Drilcorp Acquires Stake in Producing Property in Canada

Drilcorp Energy has completed the acquisition of an operated, 45.5% working interest in a Viking oil and gas property in exchange for release of security held against the property. The Bulwark property, located approximately 12 km east of Castor in central Alberta, has produced a total of 364,000 barrels of 38 degree API sweet crude oil and 2.1 billion cubic feet of natural gas in the Viking interval from 1978 to present. The property is today producing approximately 28 barrels of sweet light crude oil and approximately 385 thousand cubic feet of natural gas per day, representing approximately 92 boed gross on a combined basis, from six wells re-activated during November and December. A total of eleven wells and 2,080 gross acres of P&NG mineral lands were acquired in the acquisition. The Corporation is proceeding with surface rights and regulatory approvals to allow re-entry of a tested but abandoned well in the field and plans to drill at least one infill well during the 2004 winter period. Drilcorp has not yet re-initiated the waterflood in the oil pool to allow technical evaluation of all wells prior to re-pressuring the reservoir.

The Corporation also holds, or has otherwise acquired, an operated, 92.75% working interest in two standing wells and an additional 1,440 acres of P&NG mineral lands immediately offsetting the Bulwark lands. These standing wells are now scheduled for recompletion to the Viking interval for testing, evaluation and production, if successful, during January, 2004.