Pacific Energy to Expand Wilmington Oil Field Production

Pacific Energy Resources Ltd. is in the final phase of negotiating a Purchase and Sale Agreement to acquire additional oil-producing acreage adjacent to its Wilmington Oil Field Pico Lease property located in Long Beach, California. The acquisition price of US$2,000,000, which includes a new US$220,000 permitted 70-kilowatt electric co-generation plant, would be funded primarily from cash on hand.

Wells on the new property currently produce 100 barrels of oil per day. Management estimates Proven Developed Producing (PDP) oil reserves and Proven Un-Developed (PUD) oil reserves are in the 2,000,000 barrels range.

Currently, Pacific Energy's acreage produces over 500 barrels of oil per day (BOPD). The additional assets would raise production levels by 20% to 600 BOPD.

"It's a good strategic fit," says company President Vladimir Katic. "We expect this acquisition to lead to a significant reduction in current operating costs of both leases."

The deal is expected to close by end June.

Operations Update

The Wilmington Pico Lease oil production is now on an up-trend. The company has completed two wells of a five-well drilling program (see February 11/04 news release). N1C 224-B is producing an average of 50 barrels of oil per day. Completion work continues on A2-C. The third well has been permitted and is expected to spud within 60 days, depending on rig availability.

Two additional factors are also contributing to increased production levels: additional pressure support through water injection as newly drilled wells are put into production, and more efficient management of field development resulting from a comprehensive integrated computer model, in use since November 2003, that provides a better understanding of the behavior of the reservoirs.