Tekoil and Masters Extend Galveston Bay Deal

Tekoil & Gas Corp. announced that it and the Sellers in the previously announced Purchase and Sale Agreement to acquire certain oil and gas properties in Galveston Bay, Texas (the "Masters Acquisition") have agreed to extend the Closing date to on or before March 2, 2007.

Mr. Mark Western, Chairman of the Company, stated: "While we had hoped to complete the Masters Acquisition by now, we have continued to make steady progress, have agreed terms for the Masters extension, and continue to work towards definitive financing arrangements and related due diligence closure. These as well as other conditions under the amended Purchase and Sale Agreement for the Masters Acquisition must be satisfied in order to close."

Mr. Richard Lee, President of Masters Resources, LLC, stated: "This is a complex acquisition that has required enormous commitment on behalf of both companies to bring it to closure. We are busy assisting Tekoil through the final stages of due diligence and look forward to bringing the divestment to a successful conclusion."

Houston-based Tekoil & Gas Corporation is a technology-driven company focused on the development, acquisition, stimulation, rehabilitation and asset improvement of small to medium-sized oil and gas fields.