Patch Adds Red Deer Prospect

Patch International Inc.

Patch International Inc. has entered into an agreement with Calgary-based Highview Resources Ltd. for a gas prospect near Red Deer, Alta.

Patch will acquire 50% of Highview's majority interest in two sections of land. As consideration for the acquisition, Patch will remit to Highview 50% of past land and seismic costs incurred by Highview.

Highview does not control the complete spacing unit but has entered into a seismic option agreement with a third party concerning the residual interests in the two sections. Under the terms of this deal, Patch and Highview will undertake a 2D proprietary seismic program involving 8 kilometers over prospective lands to verify drillable location(s) previously identified on existing seismic. Upon completion of this program, an interest can be earned in the two sections by commencing a well on each within specified time periods. The third party is to be reserved a 12% gross overriding royalty reduced proportionately to its acreage contribution in each of the two sections.

Patch anticipates the seismic program will conclude in late July. In the event drilling operations are pursued, the well(s) will be drilled to an intermediate depth in order to adequately test multiple Cretaceous zones. Because of existing infrastructure, it is anticipated the well(s) could be placed on production without undue delay.

In addition, an area of mutual interest has been established with Patch having 50% participatory rights.

"This opportunity initiated by our newly expanded management team allows Patch to develop a new core area providing for potential development of cash flow and reserves and further adds the capacity to expand its land position,” said John Thornton, Patch’s president. “The ability to have multi-potential zones, along with the possibility of multiple locations, adds to the depth and scope of the prospect."

Patch is a junior oil and gas company that earns oil revenue from a small participation interest in 20 oil wells. These wells provide the company with some short- and long-term cash flow. The company has drill programs planned on five properties in Alberta scheduled for 2006. Patch also has oil sands properties in the heart of the Alberta Oil Sands, owned through its majority ownership of Patch Oilsands Limited Partnership, on which it plans a limited work program in 2006.


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