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PRESS RELEASE Deer Lake Oil & Gas Inc announces that it has entered into an option agreement with B.G. Oil & Gas Ltd , a private St. John’s company, with respect to Exploration Licence EL1102. EL1102 covers Block 1 as awarded by the Canada Newfoundland and Labrador Offshore Petroleum Board (CNLOPB) in its November 15, 2006 Land Sale. EL1102 covers 124,320 hectares (307,201 Acres) in the southeast part of Bay St. George offshore Western Newfoundland. Reservoir targets include Carboniferous aged sandstones and reefal buildups. Prominent in the Carboniferous section on EL1102 are large elongated salt related anticlinal features. These features are oriented in a NNE – SSW direction and some exhibit four way closure on open file seismic. These excellent targets overlie an equally exciting play in the erosional remnants of the same Cambro-Ordovician aged carbonate platform that hosts the significant Gudrid and Hopedale gas condensate discoveries off Labrador as well as the onshore Hunt Port au Port #1 oil discovery 25 km (15 miles) to the north. These Ordovician strata are also the equivalent of the Ellenberger Formation rocks that have provided many oil and gas discoveries in West Texas. Water depths on EL1102 range from 70 m to 190 m (with most areas less than 100m). Operating conditions are significantly less severe than in the Grand Banks/Hibernia area and no icebergs traverse the area. Under the agreement, Deer Lake Oil & Gas Inc. has the option, until July 16, 2007, to acquire a 25% undivided working interest in all of EL1102 by paying $41,000.00. As part of the transaction, Deer Lake Oil & Gas Ltd. will issue to B.G. Oil & Gas Ltd. or its nominee, 200,000 warrants to purchase Class A Common Shares in Deer Lake Oil & Gas Inc. at $0.40 for a period of 5 years. In the northern part of Bay St. George, the Company did not exercise its right to extend the term of offshore Exploration License EL1072 which was located immediately north of EL1102. Deer Lake President, Cabot Martin, stated that:
He noted that the presence of live oil had been proven in the Carboniferous rocks in the onshore area immediately adjacent to EL1102’s eastern boundary and is the subject of ongoing exploration activity. Deer Lake oil & Gas Inc. is an independent oil & gas explorer based in St. John’s, Newfoundland with exploration properties in western Newfoundland and strong focus on the onshore Deer Lake Basin where it holds 90,239 contiguous hectares (222,890 acres). Cabot Martin, President For further information please visit the company’s website www.deerlakeoilandgas.com or email cabot@deerlakeoilandgas.com Phone 709-579-5050 Fax 709-726-0584
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