Sun Cal Energy Acquires Texas Drilling Prospect

Sun Cal Energy Inc. announced the acquisition of a minority joint venture interest in a three well, multi-pay prospect in the West Gomez Field within Pecos County, Texas.

Having produced in excess of 5 TCF of natural gas, the West Gomez Field is one of the most prolific gas plays in the United States. The prospect, "83/84", consists of two re-entry wells, the Gulf-Baker 83 #1 (originally owned by Gulf and operated by Getty Oil Co.) and the Sibley 84 #1, as well as a new well, the Sibley 84 #2, on a 1280 acre lease in Pecos County, Texas. Based on published production data and geological and engineering calculations, recoverable reserves are estimated to be more than 27 billion cubic feet of gas and 50,000 barrels of oil. Sun Cal's interest will be 2% while any cost over-runs will be assumed by the operator.

The 83/84 Project is adjacent to proven production properties operated by the world's leading oil and gas producers including Exxon Mobil Corp., Conoco Phillips Co., Chevron USA Inc., Hunt Oil Co., Chesapeake Operating Inc., Cimarex Energy Co. and Texaco Inc. Supported by a data review of the Composite Borehole Compensated Sonic Log from Schlumberger, Gamma Ray & Sidewall Neutron Porosity Logs, drilling and completion reports, and the production history in the area overall, the 83/84 Project could produce upwards of 6,500 MCFGPD and 80 BOPD.

The target spud date is expected within weeks. Based on extensive reservoir analysis, and recent field data, the Gulf-Baker 83 #1 and Sibley 84 #1 will be re-worked and completed to the total depth of 22,820 feet while the Sibley 84 #2 will be drilled to a total depth of 4,000 feet. The main objectives will be the Fusselman, Devonian, Lower Wolfcamp, Upper Wolfcamp, Atoka and Yates/ 7 River sands. The majority of wells in this field have produced or booked remarkable reserves out of these horizon intervals.

Lewis Dillman, CEO of Sun Cal Energy, Inc., states: "We are excited with our acquisition of the 83/84 Project in the West Gomez Field, and to build on the successful results of similar prospects, particularly the Hobart Prospect in Oklahoma and the Centurion Property. This acquisition is a part of a series of transactions within North America that will provide cash flow and enable the Company to continue to transition from exploratory activities to production. This acquisition follows our continued, disciplined strategy to target low risk, high impact properties in North America while also allowing the Company to continue its development activities in the prolific Jonah Field in Wyoming, the Breton Sound in Louisiana, and Lokern in California."

The operator, Stratco Operating Company and Lakehills Production, have recently completed successful re-entry programs in the nearby West Gomez Gas Unit and the Spears Gas Unit. The principal, Tom Stratton, has operated over 800 wells, and during 1974-1977, worked on the development of the West Gomez field for Texaco. The Geologist on the project, Mark Holtz, is one of the foremost authorities on this region and has authored many books and articles for the Bureau of Economic Geology of the University of Texas on the characteristics, structures, and production prevalent in the West Gomez Field.

"We will continue to consider acquisitions that allow the Company to grow at a sustainable pace," stated Lewis Dillman. "While adding to our portfolio of assets, we are also keenly pursuing the recommendations of the Schlumberger report regarding the Jonah Prospect in Wyoming and thus providing our shareholders greater exposure to one of North America's fastest growing natural gas fields."