Oilexco Receives DTI Approval for Brenda Field Development

Oilexco has received approval from the UK Department of Trade and industry for the development of the Brenda Field located in Block 15/25b in the central UK North Sea, 120 km North east of Aberdeen. The field will be developed via a subsea tie back of 4 horizontal wells to the CNR International (UK) Limited ("CNR"), a subsidiary of Canadian Natural Resources Ltd., of Calgary Alberta Canada, operated Balmoral Floating Production Vessel ("FPV"), 8.5 kilometers to the Northeast.

UK Energy Minister Malcolm Wicks said: "This is great news, especially as the DTI played a key role in promoting this acreage.

"Oilexco's success shows that new entrants can be a catalyst for future exploration in the North Sea. Their enthusiasm and commitment enables us all to benefit from maximizing the reserves that remain in the North Sea."

The Brenda development scheme is based on an initial three pre-drilled horizontal production wells, with a fourth well planned to commence production post first oil contingent upon reservoir performance. Artificial lift capability in the form of gas lift is included for all wells and is supplemented by a subsea multi phase booster pump having 51,000 bbl/d of fluid capacity. Current estimated cost of the Brenda development including contingency is Pounds Sterling 90 million, and is Oilexco's first operated oil development in the UK North Sea. Project finance to be provided by the Royal Bank of Scotland can now be finalized.

The development features an integrated subsea compact selector manifold that allows individual wells to be continuously tested subsea before being returned to the subsea booster pump for onward export to the Balmoral FPV. The manifold and trees are controlled by a fully redundant control system that utilizes fiber optic technology, through a combined controls and power control umbilical that also drives the pump. The production wells will be drilled from the Transocean semi submersible Sedco 712 currently on contract to Oilexco until March 2008. The 712 will be present on the Brenda location for the development drilling phase currently expected to commence in early February. Oil will be exported subsea to the Balmoral FPV for processing and forward export via the BP operated Forties pipeline. The Balmoral FPV is capable of handling Brenda production for the full range of anticipated production profiles. The development schedule is aimed at drilling and completion activity during Q1 and Q2 of 2006 achieving first oil in 4th Quarter 2006.

The primary contractors for the Brenda development are Technip Offshore (UK) Limited, Framo Engineering AS and FMC Technologies Ltd. Technip will provide the pipelines and risers and perform the installation of all the subsea equipment, Framo provide the integrated manifold complete with the compact multiport manifold, multiphase metering and multiphase pumping and subsea and topside control system for the wells, manifold, meters and pumps, FMC will provide the Horizontal trees. Additional hydrocarbon potential to Brenda exists within Block 15/25e and the surrounding area, and may be considered as future satellite development potential for the Brenda facilities. These include the up dip portion of the Brenda Field, together with "Sheryl" leads developed within both the Paleocene and Jurassic play fairways. The development of Brenda will provide the crucial subsea infrastructure hub necessary to facilitate commercial development of the area. The Subsea manifold has been designed to accommodate 8 wells or flow lines to allow for-tie in of regional prospects. Oilexco's 70% owned Nicol field is one such discovery which lies 10 kilometers to the Northwest of Brenda. It is Oilexco's intention to develop this field via the Brenda Manifold. The Framo subsea multiport selector and multiphase flow meter will allow future fields to be allocated correctly. Commercial discussions on Nicol development are underway with Oilexco's partners at Nicol, ConocoPhillips and ENI.

The Brenda development was enabled by the DTI's Fallow Initiative which allowed the acreage to be returned to the market for further appraisal. Following 100% award of the 15/25b area in the 20th round, Oilexco became the most active exploration driller in the North Sea in 2004 and have continuously drilled appraisal and farm in wells during 2005. The Oilexco drilling program is currently booked through the 4th Quarter 2006.

"This is the next step in Oilexco's corporate evolution" comments Arthur Millholland CEO. "Our model of aggressive appraisal and exploration drilling, maintaining high working interests, followed by a quick and common sense approach to Field Development, will create significant value for our shareholders going forward" added Mr. Millholland. "We look forward to continue to blaze new trails in the UK North Sea, a basin which though mature, offers significant future potential to independent operators such as Oilexco".