OILEXCO INCORPORATED
AIM : OIL
TSX : OIL

OILEXCO INCORPORATED

October 10, 2006 17:28 ET

Oilexco Updates its UK North Sea Activities

CALGARY, CANADA--(CCNMatthews - Oct. 10, 2006) - Oilexco Incorporated ("Oilexco") (TSX:OIL) (AIM:OIL) is pleased to provide an update about its activities in the UK Central North Sea that have occurred during the past two months.

The Company has completed appraisal drilling on its 65% owned Sheryl oil accumulation located in Block 21/23a. This phase of appraisal drilling which commenced in early August consisted of 7 well penetrations from a single surface well bore. The last well bore was drill stem tested through sand screens under "open-hole" conditions. Oil flow during the test was recorded at a maximum rate of 1,915 barrels per day, through a 36/64" choke, at 334 psi flowing pressure. Oil flow was restricted by sand production throughout the flow period as a result of a damaged sand screen. The quality of the oil was 23 degrees API, which is consistent with other oil accumulations in the area. "Once all of the data we have collected has been properly assimilated, we along with our partner will decide the next course of action at Sheryl" said Arthur Millholland President and CEO. "We have collected a substantial amount of data on this oil accumulation. Our next step is to assess it, and explore potential development options".

Oilexco's Brenda and Nicol Field developments continue to move ahead as scheduled, with oil production expected to commence in early to mid-November. The Brenda manifold-subsea pump-control package and the Nicol control package have been installed on the seafloor. Subsea pipelining from the Nicol Field to the Brenda manifold (10km), and from the Brenda manifold to the Balmoral production facility (8 km) has been completed. Divers will now complete all the necessary hook-ups of the subsea equipment. Oilexco is monitoring contract negotiations involving unionized divers who have threatened strike action on November 1st if their labour dispute is not resolved. While the Company believes the situation involving the divers will be resolved before the November 1st deadline, it has developed contingency plans in the event of strike action by the divers. The subsea diving program has been scheduled so that oil production can commence from the Brenda Field initially. Production from the single well Nicol field would then commence after the settlement of the labour disruption, if it occurs.

The semi-submersible Transocean Sedco 712, which is under long term contract to the Company, will move to the Shelley prospect located on Block 22/2b to begin appraisal drilling later this week. The Company has a 100% ownership interest in the Block, which is located approximately 35 kilometers southeast of the Oilexco's Brenda Field. This Block was awarded to Oilexco in 2005's 23rd UK Offshore Licensing Round. Oilexco's appraisal effort will consist of a minimum 3 well cluster targeting oil in Paleocene Forties sand. These well bores will be located up-dip and along trend from the well 22/2-2 (1984), which flowed oil at rate of 2,416 bbl/day from 43 feet of net Forties sand oil pay. Block 22/2b also contains a deeper High Pressure/High Temperature Jurassic gas/condensate target which the Company will not drill at this time.

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