Oilexco Finds Oil with 2nd Well of 2005 Drilling Program

Oilexco has completed the drilling of two well bores to evaluate a Paleocene sand reservoir adjacent to, but believed by Oilexco to be separate from, the MacCulloch Field in Block 15/24b. Under the terms of a farm in agreement, Oilexco is paying 100% of the costs of drilling these wells to earn a 50% interest in a sub-area of Block 15/24b, excluding the MacCulloch Field.

The 15/24b-8 well bore was the first of two "slim hole" penetrations drilled from a central location by the Transocean Sedco 712 semisub, to evaluate an oil-related seismic anomaly adjacent to the MacCulloch Field. Time lapse (4D) seismic data had indicated that oil had not been swept from this anomaly by production from the offsetting MacCulloch E1 horizontal well that has produced approximately 10 million barrels of oil to date.

The 15/24b-8 well bore encountered 43 feet of net pay in the main Paleocene sand reservoir. The oil/water contact was at the same elevation as the initial oil/water contact from the adjacent MacCulloch Field. Due to the 8 1/2 inch diameter of the well bore in the 15/24b-8 "slim hole" penetration, drill-stem testing was not possible. Wireline testing tools encountered formation pressures that indicate the separation of the Paleocene sands in this anomaly from those within the MacCulloch Field. These wireline testing tools successfully recovered samples of dark brown, light crude oil from the main reservoir sand.

The pressure data and the oil/water contact encountered by the 15/24b-8 well indicate that the Paleocene-aged, oil-bearing sands drilled in this anomaly have not been drained by offsetting production wells.

Upon study of the data accumulated from these two well bores, Oilexco may propose to drill a horizontal production well into this anomaly which could be drilled from the subsea manifold of the MacCulloch Field and could be tied- in to existing production facilities.

This well is the second successful prospect encountered in Oilexco's 2005 Exploration Program utilizing the Sedco 712 semisub, for equity earning wells.

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