Chamaelo Makes Light Oil Discovery and Accelerates Drilling Program

Alberta Foothills
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Chamaelo Exploration Ltd. has made a significant discovery in the Alberta Foothills and has commenced an aggressive light oil drilling program for the second quarter. Drilling for natural gas focused properties including Mannville CBM will start in Q306.

Alberta Foothills

Chamaelo completed a well that tested over 280 bbl/s of 48 API oil plus solution gas on a 3 day flow period in a medium depth foothills horizon in addition to testing over 1.0 mmcf/d of gas in a shallower horizon over an 8 hour flow period.

Under the terms of a farm-in agreement (which covers over 12,000 acres), Chamaelo earns a 50% working interest by paying 75% of each operation with deep drilling earning the most acreage. Chamaelo will commence seismic immediately and look to recomplete up to 3 additional wells prior to year-end. Chamaelo will also look to drill a well to further evaluate the shallow gas horizon prior to year-end.

Light Oil Drilling Program

Pembina, Alberta

Chamaelo spud a highly prospective Nisku well targeting light oil on April 30, 2006. It is anticipated that drilling will be completed by the end of May or early June. Wells in the immediate area had initial production rates of 1,000 - 2,000 boepd. Chamaelo is 100% working interest in the well until a 300% payout after which it reverts to 50% working interest.

Wilson Creek / Willesden Green, Alberta

Chamaelo has recently completed and tested 3 new wells in the area (1 infill, 2 step-outs) that resulted in 2 pool extensions. The 3 wells tested light oil at a combined rate of over 700 bbls/d of 40 API oil (600 net to Chamaelo). The wells will start producing immediately at a net combined 300 bbls/d based on AEUB allowable production rates.

Chamaelo is currently drilling infill and step-outs at Wilson Creek with 1 rig and will start with 2 additional rigs shortly to accelerate the light oil program.

At Wilson Creek, unitization discussions and preliminary work for implementation of a water-flood scheme are well under way. Once the flood is implemented (late 2006 or early 2007) GPP should be granted and Chamaelo should be able to increase production and recoverable reserves from the field.

Buick Creek, B.C.

Chamaelo has recently acquired additional lands in Buick Creek based on 3D seismic to follow-up its Q405 successful well. The well drilled last year tested at 400 bopd of light oil before quickly declining to 100 bopd. Chamaelo has up to 10 development locations on the play at an average 70% interest. Four (3 net) wells will be drilled this summer commencing in late Q206 or early Q306.

Natural Gas and Mannville CBM

Wimborne, Alberta

In Q106, Chamaelo drilled 1 successful well in the Wabamun formation that was put on production at a stabilized rate of over 50 boepd. The Wabamun has been geologically mapped, based on well control, with a minimum of 20 bcf of gas in place over approximately 14 sections. Chamaelo will now proceed to the development phase of this project with vertical and/or horizontal wells. Based on the engineering model of the vertical well, Chamaelo believes a horizontal well may yield initial rates of approximately 3 times the rate as a vertical and will look to either drill or horizontally recomplete an existing well in Q306. Chamaelo will average 63% working interest on this play.

Chamaelo also drilled and completed 1 Mannville CBM well at Wimborne which is producing at low stabilized gas rates with no water. Chamaelo's next step will be to test the formation with a horizontal well. Gas in place over its farm-in block of land is estimated at over 350 bcf of which Chamaelo would be 63%. If successful, the CBM would add a long-term resource play to Chamaelo's portfolio of opportunities. We anticipate drilling or recompleting an existing well in Q3.

Chamaelo will also drill 1-2 exploratory wells for the highly prolific glauconite formation in Q3 and continue its shallow gas program (belly river) with 15 additional wells in late Q3. Glauconite wells in the area have produced up to 10 mmcf/d at stabilized rates and 10 bcf of gas. The shallow gas program should yield rates of 150-200 mcf/d per well with low risk. Chamaelo will average 63% working interest in both zones.

Goose, BC

Chamaelo is currently constructing a pipeline and building a facility to handle its' shut-in wells and accommodate future drilling. Chamaelo will tie-in 2 wells, recomplete 1 additional well and drill up to 4 additional wells in 2006. Average production rates are anticipated at 100 boepd per well. Average working interest in the area is over 80%.

Production Update

Chamaelo has experienced significant downtime due to unscheduled problems at third party facilities and will also experience downtime in Q2 due to NOVA pipeline scheduled maintenance and other scheduled third party facility maintenance.

Chamaelo anticipates it will average 4,200 - 4,500 boepd for May with production increasing materially through June and July given the active drilling schedule.

Chamaelo hereby reconfirms it 2006 Exit Production Rate Guidance of 6,500 boepd as a result of recent drilling success, but is changing its 2006 Average Production Rate to 4,750 boepd from 5,000 boepd due to downtime experienced at third party pipelines and facilities as noted above.

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 - Chamaelo Makes Light Oil Discovery and Accelerates Drilling Program (May 9)

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