Syntroleum Inks Deal for Development of Oil Find

Syntroleum Corporation reports the execution of a Heads of Agreement with an indigenous oil and gas company, Britania-U Nigeria Ltd., to acquire a 40 percent participating interest in an oil discovery in Oil Mining Lease OML 90 offshore Nigeria in the Ajapa Field.

The Ajapa #1 well was drilled in approximately 30 feet of water and it flowed at stabilized rates of 4,210 barrels of oil per day from approximate 100 feet of net pay. The tested crude oil was high quality 40 API gravity. The Ajapa #1 well was suspended and potentially will be completed for production. The Ajapa Field is defined by high quality 3D seismic data and the logs and test data from the Ajapa #1 well.

Syntroleum estimates the Ajapa Field could contain from 15 million to more than 70 million barrels of gross oil. Syntroleum will undertake an appraisal drilling program to confirm the reserve and production potential of the Ajapa field.

"Due to the shallow water depth of Ajapa and the presence of existing infrastructure in the area, this project provides the potential for near term cash flow for Syntroleum. It is consistent with our objective of working to develop more near term cash flow while we pursue our broader objective of developing our first GTL plant," said Jack Holmes, president and CEO of Syntroleum. "The Ajapa Field is one of several discovered, partially delineated oil and gas fields in West Africa that we are pursuing. While there is additional appraisal work to be done to confirm commerciality, we look forward to implementing successful oil development of this field."

The first appraisal well is anticipated to be drilled in 2006, subject to government approval and rig availability. The parties will now commence negotiation and execution of definitive agreements, including but not limited to, a participation agreement, joint operating agreement and technical assistance agreement.

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