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To: ms.smartest.person who wrote (1214)	6/28/2006 3:11:03 PM
From: ms.smartest.person	Read Replies (1) \| Respond to of 3198

&#8362 David Pescod's Late Edition June 26, 2006 A BRIEF INTERVIEW WITH ARTHUR MILLHOLLAND OF OILEXCO INC. (From June 23, 2006) Suddenly some good results out of Oilexco that has taken the market by fire here. We are here with Art Millholland, the guru behind this story. *David Pescod:* What kind of dates now do you expect to see production? *Arthur Millholland:* Our production Dave has always been targeted in October and we are right on schedule for that. In fact, we may even be a little ahead of schedule. *D.P.:* Some people are saying 100 days and counting. That wouldn’t be too out of line? *A.M.:* No, that wouldn’t be too out of line. *D.P.:* This production test was coming up with some numbers that were more than pleasantly surprising. *A.M.:* It shouldn’t be. We do not have a lot of associated gas and so our plan has always been for these wells to be gas lifted right from the start, because eventually they’ll start to cut water and that’s normal. We also have a pump on the sea bed so to optimize production. When we did our original drill stem tests, the draw downs on these wells were minimal. So it goes to show what our production potential is at an 8% reservoir draw down, frankly which is considered to be very low if you look at Alberta where reservoir draw downs are quite substantial. This is what these wells will easily produce with gas lift. The difficulties that we probably will have, and we know we’ll have initially is keeping these production rates down to obtain proper reservoir management. Our view has been to have Brenda/Nichol combined peak production of 35,000 barrels a day. That is easily attainable. It’s probably going to be more than that. We look forward to average production in 2007 of around 30,000 barrels per day. *D.P.:* You also have a whole series of more exploration plays over the next while, one of them the Laurel Valley, looks absolutely enormous. If you could give us your thoughts on some of these? *A.M.:* What we have is a portfolio of relatively lower risk opportunities which are more appraisal in nature. That’s what Shelley is. Shelley was drilled in 1984 and tested 2400 barrels a day from 43 feet in oil pay. So we know there is oil there, it’s just how much oil. Same as with Kildare, which we have a 50/50 interest with Nexen where we will operate the drilling. There was a well drilled with BP in 1988 – that was 2700 barrels a day and again, we know there is oil there. We can map the structure to seismic and appraise it for how much. Those things are really the basis of what we grow the company on. We are not a one-asset company and that’s what we show with Disraeli, which we’ve now renamed Sheryl and are targeting to put on production in 2007. We are already starting to put all the ducks in a row to do that. We feel we are still growing as we go down the road, so things like Sheryl, Shelley, Kildare and Black Horse – those are assets which are going to grow the production profile and of course the Brenda/Nicol will decline over time. But we will have effectively increased production of the company in time and not have a drop. Laurel Valley began as the other side of our portfolio which was the higher risk side that could put us into the stratosphere. But again, we don’t know if there is oil there, but certainly we’ve got seismic interpretation that looks quite positive. We have a large technical staff here at Oilexco and we’ve hired a number of people from other companies that have North Sea experience. We have three fellows from Encana here for example that have come on board who have looked at Laurel Valley and spent time working in the basin and know the basin and feel it’s a Buzzard look-a-like. So if it’s there, it puts us in the stratosphere. We’ve got drilling booked into 2008 right now, so we have no shortage of things to drill as the future goes on. We are going to be throwing out cash like you’ve never ever seen in 2007. If we find things, then we will develop it. *D.P.:* On the Laurel, when do you see that being drilled? *A.M.:* Either December or the first quarter of next year. I am pleased with where the stock is. It hasn’t gotten ahead of itself and we’ve managed in a pretty tough market here to hit a new 52 week high today. Not bad. What we were trying to get across in the news release is that we are right on schedule and we are on budget (and maybe a little underbudget). So far, everything is positive. I couldn’t ask for anything more! Disclosure: Oilexco: Canaccord Capital covers this stock and has a Buy rating on it. (Buy: The stock is expected to generate risk-adjusted returns of over 10% during the next 12 months.) Canaccord has recently led a financing for Oilexco Inc.