Strike Oil Issues Update on Mesquite Production Project

Strike Oil said that well production testing continues at the Mesquite Production Project on the Texas Gulf Coast.

A commercial flow rate has been recorded from the Webernick 2 well, noted the Australian firm. The Webernick 2 well has tested at the rate of 3.48 million cubic feet per day of gas and 97 barrels per day of oil condensate, with a flowing tubing pressure of 4705 pounds per square inch absolute (psia) with 13/64 inch choke. The test result was reported to the Texas Railroad Commission.

Strike said that the test result at Webernick 2 confirmed that all four wells drilled to date on the Mesquite Project--including the Shefcik 1 and 2, and the Webernick 1 wells--have flowed at commercial rates. Additional shallower potential pay zones exist in all wells.

The operator has decided not to test these shallower zones at present, which would mean further shutting in of existing production. This will enable the maintenance of the production from the existing zones until future re completions up hole are warranted. Currently the production from all four wells is around 11 to 12 million cubic feet per day of gas and 200 barrels of oil condensate.

Forward Drilling

At the Mesquite Project a decision on further drilling will await evaluation of all the technical data from the first four wells drilled, data from offset operators and production history from the field. Currently a well is being drilled on an adjacent lease in which Strike Oil has no interest, to the south of the Webernick wells, which if successful could extend the potential of the field.

On trend with the Mesquite Project, the operator is at advanced stages of leasing on several prospects the first of which is now programmed to be drilled in October 2006. A drilling rig has been contracted. The first three wells planned to be drilled are on the following prospects:

Prospect Prospective Resource Size (Billion cubic feet)

--Lasso: 25
--Flint 100+
--Rayburn 200+

Strike Oil has a 25% working interest in these prospects.