Attachment 1 to Deer Lake Oil & Gas Inc Press Release dated January 02, 2009 Edited Version of remarks by Dr. James M. Edwards, Chairman of the Board to the AGM of Deer Lake Oil & Gas Inc., St. John’s, Newfoundland and Labrador Since our last AGM, the worldwide oil and gas exploration sector has been subjected to the same economic turmoil as the rest of the world, and this is clearly reflected in the price collapse of hydrocarbons over the last six months. This price collapse has had an immediate impact on projects whose business plans were based on the concept of early access to flowing wells and cash flow to sustain their economics. But even today, exploration projects where the projected first and subsequent production will take place in the medium and long term are seen in a different light by well financed groups. Given worldwide demographics and inevitable supply shortfalls if current prices are sustained for any length of time, a reasonably risked assessment would suggest that crude prices will rise again in the near term. We should commend the continuous industry commitment of the Hebron Group to proceed as scheduled with that particular project. Of relevance to our Deer Lake Basin properties, I can also point to a re-trenched but still very healthy long term industry interest in a variety of shale gas plays, particularly in the United States but increasingly in Canada and indeed worldwide. The challenge for Deer Lake Oil & Gas Inc in 2009 is to ensure that we present our projects in sufficient fashion to meet newly focused decision criteria used by an increasingly smaller group of potential joint venture partners. Fortunately, Deer Lake has two major exploration opportunities that meet those criteria and give us solid expectations of moving forward in 2009. Review of the Company’s two main Plays Our two main plays consist of our 100% owned combined shale gas/ conventional shallow oil targets in the Deer Lake Basin and our 25% interest in the conventional oil and gas targets on the 307,000 acre EL1102 in Bay St. George. The development of these two plays has occupied much of our time over the past eighteen months. In both cases, an increasingly encouraging database and suite of play concepts has been coupled with the development of contacts with a number of potential joint venture partners capable of funding the required exploration programs. Shale Gas Potential of the Deer Lake Basin There is no doubt that the last number of years has seen a spectacular rise in industry investment in shale gas plays and that, from a worldwide perspective, the US industry is significantly more dominant in the shale gas industry than any other area of the world. Based on the apparent shale gas potential of the Deer Lake Basin, going back to February 2006, Deer Lake has aggressively been building relationships with key participants in this exciting new sector. I hasten to say that this additional “shale gas” emphasis is truly “additional” and “complementary” to the very significant conventional oil and gas potential of our Deer Lake Basin lands and of that Basin generally. In many cases, wells drilled to help determine an area’s shale gas potential will be designed at the same time to test a large scale either shallow conventional oil or deeper conventional gas target. This combination of targets should prove a key attraction to exploration oriented companies. Virtually all of the US shale gas plays are taking place in areas which have long been explored for conventional oil and gas. Examples include, the Barnett shale play near Fort Worth, Texas and Pennsylvania’s Marcellus shale play in the birthplace of the U.S oil industry. The basic requirement of any shale gas play is a sequence of organically rich shales that have been either “cooked” to the right degree (thermogenic type) or have been, at lower temperatures, subject to the impact of certain microbial bacteria capable of producing pipeline grade methane. Needless to say a broad range of other geological conditions must also be satisfied to provide the proper hydrocarbon system. But where they are, and where modern horizontal drilling and hydraulics are applied, good flow rates and returns can be achieved when a favorable natural gas market is present. In the case of the Deer Lake Basin, the existence of a well developed electrical transmission grid and the present reliance on imported, and less desirable, heavy fuel oil to generate a significant proportion of the Province’s electrical supply ensures just such a market using more environmentally acceptable natural gas. Near to home, Pennsylvania’s Marcellus shale gas play is enjoying significant investment and still nearer we see significant interest in New Brunswick in the shale gas potential of Carboniferous rocks of similar age and type as present in one of a number of prospective suites of rocks in the Deer Lake Basin. The character of the various shale sequences of the Deer Lake Basin justifies a strong thermogenic shale gas exploration effort. At the same time, we are also investigating the potential of the Deer Lake Basin for the “biogenic” type of shale gas potential. This sort of play is best represented by Michigan’s Antrim biogenic shale gas play where favorable conditions have led to the production of over 2 tcf of gas from less that 2000 feet over an area approximating the size of the Deer Lake Basin. Analytical work continues on these opportunities using leading laboratories and technical assistance. While we may be able to quantify the technical side of this effort, the other half of the equation is the raising of capital sufficient to fund a comprehensive shale gas inventorying process which will require properly fraced and flow tested wells. To this end, Deer Lake has utilized a number of key industry forums, such as the now biannual North America Prospect Exposition (NAPE) in Houston and the AAPG’s APPEX forum in London. This marketing initiative will continue in concert with our expanding shale gas data base. We are confident that the present indications of an exploitable shale gas resource will, in 2009, attract the investment needed to make significant steps towards the exploitation of those resources. The Oil & Gas Potential of EL1102 (offshore Western Newfoundland in Bay St. George) EL1102 is a very large block (307,000 acres) in relatively shallow water (~300 feet) with some of the most favorable operating conditions offshore Newfoundland (eg. no icebergs). The geology of Bay St George is also unique from a Newfoundland perspective with the Carboniferous aged units of the Maritimes Basin resting, unconformably, on the Ordovician aged carbonate platform of the Anticosti. Much has properly been made of the oil and gas potential of Western Newfoundland’s Ordovician aged carbonate platform. This same carbonate platform hosts many significant oil and gas finds in related basins stretching all the way SW to West Texas. I and fellow Director Bill Dixon are very familiar with many of these plays, having had direct and continuing efforts with numerous explorers. We are also familiar with many of the Basins lying to the interior of the Appalachian front where Carboniferous aged sandstone targets overly deeper Ordovician carbonate targets in a “ stacked” fashion. Such stacked targets have proven lucrative in parts of the Arkoma Basin (eg Kansas sector) for both oil and gas. But the central part of Bay St. George (eg EL1102) is characterized by three additional features that may have played a key role in creating truly large exploration targets. Firstly, EL1102 overlies, or at least is immediately adjacent to, a significant oil prone lacustrine source rock that has been in the oil and /or gas window (Snakes Bight Formation ) which is equivalent to the very prospective Fredricks Brook Formation in the McCully area of New Brunswick. Secondly, porous and permeable Mississippian-aged reefal buildups occur at the Ordovician/Carboniferous unconformity. Examples of these reefal buildups are located on the coast immediately adjacent to EL1102. These reefal buildups present attractive exploration targets. And thirdly, and most importantly, EL1102 hosts major salt related targets. Mississippian aged salt and salt movement is ubiquitous throughout EL1102 and seems to have formed major anticlinal, stratigraphic and fault related traps. Some of these salt related traps are analogous to the infamous multi – billion barrel potential of the Old Harry structure that lies on the Quebec/Newfoundland offshore boundary less than 50 miles to the SW. The significant missed opportunity represented by Old Harry stands as a mute testament to an unfortunate political impasse between Ottawa and Quebec City. This impasse, in my view, has had the effect of dampening industry’s interest, not only in the significant resource opportunity that Old Harry represents, but understandably also in the whole of the Anticosti Basin which covers, and is prospective over, the whole northern part of the Gulf of St. Lawrence. The fact is that the greater part of the promising Anticosti Basin lies in waters claimed by Quebec. And while one can argue, with good geological foundation, that the Newfoundland portion of the Anticosti Basin (onshore and offshore) is the more prospective part as compared with the larger part within Quebec’s area of claim, as long as the greater part of the Anticosti Basin is in a jurisdictional and exploration rights no man’s land, then all parts of the Basin are negatively affected. Consequently, in 2009, Deer Lake intends to give whatever support is appropriate to the efforts of Corridor Resources of Halifax (who hold certain rights to Old Harry) in their ongoing attempts to have this key outstanding jurisdictional issue resolved. Simply put Western Newfoundland, Eastern Canada and indeed eastern North America needs to see this issue resolved, and soon. So the Year 2009 is significant to me because the economic turmoil and financial stress brought on in 2008 will reduce the number of viable partners for exploration ventures. But with good projects, well defined by technical information, a company will survive this difficult time. Deer Lake has excellent acreage and a good exploration plan. I am happy to be a part of this program. While challenging, it should not be beyond us to think big and to think differently. Dr. James M. Edwards
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