Cavell Commences 35 Well Drilling Program in Alberta

Cavell Energy has acquired 8,320 gross acres (3,264 net acres) of land in the Mitsue area of Alberta. Representing Cavell's re-entry into Alberta, the acquisition included three oil wells producing 50 boed (net) from the Gilwood formation, including some solution gas and liquids. Cavell has doubled production to 100 net boed since assuming operatorship of the property and is focusing on generating new gas production.

"The Mitsue property fit our business plan and met our threshold criteria," said Murray D. McCartney, President and CEO. "While Cavell's focus and commitment to its Saskatchewan based growth strategy remains intact, we elected to expand into Mitsue because it was a compact targeted acquisition with upside for natural gas growth as well as minor gains in oil production. Since completing the acquisition, Cavell has double the oil production to 100 boed and is starting to develop the natural gas upside."

Cavell's capital budget of $33.0 to $35.0 million is currently divided 49 percent to Western Saskatchewan, 22 percent to South East Saskatchewan and 11 percent to Mitsue. With the expanded budget, the Company plans to drill up to 66 net wells, with 61 wells targeting natural gas and five light oil horizontal wells.

The protracted wet spring postponed Cavell's summer drilling program until late June. For the balance of the second quarter and the third quarter of 2003, the Company plans to drill 10 net wells in West Central Saskatchewan, 20 net wells in South West Saskatchewan, four horizontal wells in South East Saskatchewan and one well in Mitsue. Cavell has reserved drilling rigs for its second and third quarter drilling program with drilling re-commencing this week at Shackleton in South West Saskatchewan.

Cavell plans to increase processing capacity in both areas in the third quarter to allow for anticipated additional production volumes. While production in April and May averaged approximately 3,300 boed, gains from the summer drilling program are expected to be realized in the third quarter in all areas of operation. At the recent June Saskatchewan Crown land sale, Cavell acquired an additional 11,400 net acres of Crown petroleum and natural gas rights in its West Central Saskatchewan natural gas areas. This increases the Company's total undeveloped land position to 220,000 net acres (including 55,000 acres of farm-in lands), providing Cavell ample opportunity for its future growth strategy. Since the beginning of the year Cavell has increased it undeveloped land holding in Western Saskatchewan from 105,000 acres to 165,000 net acres (net of farm-in acres).

"Cavell's strong land position will play a key role in the execution of our western Saskatchewan natural gas strategy," said Mr. McCartney. "It provides the Company with sufficient resources to focus on activities that prove the best return. While still focused primarily in Saskatchewan, all areas provide the flexibility and opportunity that will allow us to reach our two year production goal of 5,000 boed. We've had solid exploration results to date, and anticipate continuing to meet our targets and maximize return for our shareholders."