Daybreak Oil and Gas Starts 5 Well Re-entry Program

Daybreak Oil and Gas has signed a Letter of Intent with Oracle Operating Co., LLC. of Dallas, Texas to participate in the re-entry of a well in the Saxet Deep Field. The project is located on a 320 acre lease within the city limits of Corpus Christi, Texas. The well, Socony Mobil 8 Weil "C" will be re-entered to test a Frio sand at 7,022 feet. This zone exhibits approximately 15 feet of hydrocarbon pay believed to be primarily natural gas. Daybreak will have a 20% working interest subject to a 75% net revenue interest.

In addition to the initial interval to be re-completed, there are numerous shallower zones up to 6100 feet that exhibit hydrocarbons on the well logs. Based upon a review of off-setting well logs and production records none of these zones are believed to have previously produced gas or oil. There are four additional existing well bores within the Area of Mutual interest that can be re-entered by Daybreak and its partners. In addition to normal State workover permits, a Federal Aviation Agency (FAA) approval is also required.

Extensive infrastructure is in place to produce the natural gas expected to be encountered. The initial well already has pipeline in place. The Saxet Deep field has previously been produced primarily as an oil field and some of the gas sands have been neglected.

Robert Martin, President of Daybreak believes the Saxet re-entry project to be a relatively low cost and high reward prospect. Geological risk is minimal and engineering risk is moderate.

Daybreak announced it has also acquired the necessary drilling permits for their Tuscaloosa Sands project in Louisiana. A drilling company has been engaged and drilling is expected to commence on the first well within the next few weeks.

Drilling on the Ginny, South project on the Gulf Coast of Texas has now been underway for several days. The surface casing has now been put in place on the Curlee #1 well. Drilling depth has exceeded 1000 feet. The target depth on this well is 9,550 feet.