Oilexco Intersects Oil in Latest UK North Sea Appraisal Well

Oilexco reports that oil has been intersected in Oilexco's latest "Brenda" appraisal well, the 100% owned "well cluster" 15/25e-11, 15/25e-11Z and 15/25e-11Y. The objectives in the drilling of this well cluster under Oilexco's "Brenda" appraisal program were to define the western and northwestern limits of the "Brenda West" Paleocene Forties Sand oil accumulation. As previously announced, the oil/water contact intersected by the 15/25e-11 well-bore is at a higher elevation than that intersected in the Oilexco 15/25b-10 well located 1.5 kilometers to the southeast. The difference in elevation suggests the 15/25e-11 "well cluster" is evaluating another oil accumulation, which may be separate from the "Brenda West" oil accumulation currently defined by the Oilexco wells 15/25b-9 and 15/25b-10. This additional accumulation was confirmed by the third well-bore of the cluster 15/2 5e-11Y, located 1 kilometer northwest of the 15/25e-11 location. The second well-bore of the cluster 15/25e-11Z, located 1.25 kilometers west of 15/25e-11, met its designed objectives in the appraisal program by successfully encountering oil-bearing Brenda Paleocene Forties Sand pay near its western limit.

Drill stem testing operations will not be undertaken on the 15/25e-11Y well-bore. This is due to thin oil pay, limiting the future use of this vertical well-bore as a possible production well. Additional appraisal drilling on this northwest oil accumulation at Brenda, north and northwest of the 15/25e-11Y well-bore, may be undertaken next year utilizing the Transocean Sedco 712 semi-submersible drilling unit after Oilexco assimilates the results of the 15/25e-11 "well cluster" into its geologic/geophysical interpretation of the "Brenda" area.

Currently the Transocean John Shaw semisub is preparing to move to the next location in Oilexco's "Brenda" appraisal drilling program. This will be a two well-bore "well cluster" evaluating a significant extension to the "Brenda East" oil accumulation. The first well-bore of the cluster will be located 2.25 kilometers south southeast of the Oilexco 15/25b-9Y location. The second well-bore of the cluster will be located 1.5 kilometers south of the 15/25b-9Y location. Drilling operations are expected to commence within a week's time. Upon completion of this two well-bore cluster, the semi-submersible drilling unit John Shaw will be released as Oilexco's 2003/2004 offshore drilling contract with Transocean will have come to an end.

Future operations at "Brenda" next year will focus on the development of the "Brenda East" and "Brenda West" Paleocene Forties Sand oil accumulations. Oilexco intends to file a Development Plan early next year with the UK Department of Trade and Industry for the development of these areas. Production will be tied back to the Balmoral Floating Production facility 8 kilometers to the northeast, in which Oilexco recently acquired a 7.91% equity interest. Oilexco's production engineering effort is currently focused on a design concept for a maximum initial production rate of 35,000 barrels of oil per day from "Brenda". This production rate can be handled by the Balmoral Production Facility where the unutilized oil treating capacity is currently in excess of 50,000 barrels per day. First oil is targeted for the 4th Quarter of 2005.

Oilexco's Block 15/25 appraisal program is designed to define the limits and edges of the "Brenda" Paleocene Forties sand oil accumulation intersected by the well 15/25b-3 in 1990 and confirmed by the Oilexco 15/25b-6 appraisal well in January 2004. To date Oilexco has drilled six (6) wells and eleven (11) well bores inclusive of sidetracks. Nine (9) of the well bores encountered oil; four (4) of these well bores, 15/25b-6, 15/25b-8, 15/25b-9Y, and 15/25b-10 were drill stem tested through perforations, flowing 40 degrees API oil at rates of 2,980 bbl/d, 4,785 bbl/d, 2,648 bbl/d, and 3,351 bbl/d respectively, on restrictive chokes at reservoir sand face pressure draw downs of less than 10%. Well test analysis has indicated the production wells at "Brenda" will produce at rates far in excess of these drill-stem tested rates.

Oilexco Incorporated operates in the UK North Sea through its wholly owned subsidiary Oilexco North Sea Limited. Oilexco's current focus in the UK North Sea is on the following 100% owned Blocks: Block 15/25b, a 20th Round award, and Block 15/25e, an August 2004 Out of Round award. Block's 15/25b and 15/25e are located in the Outer Moray Firth of the UK Central North Sea, 120 kilometers northeast of Aberdeen.