PRESS RELEASE 

DECEMBER 27, 2002

Deer Lake Oil & Gas Inc. is pleased to announce that its bids on  Parcel 7 & Parcel 9 (Deer Lake Basin onshore western Newfoundland) in the Province’s December 13, 2002 Land sale have been accepted by the Minister of Mines & Energy subject to the filing of the appropriate work commitment bonds.

When issued, the respective Exploration Permits will give the Company a 100% working interest in an additional 61,039 hectares (150,927 acres) of very promising exploration lands adjacent to its EP 93-103 Exploration Permit.

This brings Deer Lake Oil & Gas Inc.’s total holdings in the Deer Lake Basin  to 90,239 hectares ( 222,981 acres).

Deer Lake Oil & Gas is also pleased to announce that its bid as part of a new Consortium on Parcel 4 ( Parsons Pond area) covering 14,180 hectares ( 35,063 acres) has been accepted by the Minister subject to the filing of the appropriate work commitment bond.

The Parcel 4 Consortium consists of East Resources Inc. (a well-established, private oil & gas explorer from Pennsylvania –– 72.470%); Deer Lake Oil & Gas Inc.(17.390 %); Ammonite Resources Inc. (a private Connecticut company –– 5.070 %) and 554568 Alberta Ltd. (a private Calgary explorer –– 5.070 %).

Deer Lake Oil & Gas Inc. is also pleased to announce the results of its 2002 drilling activities at its Western Adventure #2 location on Exploration Permit 93-103 (Deer Lake Basin). This well is presently suspended at 1325m and it would be the Company’s  intention to re-enter and deepen this well.

Western Adventure #2 encountered gas shows in both porous and fractured zones at several levels and will be logged to ascertain whether or not any of these zones are candidates for a Drill Stem Test (DST).

In a major development, the Western Adventure #2 well encountered the Cambro-Ordovician aged Carbonate Platform at 761.5m.

The Cambro-Ordovician carbonate platform is the target reservoir sequence in such onshore Western Newfoundland areas as Parsons Pond and the Port au Port Peninsula (Hunt Port au Port #1 discovery well).  

The Western Adventure # 2 well marks the first time that this key sequence has been encountered at depth in the Deer Lake Basin and greatly improves the Company’s prospects in the Deer Lake Basin.

Field outcrop and laboratory studies of rock samples from the area west of the Deer Lake Basin (where the Cambro-Ordovician carbonate platform sequence is exposed at surface) demonstrate that excellent porosity and permeability can be developed over thick intervals of this sequence particularly where overthrusting of the sequence occurs.

Overthrusting appears to be present on seismic at the Western Adventure #2 location and it is the Company’s intention to deepen the well to test targets in the footwall carbonate sequence.

In general, it would appear that most future drilling activities on the Company’s lands in the Deer Lake Basin will now involve both Carboniferous aged sandstone targets in the upper zones and Cambro-Ordovician aged carbonate targets in the deeper zones.

The acquisition of Parcels 7 & 9 in the recent Land Sale allows the Company to pursue this new play in a vigorous manner and greatly strengthens the Company’s prospects in the Deer Lake Basin which is the Company’s Core Area.

The Company also holds a strategic land position in four other areas of interest presently under exploration in Western Newfoundland.

In total, Deer Lake Oil & Gas Inc. holds a 100% working interest in 171,489 hectares (423,749 acres) and  a 17.390% working interest in 14,190 hectares (35,063acres).

Deer Lake Oil & Gas Inc. is an independent oil & gas explorer headquartered in St. John’s, Newfoundland.

For further information please visit our website www.deerlakeoilandgas.com or  call Cabot Martin, President & CEO at 709-579-5050 or Fax 709-726-0584 or email cabot@deerlakeoilandgas.com.