GFI Acquires Stake in Seruway Block Offshore Indonesia

A subsidiary of GFI Oil & Gas Corporation' has executed a Farm-in agreement with Transworld Seruway Exploration Limited (TSEL) for a 22.5% interest in the Seruway Production Sharing Contract located Offshore North Sumatra, Indonesia. The assignment of the interest is subject to approval by Indonesian authorities. The Seruway PSC covers approximately 1,115,000 acres. Seven of sixteen wells previously drilled in the Seruway PSC resulted in hydrocarbon discoveries. The Seruway PSC is adjacent to GFI's Asahan PSC and Kambuna TAC where GFI is participating (35%) in the development currently underway in the Kambuna and Tangung Perling fields. Consistent with GFI's Greenfields strategy, the Seruway PSC contains five highly attractive Greenfields: Gurame, Salem, ONS B-1, NSO-2 and Teripang. In addition, GFI has identified more than ten seismically defined exploration prospects located in the Seruway PSC.

Efforts are currently underway to initiate the delineation of the Gurame structure. GFI has committed to initially fund from current cash reserves a US $5 million 3-D seismic program planned for the second half of 2006. GFI will also fund from a future financing a substantial portion of up to US $12 million for an exploitation well planned for 2007.

Third party reports submitted to Pertamina in the late 1990's by former licensees, document reserve potential of greater than 500 BCF in the Gurame structure. The reports also estimate that reserve potential in the exploration prospects and the other four Greenfields may be in excess of 5 TCF.

"We are very pleased to announce this significant expansion of the GFI Southeast Asia portfolio, stated Alex Warmath, GFI CEO and Chief Geoscientist, especially since the block contains multiple Greenfields plus excellent exploration upside. We are also excited to join with our new partners Transworld and Rion Energy of Australia in developing Seruway."

GFI is an international oil and gas development company focusing on acquiring and developing previously discovered oil and gas fields (Greenfields) which significantly reduces below ground risk and finding and development cost and accelerates cash flow. GFI is an Alberta company with offices in Houston, Texas.