PRESS RELEASE 

December 22, 2003

Deer Lake Oil & Gas Inc is pleased to announce that it has entered into an agreement with Contact Exploration Inc. of Calgary whereby Deer Lake will pay $150,000 towards the cost of Contact’s planned Parsons Pond #1 well to earn a 10% working interest in two Exploration Permits (EP03-101 & EP03-103) currently held by Contact in the Parsons Pond area.

These two Parsons Pond Exploration Permits cover a total of 28,475 hectares and are located adjacent to Exploration Permit 03-102 which covers an additional 14,190 hectares and in which Deer Lake already holds a 17.39% working interest.

Deer Lake’s decision to add an interest in Contact’s Parsons Pond Exploration Permits follows an extensive review of the geological and geophysical data base in the area which showed that some of the same targets present on Deer Lake’s original Exploration Permit 03-102 are also present on Contact’s two Permits.

This acquisition will place Deer Lake in the unique position of being a participant in all Exploration Permits currently issued in the Parsons Pond area.

It is anticipated that drilling operations at the Parsons Pond #1 location will commence early 2004 with Contact Exploration Inc. as operator. The transaction is subject to the drilling of the well being commenced by February 15, 2003.

Parsons Pond #1 will be drilled to 1,200m with a budget of $900,000 and will be the first well ever drilled in the area with the benefit of seismic.

Oil seeps were reported in the Parsons Pond area as early as 1812 and numerous wells were drilled in the area dating back to 1867. Some oil production was achieved and some crude oil was refined at Parsons Pond in the 1920’s. However, none of these old wells were drilled deep enough to penetrate the targets now evident on seismic.

Further information on the oil & gas potential of the Parsons Pond area and an extensive review of the history of exploration in the area can be viewed on the Deer Lake website www.deerlakeoilandgas.com.

Deer Oil & Gas Inc is an independent oil & gas exploration company based in St. John’s, Newfoundland and holds interests in a number of areas in Western Newfoundland with major holdings in the onshore Deer Lake Basin.

For further information please call 709-579-5050 or email cabot@deerlakeoilandgas.com.