OILEXCO INCORPORATED
TSX : OIL
LSE : OIL

OILEXCO INCORPORATED

August 15, 2007 19:50 ET

Oilexco Purchases North Sea Assets from CNR International (U.K.) Ltd

CALGARY, ALBERTA--(Marketwire - Aug. 15, 2007) - Oilexco Incorporated ("Oilexco" or "the Company") (TSX:OIL) (LSE:OIL) announces that its wholly owned subsidiary, Oilexco North Sea Limited, has signed a Sale and Purchase Agreement ("SPA") with CNR International (U.K.) Limited ("CNR") for the acquisition of CNR's entire interests in the Balmoral Floating Production Vessel ("FPV"); and the Balmoral, Glamis and Stirling Fields, which currently produce approximately 1,800 barrels of oil per day, net to CNR; and certain exploration acreage, all located in Block 16/21 in the UK Central North Sea ("the Balmoral Properties").

The table below outlines Oilexco's current interests in the assets, those interests acquired from CNR and Oilexco's total interests after the purchase.



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Current Oilexco Acquired Interest Total Oilexco
Asset Interest from CNR Interest
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Balmoral FPV 7.994150% 70.121270% 78.115420%
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Balmoral Field 7.994150% 70.121270% 78.115420%
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Glamis Field 9.714286% 75.285714% 85.000000%
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Stirling Field 0 68.680000% 68.680000%
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Exploration Acreage 9.714286% 75.285714% 85.000000%
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The total amount paid by Oilexco for the acquisition of the Balmoral Properties is US$50 million, subject to normal closing adjustments. At closing the Company will also provide a US$63 million letter of credit as part of a decommissioning security agreement to cover anticipated future decommissioning liabilities as part of the acquisition of the Balmoral Properties. The effective date of the transaction is January 1, 2007. Oilexco intends to finance the acquisition of the Balmoral Properties through its existing credit facilities with the Royal Bank of Scotland. Closing of the transaction is expected to occur in the fourth quarter.

The appointment of Oilexco as successor Operator of the Balmoral Properties is subject to the necessary approvals from the other joint interest holders of the Balmoral Properties and the UK Department of Business Enterprise and Regulatory Reform, formerly the Department of Trade and Industry.

"This is a strategic geographical core area for us within the UK Central North Sea given our Brenda and Nicol Fields, as well as interests we have in other properties in the vicinity", said Oilexco President and CEO Arthur Millholland. "Having majority ownership of the Balmoral FPV will allow us to maximize efficient operations at the facility, as well as to increase its throughput by optimizing production from the Balmoral and Sterling fields. In addition we view the Balmoral FPV as being the preferred off-take solution for future satellite developments in the area. We will aggressively pursue these opportunities as they will allow us to maintain low unit operating costs."

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
    Gerry L. Roe
    Chief Operating Officer
    (403) 262-5441
    or
    Oilexco Incorporated
    Rob Elgie
    Manager Investor Relations
    (403) 262-5441
    Website: www.oilexco.com
    or
    Pelham Public Relations
    James Henderson
    Managing Director
    44 (20) 7743 6673
    or
    Pelham Public Relations
    Alisdair Haythornthwaite
    Associate Director
    44 (20) 7743 6676
    or
    Canaccord Adams Limited
    Clayton Bush
    Vice-President
    44 (20) 7050 6500
    or
    Merrill Lynch International
    Andrew Osborne
    Managing Director
    44 (20) 7996 1000