Stetson Oil & Gas Ltd.
TSX VENTURE : SSN

Stetson Oil & Gas Ltd.

March 04, 2009 17:00 ET

Stetson Provides Corporate Update

CALGARY, ALBERTA--(Marketwire - March 4, 2009) -

NOT FOR RELEASE IN THE UNITED STATES OR TO U.S. NEWS WIRE SERVICES

STETSON OIL & GAS LTD. ("Stetson" or the "Company") (TSX VENTURE:SSN) is pleased to provide an update of its recent corporate activities.

NORTH DAKOTA

Stetson and its partner Red Willow Great Plains, LLC, are currently in the process of preparing applications for three drilling locations on jointly owned lands on the Fort Berthold Indian Reservation in North Dakota. Stetson will be the operator of the first well to be drilled on the program, which is expected to begin drilling in June 2009. The wells will be drilled horizontally into the Bakken formation at a depth of approximately 2870 meters.

Drilling activity for the Bakken in North Dakota has continued to yield impressive production results. Overall, initial 24 hour test production rates reported to the North Dakota Industrial Commission ("NDIC") have shown a steady increase since the first quarter of 2007 when the average well reported an initial rate of 306 boepd. For the fourth quarter of 2008, this number had risen 171% to 829 boepd.

Many operators in North Dakota are now drilling 2 mile horizontal sections, which creates a 1280 acre spacing unit. Stetson has received approval from the NDIC for 1280 acre spacing on its three proposed locations, which will provide Stetson with the option to drill a two mile horizontal well. Completion techniques for these two mile horizontal Bakken wells are also evolving and fracture stimulation is being performed across as many as 20 stages. Whiting Petroleum Corporation has drilled approximately 25 Bakken horizontal wells in the Parshall and Sanish areas, and is now developing its Bakken reserves by drilling 1280 acre wells. In Q4 2008, Whiting drilled a 1280 acre spacing well that recorded the highest initial 24 hour test rate reported to the North Dakota Industrial Commission ("NDIC") standing at 4,570 boepd.

Recent drilling on the Fort Berthold Indian Reservation has resulted in several successful new Bakken horizontal wells being placed on production at initial rates ranging from 200 to 1300 boepd. Questar Exploration & Production Company has recently drilled a one mile (640 acre spacing) Bakken horizontal well approximately 10 miles north of Stetson's land and has reported an initial test rate of 960 boepd. Two additional wells have since been permitted by Questar, one of which is 1 mile closer yet to Stetson's lands. In addition, EOG Resources Inc., one of the leading operators in the Bakken play in North Dakota, has permitted a Bakken horizontal well 6 miles to the north of Stetson's lands. This will be the closest Bakken horizontal well drilled to Stetson's lands to date and Stetson will be monitoring the results of this well with great interest.

THOMAS WEISEL LITIGATION

Stetson filed and served its statement of claim against Thomas Weisel Partners Canada Inc. ("Weisel") on October 22, 2008 in connection with the incomplete bought deal financing of July 2008. By way of update, Weisel has brought a motion seeking to dismiss or stay Stetson's action, primarily based on procedural arguments. The motion is scheduled to be heard on March 19, 2009. Assuming Stetson is successful, it is anticipated that Weisel will then deliver its statement of defence by the end of April 2009, with production of documents occurring by June 1, 2009, followed by examinations for discovery in the summer of 2009. Stetson anticipates that the trial of the action will occur in the fall of 2009.

ACQUISITION OF RHEA RESOURCES INC.

As announced on December 16, 2008 Stetson is proceeding with the acquisition of Rhea Resources Inc. ("Rhea"). An Amalgamation Agreement has now been signed and Rhea intends to mail out the information circular calling a Special Meeting of Shareholders to vote on the proposed Amalgamation. The meeting is expected to be held on March 31, 2009, and, if Rhea shareholders approve a special resolution approving the amalgamation, Rhea will become a wholly-owned subsidiary of Stetson and Rhea shareholders will receive 0.7 of a Stetson common share for each Rhea common share held.

The aggregate purchase price being paid by Stetson for the Rhea common shares is approximately $2,204,000. Stetson will issue up to 22,976,866 common shares at a deemed price of $0.10 per share. Rhea has production operations in the Lashburn area of west central Saskatchewan. The properties currently produce approximately 90 bopd. GLJ Petroleum Consultants Ltd. evaluated the properties as at March 31, 2008, and assigned proven plus probable heavy oil reserves of 219,000 bbls with a net present value, before tax and discounted at 10%, of $3,793,000. Following completion of the acquisition of Rhea, Stetson will have daily production of approximately 120 boepd.

CENTRAL ALBERTA DRILLING

Stetson has participated in the drilling of a horizontal gas well in central Alberta. The well targeted a Mannville Coal horizon that has been successfully drilled in many offsetting wells in the area. The well has been drilled and cased and a service rig has been moved onto the well to commence completion operations. Stetson will provide further updates when stabilized production results are available. Stetson will have a 37.5% interest in the well and lands.

Stetson is an emerging junior oil and gas company with exploration, development, and production programs in Saskatchewan and Alberta, Canada and North Dakota, USA.

Bill Ward, President & CEO

Disclaimers:

BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Cautionary Note Regarding Forward-Looking Information: This press release contains "forward-looking information", within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements with respect to operational plans and budgets; expected production rates and costs; ability to compare proximal properties; outcome and timing of litigation; the completion of the Rhea transaction; receipt of regulatory approval; benefits of the Transaction; and reserve estimates and valuations. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results to be materially different from those expressed or implied by such forward-looking information, including but not limited to: general business, economic, competitive, political and social risks and uncertainties; risks relating to oil and gas exploration and exploitation activities; oil and gas prices; acquisition risks; litigation risks; risks relating to the integration of Stetson and Rhea; and delays in obtaining regulatory approvals. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

This communication does not constitute an offer to purchase or exchange or the solicitation of an offer to sell or exchange any securities of Rhea or an offer to sell or exchange or the solicitation of an offer to buy or exchange any securities of Stetson, nor shall there be any sale or exchange of securities in any jurisdiction (including the United States) in which such offer, solicitation or sale or exchange would be unlawful prior to the registration or qualification under the laws of such jurisdiction. The distribution of this communication may, in some countries, be restricted by law or regulation. Accordingly, persons who come into possession of this document should inform themselves of and observe these restrictions. The solicitation of offers to buy Stetson shares in the United States will only be made pursuant to a prospectus and related offer materials that Stetson expects to send to holders of Rhea securities, subject to the requirements of applicable law. The Stetson shares may not be sold, nor may offers to buy be accepted, in the United States prior to the time the registration statement (if any is filed) becomes effective or an exemption from such requirements is available. No offering of securities shall be made in the United States except (i) by means of a prospectus meeting the requirements of Section 10 of the United States Securities Act of 1933, as amended, which would contain detailed information regarding Stetson and its management, as well as its financial statements, or (ii) pursuant to an exemption from the registration requirements of the United States Securities Act of 1933, as amended.

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