OILEXCO INCORPORATED
AIM : OIL
TSX : OIL

OILEXCO INCORPORATED

January 02, 2007 19:38 ET

Oilexco Completes Initial Shelley Appraisal

CALGARY, ALBERTA--(CCNMatthews - Jan. 2, 2007) - Oilexco Incorporated (TSX:OIL) (AIM:OIL) ("Oilexco") has completed initial appraisal drilling on its 100% owned Shelley oil accumulation located in Block 22/2b in the UK Central North Sea. This phase of appraisal drilling which commenced in mid October consisted of 8 well penetrations from a single sub-sea well bore. The last well bore, an extended reach bore hole approximately 13,850 feet in length was drill stem tested.

Oilexco's initial well cluster at Shelley 22/2b-13 was designed to appraise a 1984 Paleocene Forties sand oil discovery by the well 22/2-2, which drill stem tested 31º API oil at rate of 2,416 Bbl/day. The Company's 22/2b-13 well cluster was successful in defining a broad low relief oil bearing structure. The structure as currently defined by the 22/2b-13 well cluster is approximately 7 square kilometers in size. Two additional appraisal wells are planned to be drilled in the 2nd quarter to evaluate apparent north and south extensions of the structure. These areas could not be practically reached from the 22/2b-13 wells' surface location.

The last well bore of the cluster 22/2b-13t, an extended reach well drilled near the margin of the structure, was tested through 42 feet of perforations representing 18 true vertical feet of perforated reservoir from the top of 34 vertical feet of oil pay. Oil flow during the test was recorded at a maximum rate of 3,082 barrels per day, through a 36/64" choke, at 282 psi flowing pressure. The quality of the oil was 31º API, which is consistent with the test from the 22/2-2 well. No water or sand was produced throughout the test.

"The results of this well exceeded our expectations" said Arthur Millholland President and CEO. "Our plan for Shelley is to file a field development plan in the first quarter, and to complete additional appraisal drilling in the second quarter utilizing one of our two long term contracted semi-submersibles" added Mr. Millholland. "We preordered sub-sea equipment in 2006 to allow us to complete two sub-sea developments this year. First oil from Shelley is currently targeted for the 4th quarter if we can fully execute our plan".

The semi-submersible Transocean Sedco 712, which is under long term contract to the Company, will move to the Kildare prospect located on Block 15/26b to begin appraisal drilling early next week. The Company has a 50% ownership interest in the Block, which was awarded to Oilexco and an industry partner in 2005's 23rd UK Offshore Licensing Round. Oilexco's appraisal effort will consist of a single well bore targeting oil in thick Middle Jurassic Ettrick and Tweedsmuir sands located south of the 1988 well 15/26b-5, which flowed 35º API oil at rate of 2,675 bbl/day from thin faulted Ettrick sands at the north fault bounded margin of the Kildare fault block.

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.

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 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