Source Drills 36 Feet of Oil Pay in Peace River Arch

Source Petroleum, Inc. said that it has been notified by the operator and joint venture partner, that the first well of a multi-well program at Harmon Valley, in the Peace River Oil Sands district, HZ Peace River 1-29-83-19 W5M, was successfully drilled to appraise the reservoir characteristic and to delineate the reservoir.

The first well of the proposed program, HZ Peace River 1-29-83-19 W5M, targeted the Bluesky - Gething formation. The Core information and a horizontal leg will assist in developing a plan for a possible primary and secondary oil recovery scheme.

The well confirmed and encountered 12 meters/ 36 feet of net pay in the Blue Sky formation.

Lab analysis of further oil samples should be available within the next couple weeks.

The remaining wells of the program are expected to be drilled during 2007 to allow for interpretation of the drilling results from this well. The Bluesky - Gething formation is believed to contain an estimated 9 billion barrels of oil in place in the Peace River Oil Sands District. The well was drilled to a total vertical depth of 680 meters, and a horizontal leg of 745 meters.

Historical wells and well log data show that there could be up to 200 - 250 million barrels of original oil in place (OOIP) at the Harmon Valley asset. Historical wells and well log data have also displayed excellent core porosities and log porosities of 29% and 31%, respectively, with estimated permeability of up to 5,000 milliDarcies.

The Harmon Valley asset is situated 12 KM S.W. from Baytex Energy's heavy oil project, 20 KM S.S.W. of Shell Canada's Cadotte heavy oil project and 25 KM S.W. of Black Rock Ventures' heavy oil Project, which was recently sold to Shell Canada.