Deer Lake Oil & Gas Inc is pleased to announce that discussions are currently underway with a major US based industry partner with respect to the exploration of its properties in the Deer Lake Basin, onshore western Newfoundland.

The parties have signed a letter of intent and are working on a definitive agreement with respect to the Company’s three Deer Lake Basin permits.

Deer Lake Oil & Gas acquires 25% working interest in offshore block

Deer Lake Oil & Gas Inc is also pleased to announce that it has exercised its option to acquire a 25% working interest in Exploration Licence EL1102 from B.G. Oil & Gas Ltd , a private company based in St. John’s, Newfoundland.

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 very large elongated salt movement related anticlinal features.

These salt related features are part of a 400 km (240 mile) long "salt target" fairway that stretches SW all the way to Prince Edward Island (PEI) and Nova Scotia and includes the billion barrel plus Old Harry target which sits astride the Quebec/Newfoundland offshore boundary some 50 miles SW of EL1102.

Variation in source rock character along the length of this fairway supports a gas play in the SW near PEI and Nova Scotia and an oil play in the NE near Newfoundland (such as at Old Harry and on EL1102).

And in the NE part of the fairway near Newfoundland, these excellent targets overlie an equally exciting play in Cambro-Ordovician aged carbonate platform that hosts the onshore Hunt Port au Port #1 oil discovery 25 km (15 miles) to the north of EL1102.

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.

Deer Lake Oil & Gas Inc Chairman, Dr. James M. Edwards, stated that:

"These are two major opportunities for the Company.
In the Deer Lake Basin, the prospective US based partner would bring their innovative exploration expertise and a proven track record to bear on the Company’s highly prospective core area.
With respect to our Bay St. George play, this is a potentially high reward play and calls for a major frontier 3D seismic survey and offshore drilling program.
Our strategy will be to seek a major industry partner to move the Bay St. George project forward. We are encouraged by the positive industry reaction we received when we presented this opportunity to the APPEX 2008 AAPG International Prospect & Property Expo in London earlier this month."

He noted that both the Deer Lake Basin and EL1102 plays are the sort of large scale opportunities that an increasing number of well funded new players are looking for in today’s expanding exploration environment.

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 (225,000 acres).

For further information email cabot@deerlakeoilandgas.com ; Phone 709-579-5050 Fax 709-726-0584