Onco Petroleum Inc.

Onco Petroleum Inc.

June 16, 2008 11:11 ET

Onco Petroleum Discusses Drilling Results and Potential and Updates Year-End Financial Statement Filing Status

TORONTO, ONTARIO--(Marketwire - June 16, 2008) - Onco Petroleum Inc. (CNQ:ONCO) (FRANKFURT:3HX) announced today drilling results from the upper section of the Onco #32 exploration well. This second well of Onco's previously-announced multi-well drilling program is being drilled at Onco's Tilbury Field leases in Ontario on the north shore of Lake Erie in Ontario, where Onco holds a 100% interest in oil and gas leases on 40,000 acres on the Tilbury Field. Onco is quite excited about the potential of its Tilbury Field assets as well as the results to date.

Background and Upside Potential

Tilbury Field has been recognized as the single largest natural gas reservoir ever discovered in the Michigan Basin, where, historically, about 277 billion cubic feet (BCF) of natural gas were produced from three shallow Silurian-aged reservoirs at the field.

Based on technical data, a report prepared by Fugro-Jason (the "Fugro-Jason Report No.: JGC-C04JL0005 APEGGA Permit # 7065" see May 27, 2008 press release) estimates prospective resources on Onco's acreage on the Tilbury Field to be approximately 1.6 TCF (trillion cubic feet).

Most of the wells drilled prior to Onco's involvement were shallow and past operators did not have any seismic data to guide them. Armed with the seismic data it acquired from 2003 onwards, Onco recognizes (1) a number of undrilled shallow Silurian-aged carbonate prospects and (2) a number of undrilled deeper structures that are recognized prolific oil and gas producers elsewhere in Ontario and in New York state.

Shale Gas Potential

During the future drilling of these deeper oil prospects, Onco will also be drilling through and evaluating the shale gas potential of the Utica Formation equivalents, that are geologically equivalent to the Utica Formation in the Saint Lawrence lowlands in Quebec where Forest Oil, Gastem Inc., and Junex Inc. recently announced the results of gas production tests and the confirmation of the significant gas potential of the Utica shale.

Onco #32 Exploration Well

The Onco #32 exploration well upper targets include the Utica-equivalent potential shale gas zone as well as natural gas in the shallower Silurian-aged A2 Unit carbonate, Guelph and Gasport formations. Planned drilling in the lower section will test a seismically-defined oil prospect where the Ordovician-aged Trenton/Black River formations and deeper Cambrian-aged reservoir rocks are the principal targets.

Upper section results:

An open flow test and pressure build-up on the well bore was conducted @ 429.15 mKB while drilling within the Goat Island Formation (testing porous rock containing hydrocarbons within the A-2 Carbonate, A-1 Carbonate and Guelph formations).

Test was conducted for 90 minutes at a depth of 429.15 mKB within the Goat Island Formation.

Pressure and open flow testing results:

Before shut-in of the well bore to conduct a pressure test on the gas producing formations, an open flow test recorded a flow rate of 196,000 cubic feet/day of sour gas from the A-1 Carbonate and Guelph formations, the well was then shut-in for pressure recording, after 90 minutes the pressure build-up on well bore was approximately 300 psi (virgin reservoir pressure at 429m depth is approximately 500 psig), after pressure recording a second open flow test recorded a flow of 177,000 cubic feet/day of sour gas from the A-1 Carbonate and Guelph formations.

There was a small show of sweet gas with an indication of sweet, light crude oil within sample cuttings taken from the A-2 Carbonate upon penetration but no recovery of oil occurred from the well bore after 2 days (week-end) of shut-in time and a subsequent recovery attempt. Sour gas (gas containing hydrogen-sulphide or H2S) is typical of gas produced from the Guelph Formation within the Tilbury Gas Field.

The results indicated a good reservoir pressure and flow rate capabilities for the A-1 Carbonate and Guelph formations that are typical of the Tilbury Gas Pool. These results support additional exploration along the west portion of the Tilbury Gas Pool for undeveloped compartments containing natural gas.

Further drilling on the Onco #32 well is planned to test a seismically defined oil prospect where Ordovician-aged Trenton/ Black River formations and deeper Cambrian-aged reservoir rocks are the principal targets.

Onco #31 Exploration Well

The Onco #31 well attained a total depth of 553.2 metres. Downhole logging tools were then run in the wellbore to evaluate the geologic formations encountered. A wellhead was then installed that will permit future work to be performed on the well.

The Onco #31 well was a technical success as it encountered the predicted porous reservoir rocks in three Silurian-aged geologic formations: the Guelph Formation (primary target), the A-2 Unit (secondary target), and the Gasport Formation (secondary target).

Oil and gas shows were observed while drilling through the A2 Unit. The gas flow was estimated at approximately 400 cubic feet per day. The crude oil show was described as being light oil, greenish in colour, and sweet (no sulphur). As this was the first time that light, sweet crude oil has been seen by Onco in this geologic formation at Tilbury, this significant oil show is being evaluated in detail to see whether or not it could be part of a potentially larger oil accumulation.

While being porous as predicted, both the primary target zone (Guelph Formation) and one of the secondary targets (Gasport Formation) unfortunately contained only formation water at this location. Nevertheless, the presence of porous reservoir rocks in the A2 Unit, Guelph and Gasport formations validates the Company's interpretation of its seismic data. Furthermore, the confirmed presence of porous reservoir rock in the Gasport has elevated this geologic formation's status to that of another drilling target horizon at Tilbury.

There is no certainty that any portion of the estimated prospective resources described in this press release will be discovered other then the actual findings to date which are described above.

"Update on Annual Financial Statements"

Onco previously announced through a press release issued on May 21, 2008 that it would be delayed in the filing of its audited annual financial statements for the year ended December 31, 2007 (the "Annual Financial Statements"), which pursuant to National Instrument 51-102 were to be filed via SEDAR by April 29, 2008. Due to the delay in the completion of the Annual Financial Statements, the completion of Onco's interim financial statements for the period ended March 31, 2008 (the "Interim Financial Statements") have also been delayed. Pursuant to National Instrument 51-102, the Interim Financial Statements were to be filed via SEDAR on May 15, 2008.

The filing of the Annual Financial Statements have been delayed due to unanticipated delays in the audit of Onco's financial statements. The audit of Onco's financial statements were previously performed by the auditor's Montreal branch, but that task was recently transferred to the auditor's Calgary branch, as that branch has expertise in auditing oil and gas companies. The transfer to the Calgary branch has caused a delay in the completion of Onco's audit. The Company is making best efforts to remedy its default with respect to the completion of its Annual Financial Statements, and currently anticipates that its Annual Financial Statements and related management's discussion and analysis will be filed by June 30, 2008) and its Interim Financial Statements and related management's discussion and analysis will be filed by June 30, 2008. Onco had expected that the Annual Financial Statements would be filed by May 30, 2008; however, the completion of an audit of the Annual Financial Statements was unexpectedly further delayed.

Due to the delays, Onco had applied to the Ontario Securities Commission (the "OSC") and had received a Management and Insider Cease Trade Order applicable to all management and insiders of Onco. This order will remain in effect until the default is remedied or until June 29, 2008 (the date that is two months after the date of the default), whichever is earlier. Onco acknowledges that the OSC may impose an Issuer Cease Trade Order if the default is not remedied by that time.

Onco confirms that it intends to satisfy the provisions of the OSC's Alternate Information Guidelines so long as it remains in default of the financial statement filing requirements."

About the Company

Onco Petroleum Inc. is a Canadian-based energy company that is primarily involved in the exploration, development and production of oil and gas deposits and related projects in Southern Ontario and Michigan. The Company is undertaking aggressive exploration and development programs and plans to pursue strategic acquisitions of previously discovered under-utilized oil & gas properties as well as potentially developing some of its assets as natural gas storage reservoirs. The Company is listed on the CNQ exchange in Toronto and on the Frankfurt Stock Exchange in Germany.

Forward Looking Statements: This release contains certain forward looking statements relating to the business, operations, anticipated financial performance, business prospects and strategies of Onco Petroleum Inc. (the "Company"), including but not limited to expectations relating to production levels; the quantity of oil and/or gas reserves; projections of market prices; capital expenditure programs; projections of costs; expectations regarding the ability to continually add to reserves through exploration and development; and treatment under governmental regulatory regimes. These statements are based on current expectations that involve numerous assumptions regarding factors and risks that could cause actual results to differ materially from those projected in forward looking statements. These risks are further described in the Company's prospectus dated October 12, 2007, which is available at www.sedar.com. The use of any of the words "anticipate", "believe", "continue", "could", "estimate", "expect", "may", "potential", "project", "should", "will", and similar expressions are intended to identify forward-looking statements. There is no representation by the Company that actual results achieved will be the same in whole or in part as those set out in the forward looking information. Furthermore, the forward looking statements contained in this release are made as of the date hereof, and the Company undertakes no obligation, except as required by applicable securities legislation, to update publicly or to revise any of the included forward looking statements, whether as a result of new information, future events, changes in the Company's opinion or otherwise.

The CNQ Stock Exchange does not accept responsibility for the adequacy or accuracy of this news release. No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.

Contact Information

  • Onco Petroleum Inc.
    Robert J. Vanier
    (519) 646-2959
    (519) 433-0509 (FAX)
    Onco Petroleum Inc.
    Catherine Somers
    (519) 646-2959
    (519) 433-0509 (FAX)
    Onco Petroleum Inc.
    782 Richmond Street
    London, Ontario N6A 3H5
    Website: www.oncopetroleum.ca