Oilexco Pleased with Shelley Test Results

Oilexco Incorporated has completed initial appraisal drilling on its 100% owned Shelley oil accumulation located in Block 22/2b in the UK Central North Sea. This phase of appraisal drilling, which commenced in mid October, consisted of 8 well penetrations from a single sub-sea well bore. The last well bore, an extended reach bore hole approximately 13,850 feet in length was drill stem tested.

Oilexco's initial well cluster at Shelley 22/2b-13 was designed to appraise a 1984 Paleocene Forties sand oil discovery by the well 22/2-2, which drill stem tested 31º API oil at rate of 2,416 Bbl/day. The Company's 22/2b-13 well cluster was successful in defining a broad low relief oil-bearing structure. The structure as currently defined by the 22/2b-13 well cluster is approximately 7 square kilometers in size. Two additional appraisal wells are planned to be drilled in the 2nd quarter to evaluate apparent north and south extensions of the structure. These areas could not be practically reached from the 22/2b-13 wells' surface location.

The last well bore of the cluster 22/2b-13t, an extended reach well drilled near the margin of the structure, was tested through 42 feet of perforations representing 18 true vertical feet of perforated reservoir from the top of 34 vertical feet of oil pay. Oil flow during the test was recorded at a maximum rate of 3,082 barrels per day, through a 36/64" choke, at 282 psi flowing pressure. The quality of the oil was 31º API, which is consistent with the test from the 22/2-2 well. No water or sand was produced throughout the test.

"The results of this well exceeded our expectations" said Arthur Millholland President and CEO. "Our plan for Shelley is to file a field development plan in the first quarter, and to complete additional appraisal drilling in the second quarter utilizing one of our two long term contracted semi-submersibles" added Mr. Millholland. "We preordered sub-sea equipment in 2006 to allow us to complete two sub-sea developments this year. First oil from Shelley is currently targeted for the 4th quarter if we can fully execute our plan."

The semi-submersible Transocean Sedco 712, which is under long term contract to the Company, will move to the Kildare prospect located on Block 15/26b to begin appraisal drilling early next week. The Company has a 50% ownership interest in the Block, which was awarded to Oilexco and an industry partner in 2005's 23rd UK Offshore Licensing Round. Oilexco's appraisal effort will consist of a single well bore targeting oil in thick Middle Jurassic Ettrick and Tweedsmuir sands located south of the 1988 well 15/26b-5, which flowed 35º API oil at rate of 2,675 bbl/day from thin faulted Ettrick sands at the north fault bounded margin of the Kildare fault block.

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