Oilexco Begins Brenda Field Development

Oilexco has begun development of its 100% owned Brenda Field located in Block 15/25b in the UK Central North Sea. The Transocean semi-submersible Sedco 712, currently under long term contract to Oilexco, has commenced operations on the first of four horizontal production wells. The Brenda Field development is the first phase of Oilexco's Brenda/Nicol project located in Block 15/25. After completing the Brenda production wells, operations will commence on the company's 70% owned Nicol Field late in the second quarter. Production from both Fields is set to begin in September/October 2006, with peak production rates expected to reach 35,000 barrels of oil per day. These production rates would place the company in the top quartile of all producers in the UK North Sea.

"This is a very exciting time for our company", said CEO Arthur Millholland. "We first entered the UK North Sea in 2002, and since that time we have gained a reputation for being one of the most innovative and aggressive exploration companies in the region. Now that development has started at Brenda, we will demonstrate that we are also very good at bringing discoveries into production quickly and cost effectively. Our contractors are on schedule with equipment fabrication. Last week we announced the signing of our US$245 million financing with the Royal Bank of Scotland. Now our drilling rig has begun field operations. Everything is proceeding as planned."

In addition to ongoing operations at Brenda, Oilexco will recommence its exploration/appraisal drilling program in March utilizing the Bredford Dolphin semi-submersible drilling unit under a three well drilling contract. The first well of this three well program will be located on the Company's 100% owned Block 15/25c. This well will target light oil reservoired in Paleocene Balmoral Sands on trend with, and just north of, the Nicol Field in Block 15/25a. If successful, this well will add future incremental production and reserves to the Brenda/Nicol development.

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