Delta Oil & Gas to Begin Drilling on California Acreage

Delta Oil and Gas has entered into an agreement to participate in drilling in a highly prospective property known as the Cache Slough Project, a prolific natural gas area located northeast of Sacramento, California. The Cache Slough Project is located next to the one of the largest gas field in the State of California, the Rio Vista field. Drilling of an initial test well is expected to commence in the next 60 days. Pipelines located near and within the Project area make it easy to transport and sell any production encountered.

The property occupies almost all of the Cache Slough gas field and a small part of the Rio Vista gas field. Although not indicative of future production volumes, the Cache Slough gas field has produced approximately 11.5 billion cubic feet ("Bcf") of natural gas since its discovery in 1945. The giant Rio Vista gas field was discovered in 1936 and has produced in excess of 3.5 trillion cubic feet ("Tcf") of natural gas to date.

The property covers approximately 825 acres of land. Analysis of a 3-D Seismic survey, in combination with scrutiny of all available well data, has resulted in the recognition of several natural gas prospects on the property. The initial drilling focus is expected to be on the high side of the Midland Fault, a major structural feature in the Rio Vista area that has historically produced large amounts of natural gas.

Delta Oil & Gas has agreed to pay 18.75% of all costs of drilling, testing and completion of the first test well to earn 12.5% of the working interest. Thereafter, Delta Oil & Gas will pay 12.5% of all costs of future wells to earn a 12.5% working interest.