Oilexco Announces Second Quarter Results

2008-08-14 01:00:00

CALGARY, CANADA–(EMWNews – Aug. 14, 2008) – Oilexco Incorporated (“Oilexco” or the “Company”) (TSX:OIL) (LSE:OIL) is pleased to announce the Company’s results for the three and six months ended 30 June 2008.

Arthur Millholland, President and Chief Executive Officer, commented:

“Oilexco had a very good first half of 2008, achieving record financial results and continuing our strong track record with the drill bit. In particular, the Company had another major exploration success at Moth, our second in a year following the Huntington discovery in 2007. We are set for an active second half, with seven appraisal and production wells due to be drilled and the Shelley development due to come onstream; we will also be progressing activities on our key 2009 development projects.”

SECOND QUARTER / FIRST HALF HIGHLIGHTS

Continued Strong Financial Performance

– Second Quarter revenues of $228.5 million and total First Half revenues of $400.9 million (Q2 2007: $40.7 million; H1 2007: $42.7)

– EBITDA increased to $171.7 million in the Second Quarter and $318.3 million, or $1.44 per share, in the First Half of 2008 (Q2 2007: $26.7 million; H1 2007: $24.3 million)

– The Company made a Net Loss of $27.3 million in the Second Quarter, primarily due to non-cash expenses for unrealized losses recognized on derivative contracts (Q2 2007: $25.7 million)

– Net Profit for the First Half of $22.6 million (H1 2007: $20.5 million)

– After the end of the period, the Company announced it had signed an engagement letter with RBS to increase its total debt capacity to $1 billion

Production

– Sales for oil and gas in Q2 2008 averaged 20,606 Bbl / day, and average daily production was approximately 17,073 Bbl / day, reflecting production overlift

– Received average price of $121.12 per barrel of oil in Q2 2008, with average netbacks of $105.68 per barrel

Operational / Drilling

– Drilling activity higher in the Second Quarter higher than usual due to the addition of a third drilling unit, operating under short term contract until the end of August

– Development drilling commenced on the 100% owned Shelley project

– Fifth well in the Brenda field drilled, completed and tied in, with production commencing at approximately 7,800 Bbls / day

– Appraisal drilling commenced at Caledonia field, following drilling of five well bores to define the limits of the Forties reservoir

– Exploration drilling at Moth resulted in a significant discovery, with calculations suggesting the well could be capable of producing 44 Mmcf / day and 4,400 Bbls / day of condensate

Outlook

– Focus in H2 2008 is on the Company’s development projects, ongoing drilling campaign and on operated facilities

– Shelley development on track to deliver first oil in Q4 2008

– Redevelopment of the Caledonia Field planned to commence in Q4 2008

– Production optimization work in Balmoral core area continues, including drilling of a second production well on Nicol and commissioning of a new gas compressor on the Balmoral FPV

– Appraisal drilling to be conducted at Shelley North, Huntington and Kildare

– Continuing to target year end exit production rate of approximately 45,000 Bbl / day, subject to timing objectives being met on certain key projects

The results and associated Management Discussion and Analysis and Financial Statements are at www.oilexco.com and www.sedar.com.

About the Company

Oilexco is an oil and gas exploration and production company active in the United Kingdom. Oilexco’s producing properties, exploration and development activities are located in the UK Central North Sea, specifically in the Outer Moray Firth and Central Graben areas. Oilexco operates in the United Kingdom through its wholly owned subsidiary, Oilexco North Sea, a company registered under the laws of England and Wales. Oilexco shares are listed for trading on the London Stock Exchange (LSE) and the Toronto Stock Exchange (TSX) under the symbol “OIL”.

Forward Looking Statements

This disclosure contains certain forward-looking statements that involve substantial known and unknown risks and uncertainties, certain of which are beyond Oilexco’s control, including: the impact of general economic conditions in the areas in which Oilexco operates, civil unrest, industry conditions, changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in commodity prices, foreign exchange or interest rates, stock market volatility and obtaining required approvals of regulatory authorities. In addition there are risks and uncertainties associated with oil and gas operations, therefore Oilexco’s actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements will transpire or occur, or if any of them do so, what benefits, including the amounts of proceeds, which Oilexco will derive therefrom. All statements included in this press release that address activities, events or developments that Oilexco expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements include future production rates, completion and production timetables and costs to complete wells, and production facilities. These statements are based on assumptions made by Oilexco based on its experience perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances.

For more information, please contact

Oilexco Incorporated
Arthur S. Millholland
President
(403) 262-5441

or

Oilexco Incorporated
Brian L. Ward
Chief Financial Officer
(403) 262-5441

or

Oilexco Incorporated
Rob Elgie
Manager Investor Relations
(403) 262-5441
Website: www.oilexco.com

or

Pelham PR
James Henderson
Managing Director
44 (20) 7743 6673

or

Pelham PR
Alisdair Haythornthwaite
Director
44 (20) 7743 6676

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