Cheetah Oil & Gas to Acquire Acreage in Papua New Guinea

Cheetah has agreed to acquire a 99% interest in Scotia Petroleum Incorporated, a private company.

The primary assets of Scotia Petroleum Incorporated are two Petroleum Prospecting Licenses (PPL) in Papua New Guinea. Cheetah Oil & Gas Ltd. is now the operator of these two licenses; PPL-245 and PPL-246. With the successful acquisition of Scotia Petroleum Incorporated, Cheetah Oil & Gas Ltd. is now the operator of a total of five PPL's in Papua New Guinea: PPL-245; PPL-246; PPL-249; PPL-250; and, PPL-252. The total area of land covered by these exploration licenses is approximately 8, 385,866 acres. Cheetah is presently conducting its 2004 work program on its licenses and is building a work program for the two new licenses.

PPL-245 covers a total of 2,501,750 acres and is located along the Northern coast of Papua New Guinea, adjacent to Cheetah's existing PPL-249. It straddles both the East and West Sepik sub-basins. Preliminary evaluation indicates both oil and gas seeps in parts of PPL-245; and potential for Miocene carbonate and Pliocene basin floor fans plays. No source rocks have been intersected in the Sepik Basin wells, however the occurrence of seeps and shows confirm a potential Tertiary source bed. Theorized reef prospects similar to those in the Salawati Basin will be explored and targeted.

PPL-246 covers 540,378 acres located in the south-central region of Papua New Guinea, located south of Cheetah's existing PPL-250 and to the east of recent major gas discoveries made by others. PPL-246 is located updip of the Omati Trough source kitchen area where up to 19.7 billion barrels of oil is theorized to have been generated. The property is within the Papuan Basin. The western part of PPL-246 is rated to be prospective with potential for similar proven Mesozoic petroleum systems as in the current oil fields of Kutubu, Gobe, and Moran; as well as the Barikewa and Iehi gas discoveries. Potential reservoir rocks include Late Jurassic to Early Cretaceous deltaic to shallow marine sandstones. The potential for gas accumulations in the western part of PPL-246 is rated to be high, with additional potential for hydrocarbon accumulation in the foot-wall traps.