Mr. Richard Adrey reports

AUSTEX CONTINUES ACTIVE WELL DEVELOPMENT AND EXPLORATION PROGRAM IN OKLAHOMA AND KANSAS

Austex Oil Ltd. is updating shareholders on its vertical well development program at the 100-per-cent-owned Snake River project and the company's exploration activities in Kansas.

Oklahoma

Snake River project, northern Oklahoma: ATO 100-per-cent working interest and operator

In recent weeks, the company has drilled two new vertical wells at Snake River with both reaching total depth and multiple hydrocarbon zone recorded. A third well will be spudded in the coming days, continuing Austex's stated goal of drilling two new vertical wells each month at the project.

Roger No. 20-6 vertical well -- successfully reaches total depth

The No. 20-6 development well reached a total depth of 4,700 feet last week and intersected approximately 460 feet of the target Mississippian formation. Logs and samples indicated hydrocarbons in multiple formations, and the well has been cased. Production testing of the Mississippian will commence once the well has been perforated and fracced.

Fath No. 28-1 vertical well -- successfully reached total depth

Drilling of the No. 28-1 development well reached TD of 4,689 feet earlier this week. Logs and samples indicate commercial hydrocarbons in multiple intervals including the Mississippian, Woodford shale, and in other shallower, stacked Pennsylvanian-aged formations.

The well intersected approximately 360 feet of gross Mississippian between 4,234 feet and 4,601 feet, demonstrating the contiguous nature of the formation in this project. In addition to 25 feet of highly porous chat at the top of the Mississippian logs, indicated multiple porosity breaks through the interval. Logs also recorded approximately 40 feet of the Woodford shale below the Mississippian.

The well has been cased and will be completed for production testing in the Mississippian. As this is a vertical well, future production potential is held behind pipe in additional formations that have indicated the potential for commercial hydrocarbons.

Theda No. 25-1 well to spud

Austex continues to drill two development wells per month at the Snake River project, and the Theda No. 25-1 is expected to spud within seven days. Storms and tornadoes recorded in Oklahoma in the last two weeks have not affected operations at the Snake River project.

Kansas

Colby project, northwest Kansas: ATO 70-per-cent WI, non-operator

Steele No. 1 well -- successfully reaches TD

Castle Resources Inc., as operator, reports that drilling of the Steele No. 1 well successfully reached TD at 4,710 feet. The well intersected the Lansing Kansas City, Cherokee and Mississippian intervals. Logs and samples indicated the hydrocarbons present were non-commercial. The well has been plugged and abandoned, and Austex's total investment was $186,000 (U.S.).

Data from the two wells drilled this quarter will be used to reassess 3-D seismic mapping. The company has every confidence in its Kansas assets, and Austex is currently reviewing its exploration methods before further expenditure is undertaken.

Austex's executive chairman Richard Adrey commented: "In Oklahoma, our active vertical well development program is well on track. We now have 16 wells producing, eight in the preproduction phase and one well to drill this week. This pipeline of nine preproduction wells will help to drive increased production growth. Snake River continues to live up to its status as a Mississippi Lime sweet spot, and its exploitation remains our primary focus.

"The results from the latest vertical wells drilled at Snake River endorse our vertical well development strategy. In addition to the Mississippian, the long-term potential of additional multiple stacked pay zones makes this strategy highly economical. This area of Oklahoma still has significant untapped potential, and we are still in the early stages of realizing Snake River's value.

"Our total exploration investment in Kansas is less than $400,000 this year. While we were hoping for better results from the first two wells, our objective at this time is to preserve capital until we assess the geological data and our operational processes. Austex has a large land position in Kansas totalling about 30,300 gross (18,600 net) acres, and there is a lot of scope for future development."