EnerGulf Resources to Continue South Texas Drilling Program

EnerGulf Resources along with Killam Oil Company Ltd. has elected to continue their South Texas drilling program and is participating in the drilling of the Longoria 174 #1 in Duval County, Texas.

The Longoria 174 #1, operated by Killam Oil, is currently drilling ahead at approximately 11,000 feet and making good drilling progress. Total depth is expected to be 12,500 feet. EnerGulf is paying 5% of all costs on the 1,291.9 acre designated "Longoria 174 Prospect" to earn a 5% working interest in the Prospect (being the maximum interest available per its MOU) and a surrounding area of mutual interest. Dry hole costs for the Longoria 174 #1 are estimated to be $1,933,350 with completion costs of $1,000,000. EnerGulf is paying its share of costs from ready working capital. The Longoria 174 #1 is located in a highly prospective area of South Texas with nearby prolific analogous production, being the N.E. Thompsonville field. The Texas Bureau of Economic Geology reported cumulative production of more than 595 BCF from the N.E. Thompsonville field in 1989. Ultimate recovery of at least 800 BCF is now considered likely. If the Longoria 174 #1 is successful, it is anticipated that a multi-well drilling program will be recommended for the area.

Killam will designate the Longoria 174 #1 as a "tight hole," such that all further information will be kept confidential for a period of time due to the competitive exploration environment in the immediate area.

Killam Oil Company was founded in 1921 by legendary Texas wildcatter O.W. Killam and is privately owned by the Killam family. Killam Oil Company pioneered oil exploration in South Texas (Webb, Zapata and Duval Counties) and currently operates over 285 wells with participation in approximately 558 wells. Killam is one of the top producers of natural gas in the area. (The three counties are in Railroad Commission District 4, which is the largest gas producing district in Texas).

Commenting on the prospect, Jeff Greenblum, Chairman of the Board of EnerGulf stated: "We are pleased to continue our partnership with Killam Oil Company, one of the most highly regarded and successful independent oil and gas exploration companies in Texas. Our decision to participate is based on a strategy of complimenting our portfolio of high impact exploration opportunities in Africa with high grade South Texas prospects. This balanced approach is aimed at maximizing shareholder value and capturing immediate, meaningful and sustainable revenue for EnerGulf. Participation in the Longoria 174 #1 provides EnerGulf an exciting opportunity in this highly prolific region at a time of unprecedented energy prices."