Derek Oil & Gas Corporation

COMPANY DATA | INTRODUCTION | PROJECT IN HAND | PRODUCTION
TECHNOLOGY APPLIED |  MANAGEMENT | NEWS UPDATE | CHINESE

COMPANY DATA

INTRODUCTION

Derek Oil & Gas Corporation is a junior oil and gas company, engaged in the acquisition, exploration, and development of North American oil and gas properties. The Company and its joint venture partners are particularly interested in leveraging their unique and extensive experience with heavy oil operations. With emerging technologies, properties like the Company's LAK Ranch oil sands project in eastern Wyoming have recently become economic. Derek Oil & Gas is on the forefront of these new technologies, and plans to make LAK Ranch the foundation for a growth in this niche field.

PROJECT IN HAND

LAK Ranch Project, Wyoming, USA

LAK Ranch Project is situated on the eastern border of Wyoming in the northeast corner of the Powder River Basin. First discovered in the 1920's, it was produced periodically by senior oil companies, such as Texaco and Conoco. On 1984, Surtec Inc. estimated the in-situ resource at over 100 million barrels. In 1997, Derek Oil & Gas acquired a 75% interest in the property, later increasing that interest to 100%. In 2003, Derek entered into a joint venture agreement with Ivanhoe Energy, whereby Ivanhoe can earn up to a 60% interest in the property by funding the first US$5 million in capital costs. So far, the partner has met their funding obligations. The property consists of nearly 7,500 acres and is in close proximity to a refinery in the town of Newcastle, WY, four miles away.

The deposit is a so-called 'cold' oil deposit; the oil is locked in hard sand-like material and has, until recently, not been economical. With emerging technology, however, it is estimated that up to 75% of the deposit can now be recovered profitably. It is analogous to oil sand deposits in northern Alberta where new techniques have been the basis for very large multi-billion dollar oil recovery projects. An independent engineering report completed by Petrotech Engineering, of Burnaby, British Columbia in May 2004 has estimated that the oil-in-place at LAK Ranch could be over 190 million barrels. The product would be a high-quality oil - useful for the production of jet fuel. The LAK Ranch project has the potential to produce in excess of 4,500 to 10,000 BOPD; at optimum the project could have in excess of 20 producing wells.

PRODUCTION

In the initial area of focus, a 450 acre section, to a depth of only 2,300 feet (known as the Newcastle Marine Sand), a production plan calls for 22 wells, producing up to an estimated 4,600 bbl/day, for 14 years. However, further resources have been shown to exist below these sands, and could be extracted simultaneously in a successive production phase.

The operating and royalty costs of production have been estimated as low as US$9.50/bbl. The theoretical value of the production, from this small section of the property, according to detailed economic forecast by Petrotech Engineering, will be in excess of US$52 million to Derek's credit, or US$1.80/share.

This is what companies call a 'company-builder' - a solid asset that produces stable and robust cash flow for many years to come. This allows the Company to combine their expertise with this emerging technology and find other similar deposits.

TECHNOLOGY APPLIED

The petroleum industry has had a significant change in the last 10 years. Oil sand projects have become an economic reality. This means that petroleum products can be profitably removed even though they may be encased within hard rock material. One particularly notable example of such a commercial operations is the large-scale Athabasca Oil Sands project in northern Alberta. New processes - the product of decades of research - are showing for the first time that by using heat, oil and other valuable material can be extracted from rock.

The process works by injecting steam into the hard-rock material that contains the petroleum products, and when the material has been suitably liquefied by this steam, it can then be extracted by flowing it through the well as normal. For the LAK Ranch deposit, the process will be used to create SAGD (Steam-Assisted Gravity Drainage), a process whereby steam is injected from below the deposit through one well, and the liquefied material is extracted from above through a parallel well.

MANAGEMENT

The management, partners and consultants of Derek have been assembled with a depth of experience in senior international oil operations. The team will be instrumental in executing the objective of capitalizing on modern technology to exploit previously uneconomic deposits.

Mr. Barry C.J. Ehrl, President, C.E.O. & Director
Mr. Ehrl, the founder of Derek Resources Corporation, is an entrepreneur who has spent many years in corporate business and has held senior management positions in several publicly traded resource companies. Directly responsible for acquisition and sale of assets to a major oil company.

Mr. Alan H. Stevens, Director, VP Operations
Mr. Stevens has 35 years experience in technical and managerial positions involving all phases of hydrocarbon exploration, production, operations, and contract negotiations for both North American and International Provinces. Mr. Stevens is a former President of Southwestern Energy's petroleum division. Senior Vice-President of Worldwide Petroleum Exploration for Occidental Petroleum.

Mr. Edward G. Byrd, C.A., C.F.O. & Director
Mr. Byrd has been a Senior Partner with the accounting firm of PriceWaterhouseCoopers as well as a Director of Atomic Energy of Canada Limited. He has many years of experience working with both public and private sector companies and has served on the Boards of several public resource companies.

Mr. Patrick Boswell, Director
Mr. Boswell has 26 years of experience in the oil & gas industry and currently sits as the President and C.E.O. of Calgary-based International Frontier Resources Corporation. He has served in an executive capacity with several LSE and TSX Venture Exchange-listed companies.

Mr. John Lush, Director
Mr. Lush is a senior international oil industry executive with 35 years of experience in the oil industry. He currently serves as General Manager of Petroval, SA, a Swiss oil company specializing in marketing and sales of crude and refined oil products from Russia, with an annual turnover of US$14 billion.

Mr. Doug Symonds, B.Sc., P.Geo., General Manager
Mr. Symonds is a Professional Geoscientist with a 30 year background in resource exploration. He manages corporate activities at the Company's head office and coordinates with the Derek project management team.

Mr. Brent C. Ehrl, Corporate Secretary
Mr. Ehrl has an extensive background in business and deals with various corporate matters at the Company's head office in Vancouver, British Columbia.

Mr. Greg Amor, C.A., Controller
Mr. Amor is responsible for all regulatory financial statement filings, accounting, budgeting, tax planning and cash management for the Company and its operating subsidiary. Mr. Amor has been a senior executive of junior resource companies since leaving Coopers and Lybrand in 1985.

Ms. Erica Bearss, VP Corporate Communications
Ms. Bearss is responsible for development and implementation of the Company's corporate identity.

Ms. Lissa Siega, Administrative Assistant
Ms. Siega assists with administrative duties at the Company's corporate headquarters.

NEWS UPDATE

On December 02, 2005, Derek Oil & Gas Corporation advised that the second and final tranche of a private placement announced on October 17, 2005 has been closed. A total of 1,000,000 units at a price of $0.50 per unit were placed thorough the second tranche for gross aggregate proceeds of $500,000.00.

On November 28, 2005, Derek Oil & Gas Corporation announced the further results from the detailed 3D seismic survey completed over the northern portion of the LAK Ranch Project earlier this year. The Company's independent technical consultants have carried out further interpretation of 3D seismic data in horizons deeper than the Newcastle Sandstone. This in-depth work has led to the discovery of several new exploration targets in deeper horizons below the Newcastle Sandstone. Derek management is currently considering the numerous options available with respect to the exploration and development of these new targets. Since the commencement of continuous steaming in October of this year, the shallower Newcastle sandstone, which is being developed under an existing agreement, is currently producing increase quantities of oil (from 40 to 60 barrels per day).

On November 18, 2005, Derek Oil & Gas Corporation advised that the first tranche of a private placement announced on October 17, 2005 has been closed. A total of 2,870,000 units at a price of $0.50 per unit were placed for gross aggregate proceeds of $1,435,000.00.

On October 27, 2005, Derek Oil & Gas Corporation and Ivanhoe Energy Inc. announced that they have commenced continuous steaming operations at the enhanced oil recovery pilot program at the LAK Ranch field in Weston County, Wyoming. Oil production from the pilot producing well has increased from 10 barrels per day to 60 barrels per day during the initial six days of continuous operations. The oil is currently being soil for approximately US$57/barrel.

On October 17, 2005, Derek Oil & Gas Corporation announced that it has agreed to a non-brokered private placement of up to 4,000,000 units at a price of $0.50 per unit. Each unit will consist of one common share and one half share purchase warrant, with each full warrant exercisable into a further common share of the Company at a price of $0.70 for two years from closing. The Company will use the proceeds to pay its share of LAK Ranch costs and for general working capital.

On September 14, 2005, Derek Oil & Gas Corporation reported that Form 51-101F1 - Statement of Reserves Data and Other Oil and Gas Information, Form 51-101F3 - Report of Management and Directors on Oil and Gas Disclosure and Form 51-101F2 - Report on Reserves Data by Independent Qualified Reserves Evaluator or Auditor have been filed on SEDAR.

On September 14, 2005, Derek Oil & Gas Corporation reported that the Company has entered into an investor relations agreement with Dr. Michael Berry, of Whippany, New Jersey. Dr. Berry has been a portfolio manager for both Heartland Advisors and Kemper Scudder where he successfully managed small and mid cap value portfolios.

On June 14, 2005, Derek Oil & Gas Corporation and Ivanhoe Energy Inc. have agreed to expand the enhanced oil recovery pilot program at the LAK Ranch field in Weston County, Wyoming. The pilot steam flood in the LAK Ranch field will be expanded with the drilling of three steam injection wells. This expansion follows completion of a 3-D seismic survey of the area and a thorough interpretation of the survey results. The new wells will provide for continuous injection of steam above the existing horizontal wells. The pilot program to date has consisted of three cycles of steam injected into a horizontal producing well. Temperature has been monitored in an adjacent horizontal well, located approximately 25 feet above the injection well. Oil production has increased with each cycle and is currently about 20 barrels per day following the third steam cycle.

On April 04, 2005, Derek Oil & Gas Corporation reported as the price and demand for oil continue to increase, good progress is being made on the LAK Ranch project, located in the heart of the United States.

Operations Progress:
Current:

· Completed 1 million USD 3-D seismic survey data being prepared for initial interpretation & subsequent development of optimal drilling program
· Data from completed geochemical survey conducted by Pacific Geotechnical Associates is being analyzed to determine the applicability of surface geochemical sampling to oil exploration in the area of the LAK Ranch
· Some oil production continues from existing production well
· Recently drilled vertical injector/observation well 12-14 is providing reservoir information for LAK Ranch computer simulation model

Upcoming
· LAK 1-P Acidization Program scheduled for the first week of April
· Initial interpretation of 3D seismic survey expected in April
· Following Acid Program; a third steam cycle is being planned for April
· Subsequently, vertical injector wells to be drilled based on pending interpretation

On October 20, 2004, Derek Oil & Gas Corporation reported that revised Form 51-101F1 - "Statement of Reserves Data and Other Oil and Gas Information", revised Form 51-101F3 - "Report of Management and Directors on Oil and Gas Disclosure" and Form 51-101F2 - "Report on Reserves Data by Independent Qualified Reserves Evaluator or Auditor" has been filed on SEDAR. The report can be accessed at www.sedar.com .

On September 07, 2004, Derek Oil & Gas Corporation announced that Mr. Alan H. Stevens, a former President of Southwestern Energy's petroleum division and a Senior Vice President of Worldwide Exploration for Occidental Petroleum has accepted an invitation to serve as a director and officer of Derek effective September 01. 2004. He has also been appointed Vice-President, Operations for Derek.

On July 12, 2004, Derek Oil & Gas and Ivanhoe Energy reported that the Phase 1 of a short-term cyclic steam injection test has been completed at the LAK Ranch enhanced oil recovery project in Wyoming. Ivanhoe, as operator, reported that 13,000 barrels of steam were injected into the reservoir from late April through the end of May 2004, using the existing horizontal production well, Derek 1-P. Approximately 70% of the steam has been recovered to date and oil cuts are beginning to improve as anticipated. The oil is high-quality 19-degree API gravity, and contains high levels of naphtha. Plans are underway to commence a second steam cycle in late July 2004, using a larger quantity of steam at a higher pressure to further stimulate oil production. The Wyoming Oil and Gas Conservation Commission has approved the higher surface injection pressure for the second cycle.

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