Bayou City Well Re-Entry Shows Promise

Bayou City Exploration, Inc.

Bayou City Exploration, Inc. said that its Mclean #1 well, a re-entry of an existing well bore in Live Oak County, Texas, has reached total depth as planned and without incident. A major oil company drilled the original well to a total depth of 12,500 feet in 1985. After reviewing surrounding sub-surface geology and the associated productive zones, Bayou City's exploration team re-examined the original well logs and determined that the original operator had potentially bypassed pay in the Wilcox formation. The team decided to re-enter and re-log the well.

Following the successful re-entry, the well was re-logged on July 20, 2006. Analysis of the new logs showed approximately 500 feet of gross interval in the Wilcox formation that appears to be capable of producing commercial hydrocarbons. Encouraged by the log analysis, Bayou City and its partners have set production casing and elected to attempt to complete the Mclean #1. The well is tentatively scheduled to be fracture stimulated and tested within the next three weeks.

The Mclean #1 is part of an overall position of 2,961 acres owned by Bayou City and its partners. Bayou City and its partners have previously drilled the Mary Lyne #1 on the leases to the Queen City Sand and are currently in the process of installing production equipment including a pumping unit on this well. This should be completed by mid-August. A third well, the Prasek #1, is scheduled to be drilled in the next month to test the Hockley C and the Cole Sands.

Bayou City has a 9.375% working interest in the Live Oak Project.

Bayou City Exploration, Inc. is an oil and gas exploration firm focused on developing proven geologic trends in East Texas, South Texas, the Gulf Coast of Texas, and Louisiana. Based in Houston, Bayou City leverages its management team's multidisciplinary expertise in applying advanced 3D seismic analysis, 3D processing algorithms, amplitude attribute, and imaging technologies to the analysis and selection of high-potential prospects with low exploration risk. The company's database has more than 7,500 square miles of 3D data, most of it covering Bayou City's focus area, as well as 13,000 linear miles of 2D data.