Oilexco Extends Ocean Guardian Contract

Oilexco has exercised its one year option for the semisub Ocean Guardian. Oilexco contracted the Ocean Guardian in December of last year for a one year period commencing in April 2007, with an option to extend the contract for an additional year ending in April 2009. The contracted rig rate for the additional one year period is US $350,000 per day. Total value of the contract extension is US $127.75 million.

The Ocean Guardian is scheduled to commence appraisal drilling at the Ptarmigan oil accumulation in mid to late April. At Ptarmigan the Company is paying 100% of the cost of a three leg well to appraise a 1994 oil discovery which flowed on drill test 1,889 barrels of 43 degrees API oil per day and 1.4MM cubic feet per day of gas through a 28/64' choke, at 1112 psi flowing pressure, from 20 feet of perforations, in a 54 foot thick oil bearing Paleocene Forties sand at a depth of 7100 feet. Upon completion of the appraisal well, Oilexco will earn 60% interest in the Ptarmigan oil accumulation.

At the Company's Brenda/Nicol development the remaining work scope is limited to the laying and connecting of the Umbilical between the Brenda manifold and the Balmoral facility. This operation has been delayed due to ongoing bouts of severe weather, and vessel availability during weather windows in March. The Company's sub sea contractor has indicated a sub sea installation vessel and dive support vessel are now available to lay and connect the Umbilical. This operation is scheduled to commence at the end of next week. Weather permitting; this operation should take three to four days to complete. Commissioning and final inspections of the facilities will then begin allowing oil production from the Brenda and Nicol developments to commence by the third week in April, weather permitting.

'First oil from Brenda and Nicol appears to be within our grasp' said Arthur Millholland, President and CEO of Oilexco. 'With this milestone past we can then fully concentrate on our 2007 development at Ptarmigan and our 2007 to mid 2008 development project at Shelley. The long term drilling contract for the Ocean Guardian is a key piece in our strategy as it and our other long term contracted rig the Sedco 712 will allow the Company to continue its aggressive program of exploration, appraisal and development drilling in the UK North Sea well into the future' added Mr. Millholland. 'Having these two rigs will allow Oilexco to continue to create significant shareholder value'.

For More Information on the Offshore Rig Fleet:
RigLogix can provide the information that you need about the offshore rig fleet, whether you need utilization and industry trends or detailed reports on future rig contracts. Subscribing to RigLogix will allow you to access dozens of prebuilt reports and build your own custom reports using hundreds of available data columns. For more information about a RigLogix subscription, visit www.riglogix.com.