Tekoil Pays Deposit to Acquire Galveston Bay Assets

Tekoil & Gas Corporation said Wednesday that it has paid the $1 million deposit required by the Purchase and Sale Agreement executed on November 13, 2006, with Masters Resources, LLC and Masters Oil and Gas, LLC, to acquire four properties, consisting of interests in Trinity Bay, Redfish Reef, Fishers Reef, and North Point Bolivar Fields, located in Galveston and Chambers Counties in the Galveston Bay, Texas.

Total consideration payable by Tekoil will exceed $50 million and may be as much as $80 million under the terms of the agreement. Closing of the transaction is subject to a number of conditions, including completion of due diligence and arrangement of the balance of the necessary financing, which Tekoil is pursuing. The agreement provides for the closing to occur in December, 2006.

Houston-based Tekoil & Gas Corporation focuses on the development, acquisition, stimulation, rehabilitation and asset improvement of small- to medium-sized oil and gas fields.