Oilexco Incorporated

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This Friday, 03rd October, 2008, Oilexco Incorporated provides the following operations update. In addition to evaluating the refinancing option, Oilexco is also reviewing the timing of some of its development programs. The principal cause of the review is not related to financing, but other issues including the installation of the Sevan Voyager FPSO vessel for the Shelley Field and some weather induced delays. The timing for the first well from the Shelley field to begin production has been pushed back to December 2008 as a result of delays to the Sevan Voyager, which is now scheduled to be floated to location in mid-November 2008, depending on weather conditions. As a result, the Company is revising its near-terms production expectations, and expects to reach a level of 35,000 bopd either by the end of 2008 or within Q1 2009.

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On July 4, 2008, the Company announced that it had signed an engagement letter with respect to refinancing Oilexco's current debt obligations and increasing Oilexco's total debt availability from US$700 million to US$1 billion. The credit facility was to be underwritten by a syndicate of key relationship banks, subject to standard internal credit approvals and due diligence. Since the July 4th announcement was made the Company has worked closely with its banks to progress this facility, and has received extremely positive feedback on the Company's financial position and its viability as a credit partner for the potential syndicate. However, due to the unprecedented liquidity and volatility issues facing the credit markets, the process to financial close is taking a little longer than anticipated. Therefore, given that Oilexco is fully funded for the remainder of its 2008 capital programme and has strong cashflow because of its current production base, the Company feels it is prudent to actively monitor, and where necessary, review the refinancing process in conjunction with its banking and other advisors, and evaluate alternative financing options available to it in the current market. A further update will be provided in due course.

Development and Production Guidance

In addition to evaluating the refinancing option, Oilexco is also reviewing the timing of some of its development programs. The principal cause of the review is not related to financing, but other issues including the installation of the Sevan Voyager FPSO vessel for the Shelley Field and some weather induced delays. The timing for the first well from the Shelley field to begin production has been pushed back to December 2008 as a result of delays to the Sevan Voyager, which is now scheduled to be floated to location in mid-November 2008, depending on weather conditions. As a result, the Company is revising its near-terms production expectations, and expects to reach a level of 35,000 bopd either by the end of 2008 or within Q1 2009.

Oilexco continues to make good progress on other key operational activities. The program to drill additional production wells during Q4 2008 and into Q1 2009 at both the Nicol and Caledonia fields has commenced. The first oil tie-ins to these wells are also subject to weather conditions. Oilexco also successfully completed its production optimization work on the Balmoral FPV, and is working through minor technical issues at the Brenda manifold with positive results.

Fourth Quarter Drilling

The Sedco 712 rig is currently conducting development drilling on the Shelley field, after which it will move to the Nicol field to drill a second production well. After Nicol, the Sedco 712 will return to Shelley to conduct final completion activities in preparation for first oil. The Ocean Guardian is conducting appraisal drilling immediately east of the Huntington discovery in Block 22/14a in the Paleocene zone, after which it will then conduct appraisal drilling in the Kildare Block.

About the Company

Oilexco is an oil and gas exploration and production company active in the United Kingdom. Oilexco's producing properties, exploration and development activities are located in the UK Central North Sea, specifically in the Outer Moray Firth and Central Graben areas. Oilexco operates in the United Kingdom through its wholly owned subsidiary, Oilexco North Sea, a company registered under the laws of England and Wales. Oilexco shares are listed for trading on the London Stock Exchange (LSE) and the Toronto Stock Exchange (TSX) under the symbol "OIL".

Forward Looking Statements

This disclosure contains certain forward-looking statements that involve substantial known and unknown risks and uncertainties, certain of which are beyond Oilexco's control, including: the impact of general economic conditions in the areas in which Oilexco operates, civil unrest, industry conditions, changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in commodity prices, foreign exchange or interest rates, stock market volatility and obtaining required approvals of regulatory authorities. In addition there are risks and uncertainties associated with oil and gas operations, therefore Oilexco's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements will transpire or occur, or if any of them do so, what benefits, including the amounts of proceeds, which Oilexco will derive therefrom. All statements included in this press release that address activities, events or developments that Oilexco expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements include future production rates, completion and production timetables and costs to complete wells, and production facilities. These statements are based on assumptions made by Oilexco based on its experience perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances.

SOURCE: OILEXCO INCORPORATED

Oilexco Incorporated
Arthur S. Millholland
President
(403) 262-5441
Oilexco Incorporated
Brian L. Ward
Chief Financial Officer
(403) 262-5441
Oilexco Incorporated
Rob Elgie
Manager Investor Relations
(403) 262-5441
Website: www.oilexco.com
Pelham PR
James Henderson
Managing Director
44 (20) 7743 6673
Pelham PR
Alisdair Haythornthwaite
Director
44 (20) 7743 6676