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Operations Update

14th Jan 2008 07:00

Sefton Resources Inc14 January 2008 Sefton Resources Operations Update Sefton Resources Inc, the AIM listed oil and gas production company with assetsin California and Kansas announces that significant progress was achieved duringthe final quarter of the year despite the fires that caused havoc in California. TEG Oil and Gas USA, Inc. ("TEG USA") Production from Sefton's wholly owned subsidiary TEG USA averaged 193 BOPDduring the month of December, 2007, thus finishing the year with a strongproduction increase at the Tapia Field in California. This increase was due tothe excellent results from the two-well drilling programme completed in lateNovember. The two wells, Hartje#16 and Hartje#17 had combined 30 day averageinitial production rates of 78 BOPD. This increase in oil production, combinedwith record oil prices, has resulted in a significant improvement in cash flow. TEG USA plans to follow up these drillings with a three-to-four well drillingprogramme beginning in February. These planned wells will be similar in scope tothe previous wells. TEG USA entered into a drilling contract with Kenai Drillingon January 8, 2008 to perform this work. As previously announced, TEG USA is moving forward with its steam pilot testingof the Yule #7 and Yule #10 wells, also at the Tapia Field, using propane gas asfuel. The change in source fuel was made after mechanical issues were identifiedin one of TEG USA's gas source wells. Despite having other gas wells availablefor use, TEG USA believes the decision to use propane is sound because it cantest the viability of steam stimulation without excess well repair expendituresand utilize available monies on the drilling of new oil wells; it can alsoexpedite the programme without constructing a gas supply line from theneighbouring lease where other gas wells are located. Constructing gas supply lines and determining what wells will provide gas for asteam programme can be designed once the steam pilot results have beenevaluated. At TEG USA's Eureka Canyon oil field the reconnaissance survey was completed andan infill exploratory geochemical survey is planned during 2008. TEG MidContinent, Inc. ("TEG MidContinent") TEG MidContinent moved cautiously during 2007, responding to the varied resultsachieved by industry operators in the Forest City Basin in Kansas. It hasselectively focused on prime acreage in its lease acquisition programme andundertaken geological and engineering studies. During the year TEG MidContinent acquired an additional 5,000 acres and now itsAnderson and Franklin County project is comprised of approximately 36,000 acres.The additional acreage has close proximity to pipelines and is supported byextensive geology, including detailed coal maps. The acreage is situated suchthat TEG MidContinent has coverage on both conventional oil and gaspossibilities and on the thicker, potentially more productive, Bevier andRiverton coal deposits. In addition TEG MidContinent's acreage position inLeavenworth County is now 7,000 acres, which also provides excellent potentialfor both conventional and unconventional gas plays. TEG MidContinent has contracted for design of a "pilot drilling programme" thatis expected be implemented during 2008. Discussions continue with a number ofpotential joint venture partners which would allow TEG MidContinent to expandthe planned drilling programme Other Matters Sefton also announces that a former director, Karl Arleth, has elected toconvert a loan note of $39,310 into 330,827 shares of the Company at an exerciseprice of £0.06 per share. These shares will be admitted to trading on AIM on 17January, 2008. Chairman, Jeremy Delmar-Morgan, commented:'We finished the year in good form, despite the late arrival of the drill rigand the Californian fires which meant that it was not until December that wecould see the rewards from the start of our drilling programme. The pilotsteaming programme continues with the use of propane gas. We decided to followthis route so that we can quickly attain the data we need to determine the mosteffective way of increasing production from existing and future wells. Inaddition this should improve reserves, as well as cash flow. With the $10m lineof credit available for our development programmes, we start 2008 in anexcellent position to exploit all the ground work that has been put in placeduring the last two years. For further information, contact: Jeremy Delmar-Morgan, Chairman Tel: 077 8900 4874John James (Jim) Ellerton, CEO Tel: 00 1 303 759 2700David Millham, Investor Relations Tel: 020 7796 9999Nicola Marrin, Seymour Pierce Limited Tel: 020 7107 8000 Sefton Resources is an AIM listed oil and gas production company. Its main corearea of activity is in the East Ventura Basin in California, where it owns 100%of two oil fields, Tapia Canyon (heavy gravity oil) and Eureka Canyon (mediumgravity oil), both of which have over twenty years of expected production life.In addition, Sefton has over 40,000 acres in the Forest City Basin of EasternKansas where Coal Bed Methane gas, as well as conventional oil and gas deposits,are targets. This information is provided by RNS The company news service from the London Stock Exchange

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