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Orchard Petroleum Signs California Exploration Deal with Aera Energy

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Orchard Petroleum has signed two new project agreements with Aera Energy, a Californian limited liability company jointly owned by affiliates of Shell and ExxonMobil.

The two new project agreements cover a joint exploration effort in the San Joaquin Basin of California involving areas referred to as Coalinga and Yowlumne. These new projects are in addition to the previous announcement projects with Aera at Northwest Lost Hills, the Belgian Anticline and Coles Levee.

Coalinga. Aera owns or leases approximately 11,000 acres in the Coalinga area. Under the project agreement, Orchard has the exploration rights to propose prospects below productive depths over Aera's fee and leased lands.

In addition, Orchard and Aera have established an area of mutual interest of approximately 125,000 acres in the Coalinga area. OP Inc's working interest at Coalinga will vary from 37.5% to 56.25%.

OP Inc's technical team believe the project area has the potential for reserves in the range of 25 100 million barrels of oil equivalent across this vast area.

Yowlumne. OP Inc is currently funding a 3-D seismic based evaluation of the exploration potential in this area. OP Inc's objective is to participate with Aera in a Yowlumne deep exploration project. Final determination of Orchard's involvement in the project is an Aera decision yet to be determined.

The Board of Orchard is very pleased to have completed the two final agreements with Aera, one of the largest oil and gas producers in California. These new exploration initiatives will provide additional high impact projects for 2007 and beyond as part of OP Inc's already impressive project inventory. Funding for these future projects will come out of production revenues and financing capacity.

The combined five projects with Aera cover numerous play types with different prospect sizes. Orchard believes the combined range of prospect sizes vary from 95 to 170 million barrels of oil equivalent with Orchard having a working interest between 15% and 56.25%. For a company the size of Orchard, each project represents material events with major upside potential.

The venture with Aera will allow Orchard to continue to build on its core focus area, being onshore California. Orchard has numerous projects at various stages of exploration, appraisal, development and production, which will be augmented by the Aera projects. Orchard has already demonstrated its exploration capabilities across the area of interest, and now looks forward to building a strong exploration relationship with Aera which have been active in onshore California for decades.

Coalinga

The Coalinga project involves developing prospects in a highly petroliferous area below currently producing fields. Coalinga is comprised of several large fields with a combined production of over 20,000 barrels of oil equivalent being produced each day. The Coalinga oil field complex has produced over 850 million barrels of 200 API gravity oil since 1887, mostly from the Temblor Formation.

The Coalinga anticline is one of a series of echelon folds that modifies the generally homoclinal eastern flank of the Diablo range along the west side of the San Joaquin Basin. The field is part of the Kregenhagen-Temblor petroleum system that derives oil from organic-rich shales of Middle Eocene Kreyenhagen Formation. The Temblor Formation represents the inter play of shallow marine and non-marine depositional environments. Reservoir trapping is a combination of structural and stratigraphic mechanisms.

Aera owns or leases approximately 11,000 acres in the Coalinga area. Current production from Aera's Coalinga fields is running at approximately 7,600 barrels of oil per day. Under the project agreement, Orchard would have the exploration rights below productive depths over Aera's fee and leased lands. In addition, Orchard and Aera have established an area of mutual interest of approximately 125,000 acres in the Coalinga area. OP Inc will be charged with gathering geologic and seismic data across the area and developing play concepts.

OP Inc.'s technical team are excited about the numerous exploration opportunities that exist in this project area and will develop and propose play concepts to Aera as part of the Agreement. Depending on Aera's election to participate in well costs to casing point in each proposed prospect, OP Inc.'s working interest will vary from 37.5% to 56.25%.

OP Inc.'s technical team believe the project area has the potential for reserves in the range of 25 100 million barrels of oil equivalent across this vast area.

Yowlumne

The Yowlumne project involves exploration of Monterey/Stevens play concepts. OP Inc is currently funding a 3-D seismic based evaluation of the exploration potential in this area. The play concept involves the complex relationship between submarine fan channel reservoirs and structural deformation history in the San Joaquin Basin. Precise mapping of the 3-D data, utilization of seismic attributes and leading reservoir engineering concepts provide the platform for OP Inc.'s exploration approach to this project.

The existing Yowlumne field was discovered in the mid 1970s with production coming from Etchegoin and Monterey formations of the Pliocene/Miocene age. Total production to date has been approximately 20 million barrels of oil equivalent.

OP Inc's objective is to participate with Aera in a Yowlumne deep exploration project. Final determination of Orchard's involvement in the project is yet to be determined.

Aera is one of the largest owners of exploration acreage in California and is one of the state's largest oil and gas producers, accounting for approximately 30% of the state's production. Aera produces approximately 210,000 barrels of oil and 75 million cubic feet of gas each day with over 900 million barrels of oil and gas reserves.

Aera's holdings have taken many decades to acquire and represent some of the most prospective exploration acreage in California. The five project agreements will give Orchard access to some of this highly prospective acreage, which either adjoins large oil and gas fields, or lies directly below such fields.

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