Lexaria Provides Production and Drilling Update

Lexaria provides the following production update from its interests in Mississippi and Oklahoma.

Only one well from the Phase II program has been connected. Additional wells from both Phase I and Phase II are expected to be connected and producing soon. Our Mississippi Area of Mutual Interest (AMI) has over 7,500 miles of 2D seismic and 250 square miles of 3D seismic already shot which have identified over 100 drill targets. The immediate focus area, Palmetto Point, is a 32,000-acre area within the much larger AMI of over 200,000 acres. We are exploring for and during the last year have encountered both oil and gas bearing zones in this drilling program.

In Oklahoma, the Isbill #2-36 well has been producing oil and gas for several months. Production has stabilized at approximately 40-45 barrels oil per day and 10Mcf/d natural gas. Lexaria has a 7.5% interest in this well and remaining drilling prospects in this Owl Creek property.

In recent drilling operations, the PP F-111, which was spud on August 11th has reached total depth. Sidewall cores indicated a non-commercial natural gas encounter and as a result this well is being plugged and abandoned.

Production of natural gas has generally increased during 2007 as additional wells have been connected and existing wells optimized. Gross production has been as follows:

Phase I Production (20% - 30% WI)
April     16,503 mcf
May       16,360 mcf
June      18,176 mcf
July      23,156 mcf

Phase II Production (45% WI)
April     3,621 mcf
May       3,212 mcf
June      2,920 mcf
July      2,788 mcf

Total Production (20% - 45% WI)
April     20,124 mcf
May       19,572 mcf
June      21,096 mcf
July      25,944 mcf