Sky Issues Mubarek 2 Update

Mubarek H-2 Well
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Sky Petroleum, Inc., which owns a stake of the Mubarek H2 well in the United Arab Emirates, said that operator Crescent Petroleum Corp. has completed its analysis of the well's performance.

Sky said that the gas lift design will be adjusted and the production logging will be carried out on the well. Additional analysis of the gas lift design based on actual well conditions, rather than the design assumptions used before drilling, demonstrated the need to adjust the design. Crescent expects the repair will solve well stability problems and enable injection of increased volumes of gas, possibly leading to an improved production rate.

Crescent also will also use a wire-line unit to carry out a Memory Production "MPLT" logging run. The MPLT will identify which zones are producing and determine the actual operating condition of the well in terms of pressure, temperature. and gas lift valve performance. A further recalculation of the gas lift design will then be carried out and valves will be reset if necessary. Reservoir engineers will also evaluate the results of the MPLT and make recommendations for further work in the well as may be prudent, such as a re-stimulation of any tight zones.

"Crescent's evaluation and testing of the H2 well continues in an effort to stabilize it and maximize production," said Brent Kinney, Sky's CEO. "In parallel Sky is undertaking their own studies to re-evaluate the selection of the target for the second Mubarek well, for which funding has been paid. In addition, we are constantly looking at additional oil and gas opportunities that fit our corporate strategy."

Sky's participation agreement with Crescent allows it to participate in a share of the future production revenue by contributing up to $25 million in drilling and completion costs related to two obligation wells in the Mubarek Field, offshore U.A.E.

The $25 million commitment for both wells was fully paid by the end of the first quarter of 2006. Sky anticipates the second obligation well will spud in the third quarter of 2006 and be completed within 90 days. On completion of the two obligation wells a further well development program will be evaluated. Sky Petroleum believes that there is potential for 4 additional wells to be drilled and anticipates production from these wells to commence in late 2007 or 2008 subject to a positive evaluation and rig availability.

With offices in Austin, Texas, and Dubai, Sky Petroleum is an oil and gas exploration company whose primary focus is to seek opportunities where discoveries can be appraised rapidly and developments can be advanced either by accessing existing infrastructure, or by applying the extensive experience of established joint-venture partners. In addition, the company also plans some higher-risk, higher-reward exploration prospects.

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