Daytona Energy Inks Participation Deal with Emerald Oil & Gas

Daytona Energy has entered an agreement with Emerald Oil & Gas NL of Perth, Western Australia, whereby Emerald will participate in three of Daytona's prospects.

Emerald conditionally exercised its option to acquire a 15% working interest in Daytona's Pandura prospect and will pay 22.5% of the total drilling costs through the wellhead of the "Kathleen Marie" #2 well. The expected cost of the well is US$2.6M completed. Consideration to be received by Daytona on exercise of the option is as follows: (a) Emerald paying the designated working interest share of a prospect generation fee of US$50,000; (b) Emerald paying the designated working interest share of land, seismic, data and other related costs totaling US$300,000; and, (c) Emerald issuing from treasury the number of shares valued at AUD$50,000 based on the closing market price of the shares on date of exercise.

The Pandura prospect is comprised of a 424-acre lease that is adjacent to the "Kathleen Marie" #1 gas well located in the Marie Llanos Field in Webb County, Texas. The Kathleen Marie # 1 has cumulative production in excess of 1.4 Billion cubic feet of gas and 10,000 barrels of condensate.

Daytona will drill an 8,000ft well to test a series of stacked reservoirs including the Lobo 1, Lobo 3 and Lobo 6, which are all pay sands in the area. The deepest potential is the Navarro Formation, which is productive within 5 miles to the south and west across the Rio Grande River in Mexico. Daytona's well, is a step-out to the Kathleen Marie #1 well, and the exploratory potential of all the zones within the prospect is estimated at 20BCF.

Additionally, Emerald will participate for a 25% working interest in Daytona's North Sharon project by paying 50% of the drilling costs through the wellhead. The estimated well cost is US$450,000 completed. Consideration to be received by Daytona on exercise of the option is as follows: (a) Emerald paying the designated working interest share of a prospect generation fee of US$35,000; (b) Emerald paying 50% of land, seismic, administration and legal costs incurred by Daytona; and, (c) Emerald issuing from treasury the number of shares valued at AUD$50,000 based on the closing market price of the shares on date of exercise.

The North Sharon project is located within Jasper County, Mississippi and covers an area of 720 acres within the Selma Chalk. Daytona's well, the Melvin #1, will evaluate a known Selma Chalk gas condensate accumulation in a location between two key wells that have either tested or produced from the Selma Chalk interval: the Calco #1 Peek and the Thurber #1 Morgan-Pharis.

Emerald will also participate in the Progresso prospect, covering 500 acres in Hidalgo County, Texas. Progresso is a large seismically defined Frio sands structure with estimated reserve potential of 2-10BCF per well. Emerald will take 30% of the project and pay 45% of the drilling costs through completion. Consideration to be received by Daytona on exercise of the option is as follows: (a) Emerald paying the designated working interest share of a prospect generation fee of US$50,000; (b) Emerald paying 30% of land, seismic, administration and legal costs incurred by Daytona; and, (c) Emerald issuing from treasury the number of shares valued at AUD$50,000 based on the closing market price of the shares on date of exercise.

Emerald is an Australian listed oil and gas company, which is involved in the exploration for oil and gas in both the United States and Australia.

Pandura, North Sharon and Progresso are Daytona's first exploration projects in the United States. Daytona has identified and is pursuing other projects within the Gulf Coast onshore region. Daytona has current production in Alberta, Canada.

Daytona is an oil and gas exploration/development company, focused on gas exploration in Alberta, Canada and the Gulf Coast region of the United States.

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