Pearl Exploration and Production Ltd.

Pearl Exploration and Production Ltd.

June 12, 2006 10:10 ET

Pearl to Proceed with Onion Lake Drilling; Land Negotiation Arrangements in Place

CALGARY, ALBERTA--(CCNMatthews - June 12, 2006) - Pearl Exploration and Production Ltd. ("Pearl" or the "Company") (TSX VENTURE:PXX) is pleased to announce that an arrangement with the Onion Lake First Nation ("OLFN") of Saskatchewan/Alberta has been made which will allow Pearl to continue with its development drilling program, initially announced on March 14, 2006, on previously earned lands. In addition, the parties have agreed to commence negotiations to resolve the current land dispute at Onion Lake by not later than June 30, 2006, after the OLFN elections have been completed.

Under the arrangement, all parties, including Indian Oil and Gas Canada, have agreed to standstill provisions in respect of previously filed Federal and Queen's Bench court applications. In consideration of the OLFN's agreement not to enter into negotiations with any third parties in respect of the lands that are subject to the dispute, Pearl, through its wholly owned subsidiary, has agreed not to pursue its legal remedies until September 2006, and then, only if a negotiated settlement has not been reached.

The Company's Onion Lake development drilling program is proceeding along a Dina heavy oil trend near the Saskatchewan/Alberta border. Development drilling locations are being selected and an initial 20 wells will be surveyed. With OLFN's co-operation Pearl and OLFN will have new wells on production over the summer.

Pearl is a public company focused on delivering disciplined growth by establishing a North American portfolio of oil and gas projects with an emphasis on large resource opportunities. Additional information on Pearl is available on our website at:

Forward-looking statements: This document contains statements about expected or anticipated future events and financial results that are forward-looking in nature and, as a result, are subject to certain risks an uncertainties, such as general economic, market and business conditions, the regulatory process and actions, technical issues, new legislation, competitive and general economic factors and conditions, the uncertainties resulting from potential delays or changes in plans, the occurrence of unexpected events, and the Company's capability to execute and implement its future plans. Actual results may differ materially from those projected by management. For such statements, we claim the safe harbour for forward-looking statements within the meaning of the Private Securities Legislation Reform Act of 1995.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

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