OILEXCO INCORPORATED
TSX : OIL
LSE : OIL

OILEXCO INCORPORATED

February 26, 2008 14:29 ET

Oilexco Announces the Successful Appraisal of the Bugle Discovery

CALGARY, ALBERTA--(Marketwire - Feb. 26, 2008) - Oilexco Incorporated ("Oilexco") (TSX:OIL) (LSE:OIL) announces that its wholly owned subsidiary, Oilexco North Sea Limited, together with the other P.815 (Block 15/23d) joint venturers have successfully drilled an appraisal well on the Bugle discovery, in which the Company has earned a 41% interest through the drilling of this well. On behalf of the licence operator, Oilexco re-entered the original 15/23d-13 well and drilled an appraisal sidetrack well downdip to ascertain if the Bugle Jurassic oil accumulations were of a commercial size. The other joint venturers are Nexen Petroleum U.K. Limited (licence operator, 41%) and Eni UK (18%).

Bugle Appraisal Update

- At least 282 feet of oil column identified in Dirk Sand oil accumulation

- At least 280 feet of oil column identified in Upper Galley Sand oil accumulation

- Commerciality of Bugle discovery confirmed

The original 15/23d-13 discovery well, drilled in 1997, encountered 85 feet of oil-bearing Jurassic Dirk Sandstone and 123 feet of oil-bearing Jurassic Galley Sandstone. Both of the intervals were tested together at a rate of 7,400 barrels of oil per day ("bopd") (44 degrees API oil) and 9.06 million cubic feet per day ("MMcfd") of gas.

Oilexco re-entered the 15/23d-13 well on December 24, 2007. The 15/23d-13z sidetrack well was successfully kicked off from the original well bore on January 6, 2008 and drilled to a total depth of 15,898 feet on January 28, 2008.

The main objective of this appraisal well was to establish an oil/water contact in the Dirk and Upper Galley sands by drilling a location on the flank of the Bugle structure. Oil bearing Dirk Sandstone and oil bearing Upper Galley Sandstone were encountered, establishing at least 282 and 280 feet of oil column respectively, and significantly increasing the size of the Bugle oil accumulation.

Oil samples were recovered and reservoir pressures were successfully recorded from both the Dirk and the Upper Galley Sandstone.

The Ocean Guardian semi-submersible drilling rig, which is under long term contract to Oilexco, will now move to Block 23/21 to drill the Moth exploration prospect, located directly south of the Lomond gas field. During the course of 2008 Oilexco and its co-venturers will drill a production well with appraisal sidetracks on the Bugle discovery in Block 15/23d, to identify the oil/water contact point and determine the areal extent of the reservoir.

The joint venturers will proceed to review development options for Bugle targeted toward first oil in 2010.

Arthur Millholland, President and Chief Executive Officer, commented "We are very pleased with the results from the Bugle appraisal well, which illustrate why we targeted a farm in to the acreage. Alongside Huntington, the Bugle/Black Horse fields offer medium term production and reserves upside. With near term production growth from Shelley and a number of longer term exploration prospects, Oilexco continues to prove its ability to achieve sustainable shareholder growth."

About the Company

Oilexco is an oil and gas exploration and production company active in the United Kingdom. Oilexco's producing properties, exploration and development activities are located in the UK Central North Sea, specifically in the Outer Moray Firth and Central Graben areas. Oilexco operates in the United Kingdom through its wholly owned subsidiary, Oilexco North Sea, a company registered under the laws of England and Wales. Oilexco shares are listed for trading on the London Stock Exchange (LSE) and the Toronto Stock Exchange (TSX) under the symbol "OIL".

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.

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
    Rob Elgie
    Manager Investor Relations
    (403) 262-5441
    Website: www.oilexco.com
    or
    Pelham PR
    James Henderson
    Managing Director
    44 (20) 7743 6673
    or
    Pelham PR
    Alisdair Haythornthwaite
    Director
    44 (20) 7743 6676
    or
    London Stock Exchange - Joint Brokers
    Canaccord Adams Limited
    Clayton Bush
    Vice-President
    44 (20) 7050 6500
    or
    London Stock Exchange - Joint Brokers
    Merrill Lynch International
    Andrew Osborne
    Managing Director
    44 (20) 7996 1000