OILEXCO INCORPORATED
AIM : OIL
TSX : OIL

OILEXCO INCORPORATED

August 03, 2006 18:13 ET

Oilexco Completes Drilling and Completion Phase of Nicol Field Development

CALGARY, ALBERTA--(CCNMatthews - Aug. 3, 2006) - Oilexco Incorporated ("Oilexco") (TSX:OIL) (AIM:OIL) announces that it has completed on schedule, and on budget, the initial drilling and completion phase on it's 70% owned Nicol Field (Block 15/25a) development located in the UK Central North Sea. This phase consisted of the drilling and completion of one horizontal production well.

The horizontal production well 15/25a-N1w flowed oil at a maximum rate of 10,165 bbl/d, through a 70/64" choke, at 505 psi flowing tubing pressure. Estimated well flow rates normalized to an approximate 8% reservoir drawdown would have an estimated oil flow of 12,000 Bbl/d.

All oil recovered was 40 degrees API sweet crude consistent with oil recovered on previous Nicol flow tests. Oil flow rates were restricted by the test equipment utilized and government mandated oil volume burn limit regulations. No water or sand was produced in the flow test.

The completed Nicol production well is currently capped with a sub-sea production Christmas Tree awaiting tie-in to the Brenda manifold. This operation is expected to commence on schedule after the completion of the sub-sea installation phase of the Brenda development in late August to early September. First oil from the Brenda/Nicol development continues to be targeted for October.

"Similar to the completion flow tests for the three wells at the Brenda site, the Nicol flow test exceeded our expectations. The normalized flow calculations suggest a possible production rate of 12,000 barrels of oil per day from the Nicol horizontal production well, though we will likely try to reduce its flow once in production to adhere to good reservoir management practices," said Oilexco President and CEO Arthur Millholland. "Our Brenda and Nicol fields combined have the potential capability of producing 56,000 barrels of oil per day according to the flow test calculations. We are targeting daily production in 2007 to average 30,000 barrels of oil per day from the Brenda/Nicol development, but the actual rate will ultimately be determined by the optimal conditions for maintaining reservoir integrity, which we won't know until we experience some production history."

After completion of operations at Nicol in a few days time, the Transocean Sedco 712 will move to Sheryl located in Block 21/23a (65%), to conduct further appraisal drilling on the Eocene Tay Sand oil accumulation discovered in May 2006. A cluster of four appraisal well-bores is planned to be drilled on the south-half of the structure. After completion of appraisal drilling in Block 21/23a, the Transocean Sedco 712 will continue with appraisal drilling at Shelly located in Block 22/2b (100%) and Kildare located in 15/26b (50%) respectively.

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.

Oilexco is listed on the Alternative Investment Market of the London Stock Exchange plc and the Toronto Stock Exchange, in each case 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