completion of this production well will be concurrent with the Brenda production wells, with oil production targeted for the third quarter of 2006.

During the second quarter, the Company also worked actively toward finalizing its 2005/2006 UK North Sea drilling program. Currently, Oilexco's activities are focused in the central UK North Sea, the location of its Brenda and Nicol oil accumulations. In the second quarter and subsequent to it, the Company has entered into five farm-in agreements/joint venture agreements or letters of intent for drilling ventures with third parties targeting oil and/or gas condensate prospects in the central UK North Sea. Drilling operations on these projects commenced in July at Yeoman, with well 15/18b-11, followed by the well 15/22-18 at Black Horse, which commenced operations in early August 2005. Wells at Palomino (Block 21/6a) and Tay (Block 21/23a) are expected to be drilled in October and November 2005, respectively. Oilexco is currently evaluating several additional drilling opportunities to carry the Sedco 712 through its contracted period ending in March 2007. To this end, the Company is evaluating a number of additional exploration/appraisal drilling opportunities in the UK North Sea on acreage held by third parties. In addition, Oilexco has bid on Blocks offered in the 23rd UK Offshore Licensing Round, the results of which are expected to be released in September.

In April, Oilexco signed a letter of agreement to extend the contract with Transocean for the semi-submersible offshore drilling rig Sedco 712 from the end of March 2006 to the end of March 2007. This will ensure the development of the Brenda Field by guaranteeing the timing of drilling the production wells at Brenda and Nicol and the delivery of sub-sea production equipment. It also allows Oilexco to appraise its drilling successes in its 2005 UK North Sea exploration/appraisal program. This was a strategic decision made by Oilexco amid a rapidly tightening rig market for the years 2006 and 2007. Currently, all worthy semi-submersible drilling units in the North Sea have been contracted through to the end of 2006, reflecting rapid increases in industry activity levels due to high world crude oil prices.

Economic and industry trends in the oil and gas sector as outlined in the MD&A as at and for the year ended December 31, 2004 remain substantially unchanged.

Oilexco finished the second quarter ending June 30, 2005 in excellent financial condition. The Company maintained high cash balances as in the year ended December 31, 2004, reflecting Oilexco's private placement of equity in February 2005 and the subsequent offering in June 2005. Cash balances are expected to fluctuate in 2005 and 2006 due to the cash consumed by ongoing drilling activity offset by the anticipated project financing facility for Brenda, as well as increases from future equity issues. Current assets increased 187% from December 31, 2004 following the private placement and June offering of common shares and reflecting accounting for contract pre-payments to Transocean for the Sedco 712 drilling contract from March 2005 to March 2006. Current liabilities increased 40% at June 30, 2005 (compared to the year end 2004), reflecting an increase in payables accrued for second-quarter drilling operations in the UK North Sea. The Company expects levels of current liabilities to remain relatively high in subsequent 2005 quarterly periods, reflecting the 2005 UK exploration/appraisal drilling program. The share capital increase of 60 % from the year end reflects the issuance of 5,385,000 common shares by private placement in February 2005 and the issue of 31,000,000 common shares in June 2005. Oilexco may access equity markets to raise additional capital in 2005.

Increased levels of activity in the UK North Sea during the second quarter ended June 30, 2005 also caused significant changes in comparative year-over-year trends in Oilexco's operating results. Oil and gas revenues increased 338% in the second quarter ended June 30, 2005 compared with the same period of 2004. The increase in oil and gas revenues resulted from substantially higher prices and the acquisition of the Balmoral/Glamis oil production interests in September 2004. Oilexco forecasts a further increase in oil and gas revenues in the second half of 2005 due to production enhancements at Balmoral/Glamis. In addition, the Company expects oil prices to continue to average more than $50 US per barrel. Oil and gas operating costs increased by 2,224% in the second quarter ended June 30, 2005 compared with the same period of 2004 due to the acquisition of the Balmoral/Glamis production interests. The Company expects further increases in operating costs in 2005 due to continued inflationary price increases in oilfield services, onshore and offshore, in the current high-oil-price environment. General and administrative expenses increased by 218% in the second quarter ended June 30, 2005 compared with the same period of 2004 due to the Company's intensified activity in the UK North Sea, which necessitated the opening and staffing of an office in Aberdeen, Scotland. General and administrative expenses should stabilize in the second half of 2005 as employment levels stabilize. Oilexco has not experienced difficulties in attracting well-qualified staff due to the Company's compensation policy of combining share options with competitive salary and benefit packages. Share incentive compensation expense levels increased in comparative periods, as the Company issued share options to its new hires for compensation in times of increased prices for Oilexco's common shares. The Company expects the share incentive compensation expense to remain high throughout 2005, as the Company will continue to issue options to key employees and to new hires in key positions.

The Company had a net loss of $1.2 million during the period under review due to high general and administrative expenses. For the same period of 2004, the Company had net loss of $0.5 million. The Company expects to continue to incur losses until 2006, when oil production at Brenda in the UK North Sea is anticipated to commence. Cash used in operating activities amounted to $2.1 million during the second quarter of 2005 compared with $1.1 million in the same period of 2004 mainly due to higher general and administrative expenses. The Company expects to continue its active capital spending program throughout the remainder of the year and into 2006. Increasing levels of general and administrative expenses are likely to continue; therefore, cash used in operating activities may increase in subsequent periods.

During the period presented, the Company maintained strong positive working capital and relatively large cash balances. Oilexco intends to continue to finance the Company's 2005 UK North Sea exploration/appraisal program from the equity markets, as the Company currently lacks the internal cash flow to finance these activities. Oilexco continues to negotiate a project financing facility with the Royal Bank of Scotland to finance the Brenda Field development program.

RESULTS OF OPERATIONS



REVENUES
------------------------------------------------------------------------
------------------------------------------------------------------------
Three Months ended June 30, Six Months ended June 30,
2005 2004 % 2005 2004 %
------------------------------------------------------------

Oil and Gas
North
America 396,689 374,580 6% 632,614 729,562 -13%
Oil and Gas
- Discontinued
Operations
- Canada - 78,100 - - 143,303 -
Oil and Gas
UK North
Sea 1,244,923 - - 2,499,308 - -
Inter-field
Tariff 249,884 - - 557,040 - -
Interest
Income 70,729 30,184 134% 244,457 99,964 145%
Other Income 1,764 2,727 -35% 2,735 5,572 -51%
------------------------------------------------------------

Total 1,963,989 485,591 304% 3,936,154 978,401 302%
------------------------------------------------------------------------
------------------------------------------------------------------------


Oil and gas revenues before royalties from North American operations amounted to $396,689 and $632,614 for the three and six months ended June 30, 2005, respectively, compared with $374,580 and $729,562 for the same periods of 2004. The decrease in revenues can be attributed to lower production from Alabama due to temporary water problems, which is partially compensated by higher oil prices in 2005 than in 2004.

Revenues from discontinued operations in 2004 relate to the Forgan, Saskatchewan, operation, which was sold in December 2004.

Sales of oil and gas in the UK North Sea ($1,244,923 for the three months and $2,499,308 for the six months ended June 30, 2005) relate to the Company's interest in the Balmoral and Glamis Fields acquired in September 2004.

The Company also realized income from inter-field tariffs ($249,884 for the three months and $557,040 for the six months ended June 30, 2005). These represent the Company's interest in tariffs on third-party oil processed on the Balmoral Floating production facility in the UK North Sea.

The Company had no oil-and-gas or tariffs revenues from the UK North Sea in the first or second quarters of 2004.

Interest income in periods under review resulted from interest on bank accounts and short-term deposits, as the Company had significant cash balances due to funds raised for the UK North Sea operations.



PRODUCTION AND PRICES
------------------------------------------------------------------------
------------------------------------------------------------------------
Three Months ended June 30, Six Months ended June 30,
2005 2004 % 2005 2004 %
------------------------------------------------------------

Oil and Gas
- BOE/day
North
America(1) 71 87 -19% 60 89 -33%
UK North Sea 212 - - 227 - -
Average Oil
and Gas
Price
$/BOE
North
America(1) 61.20 47.08 30% 58.19 45.16 29%
UK North
Sea 64.62 - - 60.94 - -
Crude Oil
as % of
Production
(1)
North
America 95% 94% 1% 95% 94% 1%
UK North
Sea 97% - - 97% - -

------------------------------------------------------------------------
------------------------------------------------------------------------

(1) for comparison purposes, 2004 figures exclude discontinued operation
of Forgan, Canada, sold in December 2004.


Average daily sales of oil, gas and liquids in North America decreased by 19% and 33% for the three and six months ended June 30, 2005 (respectively) compared with the same periods of 2004 and amounted to 71 BOEPD and 60 BOEPD for the three- and six-month periods. The decrease resulted from significantly lower production from Alabama due to temporary water problems.

Average oil and natural gas prices in respect of the North American operation increased by 30% and 29% for the three and six months ended June 30, 2005 compared with the same periods of 2004. The increase is attributable to the increase in worldwide crude oil prices during the periods under review.



OPERATING COSTS
------------------------------------------------------------------------
------------------------------------------------------------------------
Three Months ended June 30, Six Months ended June 30,
2005 2004 % 2005 2004 %
------------------------------------------------------------

Oil and Gas
Production
North America 52,209 32,853 59% 103,822 84,797 22%
Discontinued
Operations
- Canada - 20,519 - - 44,830 -
UK North
Sea 1,188,156 - - 2,370,060 - -
------------------------------------------------------------
1,240,365 53,372 2224% 2,473,882 129,627 1808%

Operating
costs
$/BOE
North
America(1) 8.06 4.13 95% 9.55 5.25 82%
UK North Sea 61.68 - - 57.78 - -

------------------------------------------------------------------------
------------------------------------------------------------------------

(1) for comparison purposes, the 2004 figures exclude the discontinued
operation of Forgan, Canada, sold in December 2004.


Operating expenses related to oil and natural gas production in North America increased by 59% and 22% in the three and six months ended June 30, 2005 compared with same periods of 2004. The increase relates mainly to the increase in State Mineral Tax in Alabama in 2005.

Operating costs of discontinued operations in 2004 relate to the Forgan, Saskatchewan, operation, which was sold in December 2004.

Operating expenses per BOE increased by 95% and 82% in the three and six months ended June 30, 2005 compared with same periods of 2004. The increase resulted from an increase in State Mineral Tax in the second quarter of 2005 and a lower production level in Alabama in 2005.

The operating expenses from the UK North Sea represent the Company's interest in the oil and gas production costs of the Balmoral and Glamis Fields as well as the Company's share of operating costs of the Balmoral floating production facility. The Company expects UK North Sea operating costs per BOE to decrease in 2006 when Brenda production comes on stream through the Balmoral facility.



ROYALTIES - North America
------------------------------------------------------------------------
------------------------------------------------------------------------
Three Months ended June 30, Six Months ended June 30,
2005 2004 % 2005 2004 %
------------------------------------------------------------

Royalties
- North
America 79,205 73,709 7% 126,694 144,603 -12%
Royalties
- Discontinued
Operations
- Canada - - - - 4,923 -

Royalties as %
of Oil and
Gas Sales(1) 20.0% 19.7% 1% 20.0% 19.8% 1%

Royalties
$/BOE(1) 12.22 9.27 32% 11.65 8.95 30%

------------------------------------------------------------------------
------------------------------------------------------------------------

(1) for comparison purposes, the 2004 figures exclude discontinued
operation of Forgan, Canada, sold in December 2004.


Royalties relate to the Company's operations in North America. The increase in royalties per BOE (32% for the three months and 30% for the six months ended June 30, 2005, compared with same periods of 2004) is a reflection of higher oil prices in 2005.

No royalties are payable on UK North Sea production from the Balmoral and Glamis Fields.



GENERAL AND ADMINISTRATIVE
------------------------------------------------------------------------
------------------------------------------------------------------------
Three Months ended June 30, Six Months ended June 30,
2005 2004 % 2005 2004 %
------------------------------------------------------------

General and
Administrative 2,040,481 642,180 218% 3,383,300 972,148 248%
Employment
as at June 30 16 8 - 16 8 -
------------------------------------------------------------------------
------------------------------------------------------------------------


The increase in general and administrative expenses in 2005 (compared with 2004) relates mainly to the addition of new employees and contract workers at the Head Office in Calgary and the Oilexco North Sea Limited office in Aberdeen.



DEPLETION, DEPRECIATION AND ACCRETION
------------------------------------------------------------------------
------------------------------------------------------------------------
Three Months ended June 30, Six Months ended June 30,
2005 2004 % 2005 2004 %
------------------------------------------------------------

Depletion,
Depreciation
and Accretion
(DD&A) 504,628 46,841 977% 1,086,208 76,751 1,315%
Depletion,
Depreciation
and Accretion
(DD&A) -
Discontinued
Operation
Canada - 9,694 - - 24,688 -

DD&A $/BOE 19.60 5.92 231% 20.93 5.28 297%
------------------------------------------------------------------------
------------------------------------------------------------------------


The increase in DD&A related mainly to a depletion charge recognized on Balmoral, UK (approximately $448,000 in the first quarter and $358,000 in the second quarter of 2005). Additionally, DD&A includes an accretion in respect of Assets Retirement Obligation ("ARO"), which for the UK North Sea operation amounted to $102,000 in each of the two quarters.

DD&A of discontinued operations in 2004 relates to the Forgan, Saskatchewan, operation, which was sold in December 2004.



FOREIGN EXCHANGE
------------------------------------------------------------------------
------------------------------------------------------------------------
Three Months ended June 30, Six Months ended June 30,
2005 2004 % 2005 2004 %
------------------------------------------------------------

Foreign
Exchange
Gain (699,557) (1,051,181) -33% (974,740) (1,973,074) -51%
------------------------------------------------------------------------
------------------------------------------------------------------------


During the periods presented, the Company recognized significant, unrealized gains on the translation of assets denominated in British pounds. These were partially compensated by foreign exchange losses on the translation of intercompany accounts.



SHARE-BASED COMPENSATION
------------------------------------------------------------------------
------------------------------------------------------------------------
Three Months ended June 30, Six Months ended June 30,
2005 2004 % 2005 2004 %
------------------------------------------------------------
Stock-Based
Compensation
Expense - 1,170,000 - 959,500 1,470,000 -35%

------------------------------------------------------------------------
------------------------------------------------------------------------


A compensation expense of $959,500 has been recognized for the first quarter of 2005 as a result of stock options granted to employees to acquire common shares at an exercise price as follows:

- January 17, 2005 - 250,000 stock options at $3.25 per share;

- February 4, 2005 - 200,000 stock options at $3.18 per share.

All stock options vest immediately on the date of their grant. Fair value of each option granted is estimated on the date of grant using the Black-Scholes option pricing model (assumptions used for the model are discussed in the notes accompanying the Company's unaudited consolidated interim financial statements as at and for the three- and six-month periods ended June 30, 2005).



NET (LOSS)/EARNINGS AND CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
------------------------------------------------------------------------
------------------------------------------------------------------------
Three Months ended June 30, Six Months ended June 30,
2005 2004 % 2005 2004 %
------------------------------------------------------------

Net (Loss)/
Earnings (1,201,132) (459,024) 162% (3,118,689) 128,735 -2,523%
Cash
(Used in)/
Provided by
Operating
Activities (2,137,403) (1,119,143) 91% (4,537,170) 661,971 -785%
------------------------------------------------------------------------
------------------------------------------------------------------------


In the second quarter of 2005, the Company's net loss amounted to $1.2 million, versus a net loss of $0.5 million in the second quarter of 2004. The majority of the net loss in 2005 resulted from an increase in general and administrative expenses.

Cash used in operating activities increased in the second quarter of 2005 to $2.1 million, compared with $1.1 million in the same quarter of 2004. Again, the decreasing trend relates mainly to a significant increase in general and administrative expenses, which in turn resulted from continuous development of the Company's UK North Sea operation.

LIQUIDITY AND CAPITAL RESOURCES

Total net proceeds from financing activities in the first half of 2005 amounted to $63.7 million.

On February 11, 2005, the Company closed a private placement of 5,385,000 Common Shares issued at Pounds Sterling 1.30 ($3.00) for gross proceeds of Pounds Sterling 7,000,500 ($16,155,000). The Agent was paid a 6.5% commission and was issued non-transferable warrants to purchase common shares equal to 6% of the shares issued under this private placement. Therefore, 323,100 Agent's Warrants have been issued, exercisable at a price equal to the subscription price under the private placement and with an expiry date of February 10, 2006. The fair value allocated to these warrants using the Black-Scholes option model was $217,700, which was recognised as share issue costs.

On June 27, 2005, the Company closed a short form prospectus of 31,000,000 common shares issued at Pounds Sterling 0.98 ($2.22) for gross proceeds of Pounds Sterling 30,400,000 ($68,800,000). The Agent was paid a 6.5% commission and was issued non-transferable warrants to purchase common shares equal to 6% of the shares issued under this short form prospectus. Therefore, 1,860,000 Agent's Warrants have been issued, exercisable at a price equal to the offering price under the short form prospectus and with an expiry date of June 27, 2006. The fair value allocated to these warrants using the Black-Scholes option model was $969,500, which was recognised as share issue costs.

The proceeds from the Company's warrants, agent's warrants and stock options exercised during the six month period ended June 30, 2005 amounted to $487,535, $1,841,400 and $237,550, respectively. If (assuming) all outstanding warrants and stock options are exercised, the Company will realize additional gross proceeds of approximately $41.4 million.

The proceeds from the above sources as well as cash available at the beginning of the year were used to finance the Company's activities in the UK North Sea, which totalled approximately $42.7 million for six months ended June 30, 2005.

On May 20, 2005, a Bridge Facility Agreement ("Bridge Facility") for $21,973,000 (Pounds Sterling 10,000,000) was signed with the Royal Bank of Scotland plc ("RBS") to finance the development of the Brenda oil field and certain other North Sea assets of the Company. The bridge facility can be repaid at any time, but must be repaid in full by May 19, 2006 (maturity date). Interest rates are based on LIBOR plus a margin, which ranges from 3% to 6% per annum during the one-year period of the facility. Interest is paid monthly and upon maturity. The facility is secured by a first floating charge over Oilexco North Sea, a guarantee from Oilexco Incorporated, supported by charges over all shares of the parent's subsidiaries (Oilexco North Sea Limited and Oilexco America, Inc.), assignment of insurance proceeds from the Brenda and Balmoral fields and a first charge over the project bank account. The Bridge Facility was not utilized as at June 30, 2005. However, management expects the first draw down in the second part of the third quarter of 2005.



COMPARATIVE BALANCE SHEET ITEMS

($ 000's) June 30, March 31, June 30, December 31,
2005 2005 % 2005 2004 %
---------------------------------------------------------
Cash 58,445 11,711 399% 58,445 19,045 207%
Current
Assets 70,008 26,015 169% 70,008 24,364 187%
Capital
Assets 165,059 126,214 31% 165,059 122,747 34%
Current
Liabilities 30,420 10,199 198% 30,420 21,671 40%
Share Capital 215,683 153,145 41% 215,683 135,502 59%
Shareholders'
Equity 196,679 133,847 47% 196,679 117,276 68%
------------------------------------------------------------------------
------------------------------------------------------------------------


As indicated in the above table, most items on the balance sheet are trending upwards as the Company issues equity and continues its operations in the North Sea. The significant cash balance as at June 30, 2005 relates to funds received from the short form prospectus that was closed on July 27, 2005.

Oilexco is currently pursuing projects that will require additional financing. In general, the Company's projects in the UK North Sea require external financing, and the Company intends to continue to issue equity and to pursue other means of financing as opportunities arise. As at June 30, 2005, the Company had cash on hand of $58,445,080, net working capital of $39,588,460, and no long-term debt.



CONTRACTUAL OBLIGATIONS

Payments Due by Period
------------------------------------------------------------------------
($ 000's) Less than After 5
Total 1 Year 1-3 Years 4-5 Years Years
------------------------------------------------------------------------
Long term debt
principal - - - - -
UKCS Licences 115 115 - - -
Drilling Contract 90,013 28,586 61,427 - -
Office Leases 2,967 464 911 526 1,066
------------------------------------------------------------------------
Total Obligations 93,095 29,165 62,338 526 1,066
------------------------------------------------------------------------
------------------------------------------------------------------------


As at June 30, 2005, the Company has no long term debt and has working capital of $39.6 million.

License obligations in the UK are on a graduated scale, increasing over time; however, Oilexco is obligated to pay only until the end of August 2005.

The drilling contract represents the Company's obligation in respect to a Sedco 712 semi-submersible drilling unit. In April 2005, the Company signed an agreement with Transocean to extend the contract by another 12 months until March 23, 2007. As at June 30, 2005, the Company's obligations for the next 21 months under these contracts amounted to approximately $90.0 million (US$73.4 million). The Company anticipates financing this contract primarily with equity.

The office-leases obligation represents the Company's commitments under operating lease agreements for the rental of office space in both Calgary and Aberdeen, UK.



OILEXCO INCORPORATED
Consolidated Balance Sheets
As at
(unaudited)

June 30 December 31
Assets 2005 2004
------------------------------------------------------------------------
------------------------------------------------------------------------
Current Assets
Cash $ 58,445,080 $ 19,045,429
Accounts Receivable 1,505,722 728,103
Other (Note 3) 10,057,630 4,590,828
------------------------------------------------------------------------
70,008,432 24,364,360

Capital Assets (Note 4) 165,058,774 122,747,357
------------------------------------------------------------------------
$ 235,067,206 $ 147,111,717
------------------------------------------------------------------------
------------------------------------------------------------------------

Liabilities and Shareholders' Equity
------------------------------------------------------------------------
------------------------------------------------------------------------
Current Liabilities
Accounts Payable and Accrued Liabilities $ 30,419,972 $ 21,670,945
Short term Bank Loan (Note 5) - -
------------------------------------------------------------------------
30,419,972 21,670,945
------------------------------------------------------------------------

Assets Retirement Obligation 7,968,183 8,164,890
------------------------------------------------------------------------

Commitments (Note 9) - -
------------------------------------------------------------------------

Shareholders' Equity
Share Capital (Note 6) 215,682,745 135,501,547
Contributed Surplus 14,126,820 11,786,160
Deficit (33,130,514) (30,011,825)
------------------------------------------------------------------------
196,679,051 117,275,882
------------------------------------------------------------------------
$ 235,067,206 $ 147,111,717
------------------------------------------------------------------------
------------------------------------------------------------------------

The accompanying notes form an integral part of these consolidated
financial statements.


OILEXCO INCORPORATED
Consolidated Statements of Loss and Deficit
For the Periods Ended
(unaudited)

Three Months Three Months Six months Six months
June 30 June 30 June 30 June 30
2005 2004 2005 2004
------------------------------------------------------------------------
------------------------------------------------------------------------
Revenues
Oil and Gas
Sales $ 1,641,612 $ 374,580 $ 3,131,922 $ 729,562
Royalties (79,205) (73,709) (126,694) (144,603)
Inter-field Tariff 249,884 - 557,040 -
Interest Income 70,729 30,184 244,457 99,964
Other Income 1,764 2,727 2,735 5,572
------------------------------------------------------------------------
1,884,784 333,782 3,809,460 690,495
------------------------------------------------------------------------
Expenses
General and
Administrative 2,040,481 642,180 3,383,300 972,148
Operating 1,240,365 32,853 2,473,882 84,797
Depletion,
Depreciation and
Accretion 504,628 46,841 1,086,208 76,751
Foreign
Exchange Gain (699,558) (1,051,181) (974,741) (1,973,074)
Stock-Based
Compensation
(Note 6(d)) - 1,170,000 959,500 1,470,000
------------------------------------------------------------------------
3,085,916 840,693 6,928,149 630,622
------------------------------------------------------------------------

Net (Loss)
/ Earnings before
Discontinued
Operations (1,201,132) (506,911) (3,118,689) 59,873

Discontinued
Operations - 47,887 - 68,862
------------------------------------------------------------------------

Net (Loss)
/ Earnings (1,201,132) (459,024) (3,118,689) 128,735

Deficit,
Beginning
of Period (31,929,382) (19,430,246) (30,011,825) (20,018,005)
------------------------------------------------------------------------

Deficit,
End of Period $(33,130,514) $(19,889,270) $(33,130,514) $(19,889,270)
------------------------------------------------------------------------
------------------------------------------------------------------------

Basic and
Diluted Net
(Loss)
Earnings per
Share
(Note 6(e)) $ (0.01) $ (0.01) $ (0.03) $ 0.00
------------------------------------------------------------------------

The accompanying notes form an integral part of these consolidated
financial statements.


OILEXCO INCORPORATED
Consolidated Statements of Cash Flows
For the Periods Ended
(Unaudited)

Three Months Three Months Six months Six months
June 30 June 30 June 30 June 30
2005 2004 2005 2004
------------------------------------------------------------------------
------------------------------------------------------------------------

Cash Flow from
Operating
Activities
Net (Loss)
/Earnings
- Continued
Operations $ (1,201,132) $ (506,911) $ (3,118,689) $ 59,873
Net Earnings
- Discontinued
Operations - 47,887 - 68,862
Items Not
Affecting Cash
Depletion,
Depreciation &
Accretion
- Continued
Operations 504,628 46,841 1,086,208 76,751
Depletion,
Depreciation
& Accretion
- Discontinued
Operations - 9,694 - 24,688
Unrealized
Foreign
Exchange
Loss/(Gain) 21,176 264,875 (4,610) (241,182)
Stock-Based
Compensation - 1,170,000 959,500 1,470,000
------------------------------------------------------------------------
(675,328) 1,032,386 (1,077,591) 1,458,992
Changes in
Non-Cash
Working
Capital (1,462,075) (2,151,529) (3,459,579) (797,021)
------------------------------------------------------------------------
Net Cash (Used in)
/Provided by
Operating
Activities (2,137,403) (1,119,143) (4,537,170) 661,971
------------------------------------------------------------------------

Cash Flow from
Financing
Activities
Proceeds from
Issuance of
Common Shares,
net of Issue
Costs 63,718,003 157,225 81,246,758 6,739,873
Net proceeds
from Issuance
of Special
Warrants - 35,535,300 - 35,535,300
Cash Held in
Trust - - - 5,888,728
Changes in
Non-Cash
Working
Capital 513,580 (255,617) 513,580 (190,517)
------------------------------------------------------------------------
Net Cash
Provided by
Financing
Activities 64,231,583 35,436,908 81,760,338 47,973,384
------------------------------------------------------------------------

Cash Flow from
Investing
Activities
Additions to
Capital Assets (38,899,908) (23,716,541) (42,826,916) (54,827,059)
Changes in
Non-Cash
Working
Capital 24,225,439 359,192 5,766,205 (671,524)
------------------------------------------------------------------------
Net Cash Used in
Investing
Activities (14,674,469) (23,357,349) (37,060,711) (55,498,583)
------------------------------------------------------------------------

Net Increase/
(Decrease) in
Cash 47,419,711 10,960,415 40,162,457 (6,863,229)
Net Effect of
Foreign Exchange
on Cash Held in
Foreign Currencies (685,940) (232,607) (762,806) 273,450
Cash - Beginning
of Period 11,711,309 3,574,677 19,045,429 20,892,264
------------------------------------------------------------------------
Cash - End of
Period $ 58,445,080 $ 14,302,485 $ 58,445,080 $ 14,302,485
------------------------------------------------------------------------
------------------------------------------------------------------------

Interest Paid - - - -

Income Taxes Paid - - - -

------------------------------------------------------------------------

The accompanying notes form an integral part of these consolidated
financial statements.


NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS AS AT AND
FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2005


All amounts are presented in Canadian dollars unless otherwise noted.

1. DESCRIPTION OF BUSINESS

Oilexco Incorporated and its wholly-owned subsidiaries Oilexco America, Inc. and Oilexco North Sea Limited (together "the Company") are involved in the exploration, development and production of oil and gas in North America and the North Sea.

The Company's principal focus is on the exploration, development and production of oil and gas in the UK North Sea. The Company's main production is from Balmoral and Glamis Fields located in Block 16-21a in the UK Central North Sea.

The Company's current exploration activities in the United States are in Mountrail County, North Dakota, and Monroe and Conecuh Counties, Alabama. The Company's producing property is located at Vocation/Jurassic Park in Monroe County, Alabama.

The Company requires additional financing in order to fund its ongoing exploration and development programs. Management intends to raise the required financing through a combination of equity issues, cash flow, bank financing, asset rationalizations, farm-outs and other means.

2. ACCOUNTING POLICIES

The unaudited consolidated financial statements are prepared in accordance with Canadian Generally Accepted Accounting Principles ("GAAP"). In the opinion of management, the unaudited consolidated financial statements contain all adjustments of a normal and recurring nature necessary to present fairly Oilexco's financial position at June 30, 2005 and the results of its operations and its cash flows for the three and six months ended June 30, 2005 and 2004. Management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited consolidated financial statements, and revenues and expenses during the reporting period. Management reviews these estimates on an ongoing basis. Changes in facts and circumstances may result in revised estimates, and actual results may differ from these estimates. The results of operations and cash flows for the three and six months ended June 30, 2005 are not necessarily indicative of the results of operations or cash flows to be expected for the year ending December 31, 2005. The notes to these interim consolidated financial statements do not conform in all respects to the note disclosure requirements of generally accepted accounting policies for annual financial statements. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements as at and for the year ended December 31, 2004. The accounting policies are presented in Note 2 of the audited consolidated financial statements as at and for the year ended December 31, 2004.

3. OTHER CURRENT ASSETS

Other current assets include mainly prepaid amounts and are summarized as follows:



June 30, December 31,
2005 2004
-------------- --------------
Prepaid drilling contract $ 8,998,046 $ 3,193,230
Prepaid insurance 523,114 1,165,271
Prepaid office rent 82,803 57,822
Deferred charges (Note 6(c)) 315,600 -
Other 138,067 174,505
-------------- --------------

$ 10,057,630 $ 4,590,828
-------------- --------------
-------------- --------------


4. CAPITAL ASSETS

In addition to Brenda exploration and development costs and the acquisition costs of the interest in the Balmoral and Glamis fields, the Company's UK capital assets as at June 30, 2005 included exploration costs relating to the following farm-in agreements:

(a) Nicol

On March 1, 2005, the Company entered into a farm-in agreement with Conocophillips (U.K.) Ltd. ("COP") and Eni UK Ltd. ("ENI"), who hold working interests in Licence P. 233 Block 15/25a. In consideration, the Company paid 100% of the drilling costs for three wells drilled in this North Sea drilling program to earn a 70% working interest. As at June 30, 2005, the Company had fulfilled its obligations under the farm-in agreement and has a 70% working interest in this prospect.

(b) MacCulloch

On May 11, 2005, the Company entered into a farm-in agreement with COP, ENI, NOBLE Energy (Europe) Ltd. ("NOBLE") and RIGEL Petroleum (NI) Ltd. ("RIGEL"), who hold working interests in Licence P. 640 Block 15/24b. In consideration, the Company paid 100% of the drilling costs of one well to earn a 50% working interest. As at June 30, 2005, the Company has fulfilled its obligations under the farm-in agreement and has a 50% working interest in this prospect.

5. BANK INDEBTEDNESS

On May 20, 2005, a Bridge Facility Agreement ("Bridge Facility") for $21,973,000 (Pounds Sterling 10,000,000) was signed with the Royal Bank of Scotland plc ("RBS") to finance development of the Brenda oil field and certain other North Sea assets of the Company. The bridge facility may be repaid at any time, but must be repaid in full by May 19, 2006 (maturity date). Interest rates are based on LIBOR plus a margin, which ranges from 3% to 6% per annum during the one-year period of the facility. Interest is payable monthly and upon maturity. The facility is secured by a first floating charge over the assets of Oilexco North Sea Limited, a guarantee from Oilexco Incorporated, supported by charges over all shares of the parent's subsidiaries (Oilexco North Sea Limited and Oilexco America, Inc.), assignment of insurance proceeds from the Brenda and Balmoral fields and a first charge over the project's bank account. The Bridge Facility was not utilized as at June 30, 2005.



6. SHARE CAPITAL

(a) Issued Number Amount
------------------------------------------------------------------------

Balance December 31, 2004 110,789,102 $ 135,501,547
Issued pursuant to February 2005
private placement 5,385,000 16,155,000
Issued pursuant to short form prospectus 31,000,000 68,820,000
Issued pursuant to exercise
of agent's warrants 810,000 1,841,400
Issued pursuant to exercise of warrants 1,388,500 487,535
Issued pursuant to exercise of stock options 430,000 237,550
Contributed surplus on
stock options exercised - 121,640
Share issue costs - (7,481,927)
------------------------------------------------------------------------

Balance June 30, 2005 149,802,602 $ 215,682,745
------------------------------------------------------------------------
------------------------------------------------------------------------


(b) Share Issues

On February 11, 2005, the Company closed a private placement of 5,385,000 common shares issued at Pounds Sterling 1.30 ($3.00) for gross proceeds of Pounds Sterling 7,000,500 ($16,155,000). The Agent was paid a 6.5% commission and was issued non-transferable warrants to purchase common shares equal to 6% of the shares issued under this private placement. Therefore, 323,100 Agent's Warrants have been issued, exercisable at a price equal to the subscription price under the private placement, with an expiry date of February 10, 2006. The fair value allocated to these warrants using the Black-Scholes option model was $217,700, which was recognised as share issue costs.

On June 27, 2005, the Company closed a short form prospectus of 31,000,000 common shares issued at Pounds Sterling 0.98 ($2.22) for gross proceeds of Pounds Sterling 30,400,000 ($68,800,000). The Agent was paid a 6.5% commission and was issued non-transferable warrants to purchase common shares equal to 6% of the shares issued under this short form prospectus. Therefore, 1,860,000 Agent's Warrants have been issued, exercisable at a price equal to the offering price under the short form prospectus, with the expiry date of June 27, 2006. The fair value allocated to these warrants using the Black-Scholes option model was $969,500, which was recognised as share issue costs.

(c) Warrants

In May 2005, as part of the Bridge Facility consideration, the Company issued 400,000 common share purchase warrants to the Royal Bank of Scotland plc ("RBS"). The warrants are exercisable at Pounds Sterling 1.20 ($3.00) and expire on November 22, 2006. The fair value allocated to these warrants using the Black-Scholes option model was $315,600. It was recognised as deferred charges (Note 3) and it will be amortised over the utilization period of the Bridge Facility.



The following is a continuity of warrants as at June 30, 2005:

Balance Balance
January 1, June 30, Expiry
2005 Issued Exercised 2005 Date
------------------------------------------------------------------------

Warrants
at $0.35 1,387,300 - (1,387,300) - March 7, 2005
Warrants
at $1.65 7,496,100 - (1,200) 7,494,900 December 22, 2005
Agents
Warrants
at $2.02 240,000 - (240,000) - July 20, 2005
Agents
Warrants
at $2.38 1,140,000 - (570,000) 570,000 July 20, 2005
Agents
Warrants
at $2.22 - 1,860,000 - 1,860,000 June 27, 2006
RBS
Warrants
at $3.00 - 400,000 - 400,000 November 22, 2006
Agents
Warrants
at $3.00 - 323,100 - 323,100 February 10, 2006
------------------------------------------------------------------------

10,263,400 2,583,100 (2,198,500) 10,648,000
------------------------------------------------------------------------
------------------------------------------------------------------------

Weighted
average
exercise
price $1.56 $2.44 $1.06 $1.88
------------------------------------------------------------------------
------------------------------------------------------------------------


(d) Stock Options

On January 17, 2005, the Company granted 250,000 stock options to an employee to acquire common shares at an exercise price of $3.25 per share, expiring on January 17, 2010. On February 4, 2005, the Company granted 200,000 stock options to an employee to acquire common shares at an exercise price of $3.18 per share, expiring on February 4, 2010.

Accordingly, compensation expense of $959,500 ($537,500 and $422,000, respectively for the above stock options granted) has been recognized for the first quarter of 2005. The fair value of each option granted is estimated on the grant date using the Black-Scholes option pricing model with the following assumptions:



2005
-------------------------------------------------

Risk-free interest rate 3.75%
Weighted average years 5.0
Expected volatility 80%
Expected dividend yield 0%


During the three months ended June 30, 2005, 255,000 Company stock options were exercised for proceeds of $55,900. During the six months ended June 30, 2005, 430,000 stock options were exercised for proceeds of $237,550.

The Company increased share capital and decreased contributed surplus by $121,640, representing the related compensation expense for the above-mentioned stock options that were exercised during the six months ended June 30, 2005.



Net (Loss)/Earnings Per Share Data

Three Months ended Three Months ended
June 30, 2005 June 30, 2004
------------------------------------------------------------------------
Weighted Weighted
Average Average
Net Shares Per Net Shares Per
Loss Outstanding Share Loss Outstanding Share
------------------------------------------------------------------------

Basic and
Diluted $(1,201,132) 119,796,558 $(0.01) $(459,024) 84,194,163 $(0.01)
------------------------------------------------------------------------
------------------------------------------------------------------------


Six Months ended Six Months ended
June 30, 2005 June 30, 2004
------------------------------------------------------------------------
Weighted Weighted
Average Average
Net Shares Per Net Shares Per
Loss Outstanding Share Loss Outstanding Share
------------------------------------------------------------------------

Basic $(3,118,689) 117,405,143 $(0.03) $128,735 74,344,720 $0.00
Options
assumed
Exercised 3,380,957
Warrants
assumed
Exercised 7,041,531
------------------------------------------------------------------------

Diluted $(3,118,689) 117,405,143 $(0.03) $128,735 84,767,208 $0.00
------------------------------------------------------------------------
------------------------------------------------------------------------


7. SEGMENTED INFORMATION

The Company's activities are conducted in three geographic segments: Canada, the United States and the United Kingdom. All activities relate to the exploration, development, production and marketing of oil, natural gas and petroleum liquids.



------------------------------------------------------------------------
Three Three Six Six
Months Months months months
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
------------------------------------------------------------------------

Oil & Gas Revenues
US $ 396,689 $ 374,580 $ 632,614 $ 729,562
UK 1,244,923 - 2,499,308 -
------------------------------------------------------------------------

Total $ 1,641,612 $ 374,580 $ 3,131,922 $ 729,562
------------------------------------------------------------------------

Net Earnings (Loss)
Canada $(1,184,432) $(1,663,138) $(2,997,713)$(1,849,298)
Canada -
Discontinued
Operations (1) - 47,887 - 68,862
US 257,236 251,866 385,604 465,915
UK (273,936) 904,361 (506,580) 1,443,256
------------------------------------------------------------------------

Total $(1,201,132) $ (459,024) $(3,118,689)$ 128,735
------------------------------------------------------------------------
------------------------------------------------------------------------


At At
Capital Assets June 30, 2005 December 31, 2004
-----------------------------------

Canada $ 321,834 $ 284,281
US 995,829 985,544
UK 163,741,111 121,477,532
------------------------------------------------------------------------

Total $ 165,058,774 $ 122,747,357
------------------------------------------------------------------------
------------------------------------------------------------------------

(1) The Canadian oil and gas operations were sold in December 2004.


8. RELATED-PARTY TRANSACTIONS

None.

9. COMMITMENTS

On October 6, 2004, Oilexco North Sea Limited awarded Transocean Offshore (North Sea) Ltd. ("Transocean") a one-year contract for the provision of a Sedco 712 semi-submersible drilling unit. In April 2005, Oilexco North Sea Limited signed an agreement with Transocean to extend the contract by another 12 months until March 23, 2007. As at June 30, 2005, the Company's obligations for the next 21 months under these contracts with Transocean totalled approximately $90.0 million (US$73.4 million).

Further to licenses granted to Oilexco North Sea, the Company is committed to pay annual license fees in the amount of $115,000 for 2005 in respect of its four North Sea Blocks.

The Company is committed under operating lease agreements for office space rentals as follows:



2005 $ 226,000
2006 $ 476,500
2007 $ 476,500
2008 $ 391,500
2009 $ 220,500
2010 and thereafter $ 1,176,000
--------------
$ 2,967,000
--------------
--------------


10. EVENTS SUBSEQUENT TO JUNE 30, 2005

Brenda and Nicol Fields

On July 15, 2005, the Company signed "Heads of Agreement" with CNR International (UK) Limited, operator of the Balmoral Facility, for the construction and tie-in of the Brenda and Nicol Fields to the Balmoral facility and for the provision of production and operating services. In addition, the Company has entered into letters of intent with various contractors relating to sub-sea work for the Brenda and Nicol field development. The development of Brenda and Nicol Fields and sub-sea tieback is estimated at $193.4 million (Pounds Sterling 88.0 million).

11. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES OF AMERICA GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

The Company's unaudited consolidated interim financial statements are prepared in accordance with Canadian GAAP. Any differences in accounting principles as they pertain to the accompanying unaudited consolidated interim financial statements were insignificant as at June 30, 2005 and for the three- and six-month periods ended June 30, 2005 and 2004, except as described below:



(a) Consolidated Statements of Loss and Deficit

------------------------------------------------------------------------
Three Months Three Months
June 30, June 30,
2005 2004
------------------------------------------------------------------------

Deficit, beginning of period in
accordance with Canadian GAAP $ (31,929,382) $ (19,430,246)
Stock-based compensation expense
adjustment (i) 9,854,290 2,432,790
Write down under the ceiling test (ii) (1,446,000) (213,000)
Depletion (iii) 65,900 -
------------------------------------------------------------------------
Deficit, beginning of period in
accordance with US GAAP $ (23,455,192) $ (17,210,456)
------------------------------------------------------------------------

Net (Loss)/Earnings for the period in
accordance with Canadian GAAP $ (1,201,132) $ (459,024)
Stock-based compensation expense - 980,000
Depletion 87,300 -
------------------------------------------------------------------------
Net (Loss)/Earnings for the period in
accordance with US GAAP $ (1,113,832) $ 520,976
------------------------------------------------------------------------

Net (Loss)/Earnings per share under US
GAAP
Basic $ (0.01) $ 0.01
Diluted $ (0.01) $ 0.01
------------------------------------------------------------------------


------------------------------------------------------------------------
Six months Six months
June 30 June 30
2005 2004
------------------------------------------------------------------------

Deficit, beginning of period in
accordance with Canadian GAAP $ (30,011,825) $ (20,018,005)
Stock-based compensation expense
adjustment (i) 8,894,790 2,432,790
Write down under the ceiling test (ii) (1,446,000) (213,000)
Depletion (iii) 19,100 -
------------------------------------------------------------------------
Deficit, beginning of period in
accordance with US GAAP $ (22,543,935) $ (17,798,215)
------------------------------------------------------------------------

Net (Loss)/Earnings for the period
in accordance with Canadian GAAP $ (3,118,689) $ 128,735
Stock-based compensation expense 959,500 980,000
Depletion 134,100 -
------------------------------------------------------------------------
Net (Loss)/Earnings for the period in
accordance with US GAAP $ (2,025,089) $ 1,108,735
------------------------------------------------------------------------

Net (Loss)/Earnings per share under US
GAAP
Basic $ (0.02) $ 0.01
Diluted $ (0.02) $ 0.01
------------------------------------------------------------------------


The weighted average numbers of common shares outstanding for the purposes of determining the basic and diluted net (loss)/earnings per share are the same numbers as disclosed for Canadian GAAP purposes.

(i) Stock-based compensation:

Prior to January 1, 2004, compensation expense was recognized for Canadian GAAP based on the intrinsic value at the grant date. For the years ended December 31, 2003 and 2002, pro forma disclosures are included in the notes to the consolidated financial statements of the impact on net loss and net loss per share had the Company accounted for compensation expense based on the fair value of the stock options granted since January 1, 2002. Effective January 1, 2004, the Company adopted the fair value method of accounting for stock options, on a retroactive basis, without restatement of prior periods.

Under US GAAP, the Company adopted Accounting Principles Board Opinion No. 25 "Accounting for Stock Issued to Employees" ("APB 25"). Under APB 25, companies are not required to record any compensation expense relating to options granted with an exercise price equal to the market price at the date of grant. The adjustment to the opening deficit as at January 1, 2004, in accordance with Canadian GAAP, is required for the stock-based compensation expense for stock options granted to employees and is added back in accordance with US GAAP.

(ii) Impairment Test of Oil and Gas Properties:

In December 2003, the Company adopted Accounting Guideline 16 "Oil & Gas Accounting - Full Cost" ("AcG-16"). Pursuant to AcG-16, the Company performs an impairment test that places a limit on the aggregate carrying value of the oil and gas properties. For Canadian GAAP, the discount rate used must be equal to a risk-free interest rate. Under US GAAP, companies using the full cost method of accounting for oil and gas producing activities perform a ceiling test on each cost centre using discounted estimated future net revenue from proved oil and gas reserves using a discount factor of 10 percent. Prices used in the US GAAP ceiling tests performed for this reconciliation were those in effect at the applicable period end. No write down of oil and gas properties were required under Canadian GAAP, and $1,233,000 was written down under US GAAP for the year ended December 31, 2004. Under US GAAP, the Company would have recognized a write down of approximately $213,000 relating to the Canadian full cost centre, increasing the January 1, 2004 opening deficit and decreasing the net book value of the oil and gas properties as at January 1, 2004.

(iii) Depletion Calculation of Oil and Gas Properties:

Accounting Guideline 16 "Oil & Gas Accounting - Full Cost" ("AcG-16") also provides for depletion of oil and gas property (effective January 1, 2004) to be determined using proved reserves based on estimated future prices and costs. Under US GAAP, proved reserves are calculated based on "prices and costs as of the date the estimate is made" (i.e. constant prices).

The Interim Report for the 2nd Quarter and Six Months ended June 30 2005 for Oilexco Incorporated is available on SEDAR, at www.sedar.com.

Oilexco is listed on the Alternative Investment Market of the London Stock Exchange plc ("LSE-AIM") and the TSX Exchange ("TSX"), trading under the symbol OIL.

This Press Release contains forward-looking statements relating to future events or future performance. In some cases, forward-looking statements can be identified by terminology such as "may", "will", "should", "expects", "projects", "plans", "anticipates" and similar expressions. These statements represent management's expectations or beliefs concerning, among other things, future operating results and various components thereof or the economic performance of Oilexco. The projections, estimates and beliefs contained in such forward-looking statements necessarily involve known and unknown risks and uncertainties, including the business risks discussed in the MD&A as at and for the years ended December 31, 2004 and 2003, which may cause actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. Accordingly, readers are cautioned that events or circumstances could cause results to differ materially from those predicted. These documents and additional information about Oilexco Incorporated are available on SEDAR at www.sedar.com.

Contact Information

  • Oilexco Incorporated
    Arthur S. Millholland
    President
    (403) 262-5441
    or
    Oilexco Incorporated
    Brian L. Ward
    Chief Financial Officer
    (403) 262-5441
    Website: www.oilexco.com