Sun Cal Begins Drilling at West Gomez Field

Sun Cal Energy Inc., an energy exploration company focused in the Southern San Joaquin Valley of California, the Anadarko Basin of Oklahoma, the Breton Sound of Louisiana and the Green River Basin of Wyoming is pleased to announce that drilling has commenced on the Sibley 84 #1 well, the first of several wells to be drilled in the multi-pay prospect in the West Gomez Field within Pecos County, Texas.

The operator, Stratco Operating Company, recently begun the re-entry phase of the Block 83 84 Project, and to date has drilled down to the 8th plug at 10,000 feet. Drilling will continue for the next couple weeks until the total depth of 22,820 feet is reached and the well bore is free of any remaining plugs. Completion operations are then expected to commence on Sibley 84 #1 well, at which time the rig will then be moved to the Gulf-Baker 83 #1 well in anticipation of drilling, to a target depth of 22,800 feet. Drilling of the third well, Sibley 84 #2, will commence shortly thereafter and is expected to be drilled to a total depth of 4,000 feet.

As stated by Lewis Dillman, CEO of Sun Cal Energy Inc.: "With the commencement of drilling on our 83 84 Project, we are excited to have taken a significant step towards realizing the potential. We look forward to further momentum as the first well reaches its target depth, and as the second and third wells progressively begin their drilling programs over the next few weeks."

Having produced in excess of 5 trillion cubic feet (TCF) of natural gas, the West Gomez Field is one of the most prolific gas plays in the United States. The prospect, "83 84", consists of two re-entry wells, the Gulf-Baker 83 #1 (originally owned by Gulf and operated by Getty Oil Co.) and the Sibley 84 #1, as well as a new well, the Sibley 84 #2, on a 1280 acre lease in Pecos County, Texas. Based on published production data and geological and engineering calculations, recoverable reserves are estimated to be more than 27 billion cubic feet (BCF) of gas and 50,000 barrels of oil (bbls). Sun Cal's interest will be 2% while any cost over-runs will be assumed by the operator.

The 83 84 Project is adjacent to proven production properties operated by the world's leading oil and gas producers including Exxon Mobil Corp., Conoco Phillips Co., Chevron USA Inc., Hunt Oil Co., Chesapeake Operating Inc., Cimarex Energy Co. and Texaco Inc. Supported by a data review of the Composite Borehole Compensated Sonic Log from Schlumberger, Gamma Ray & Sidewall Neutron Porosity Logs, drilling and completion reports, and the production history in the area overall, the 83 84 Project could produce upwards of 6.5 million cubic feet of gas per day (MMCF/d) and 80 barrels of oil per day (bopd).

"Building on the successful results of our prospect in Oklahoma, the 83 84 Project will help enable us to continue to transition from exploratory activities to production. In addition to acquiring low risk overriding royalty properties in North America, we will continue to actively explore and develop our high impact prospects, particularly following the recommendations as set forth by the Schlumberger Report regarding the Jonah Field in Wyoming," added Lewis Dillman.

The operator, Stratco Operating Company and Lakehills Production, have recently completed successful re-entry programs in the nearby West Gomez Gas Unit and the Spears Gas Unit. The principal, Tom Stratton, has operated over 800 wells, and during 1974-1977, worked on the development of the West Gomez field for Texaco. The Geologist on the project, Mark Holtz, is one of the foremost authorities on this region and has authored many books and articles for the Bureau of Economic Geology of the University of Texas on the characteristics, structures and production prevalent in the West Gomez Field.