California Oil & Gas Issues Update

California Oil & Gas Corp. (COGC) on Thursday issued the following update on its current projects.

COGC, together with other participants, has identified five areas within an area of mutual interest (AMI) in the San Joaquin Basin that are prospective for shallow oil exploration at depths between 1,000 and 3,000 feet. Although some clean-up leasing continues, more than 11,000 acres have been acquired at very attractive lease rates in three of the five areas, which the company believes is sufficient to launch comprehensive exploration programs. Leases in the remaining two prospect areas were unavailable, too expensive, and/or not sufficiently contiguous to warrant continued exploration.

Three 3D seismic surveys covering a total of 25 square miles have been designed for the three active prospect areas. Seismic acquisition companies in the area have been contacted, and first bids are anticipated within 2 weeks. COGC anticipates that seismic acquisition will begin as soon as equipment is available, with drilling to commence after the data are processed and interpreted.

To the north of the AMI, existing 2D seismic data have been purchased on the periphery of a large prospective area identified by wide-area exploration tools. These data are currently being reprocessed with what appear to be encouraging indications. The company anticipates that a detailed exploration program will develop for this largely unexplored area, which has potential in the Chenac, Santa Margarita, Jewett, Pyramid Hills, and Vedder formations.

The San Joaquin Basin is a prolific oil-producing area with a long history of production. In the vicinity of the prospect areas, two prominent fields have produced 435 million and 20 million barrels of oil, respectively, from Pyramid Hills and Vedder Sands.

COGC has executed a geophysical exploration agreement for the EOLA Prospect area in southern Louisiana. Other parties to this agreement have yet to sign, and this agreement will not be binding on the company until all parties have signed. This is a consummation of the letter of intent announced June 20, 2006.

COGC will participate to 40% in a prospect on the crest of a large, intensively fractured and faulted anticline in a prolific Fractured Lower Chalk trend. Both the over-pressured Chalk and the deeper Lower Tuscaloosa Massive Sand formation have tested hydrocarbons on the structure. They underline a Tertiary age field that has produced more than 28 million barrels of oil.

Current plans are for the participants to acquire a 3D seismic survey of up to 35 square miles over the structure, followed by the re-drilling of a 1982 well that encountered significant gas volumes in the Lower Tuscaloosa Massive Sand zone at 16,300 feet. Gas and condensate were tested but never produced more than 40 years ago from a crestal fractured Lower Chalk well. Secondary targets include multiple shallower sands, productive on the structure, within which additional reserves may be identified by 3D seismic in undrained fault traps.

Formal documentation is being prepared on the Krotz Springs project in St. Landry Parish whereby COGC intends to participate directly for a 15% working interest in the project. A cost estimate is being prepared for a well that the company anticipates will be drilled at the earliest practical opportunity to 11,000 feet on the crest of a prolific, unexplored Cockfield Sand defined by geology and 3D seismic.

Both Louisiana prospects are in areas that have produced large volumes of gas, oil, and condensate from shallower horizons. As such, facilities and pipelines are already in place to quickly market any fluids produced.

COGC continues to evaluate other farm-in and acquisition opportunities, as well as late-stage exploration and early stage development projects in California, Louisiana, and internationally.