Derek Oil & Gas Corporation - Projects Overview

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LAK RANCH OIL PROPERTY

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Derek Oil & Gas Corporation's 8000 acre LAK Ranch property is located on the eastern margin of the Powder River Basin, approximately 8 kilometers (5 miles) southeast of Newcastle, northeastern Wyoming.

The LAK crude oil being produced is viscous and on the high end of "heavy oil" (API approx. 20). The oil has negligible paraffin, low sulphur content and requires an enhanced oil recovery method ("EOR") to extract.

The quantity of "oil in place" at LAK Ranch has been calculated by several operators and consultants and in all cases the quantity is significant.

Several unsuccessful attempts were made by previous operators to produce oil from LAK. Derek produced about 5000 barrels from a limited horizontal well program in Apr/01 to Jan/02.

The LAK Property re-commenced operations in Jan/04 using a limited vertical injector/horizontal producer pilot program that employed cyclic and continuous steaming. The process produced over 20,000 barrels of oil from Jun/04 to Nov/06. This pilot program is still in operation.

All of the LAK production to-date has been from the Newcastle Sandstone.

A 4.4 square mile high resolution 3D seismic survey has been carried out over the north portion of the LAK Ranch Property. This survey has been instrumental in defining the extent of the Newcastle Sandstone and also delineating potential prospects in the deeper Fall River and Minnelusa Sandstones. No wells have yet been drilled into prospects contained in these deeper stratigraphic units.

The Oil:

Due to the viscosity of the high quality oil being produced from the Newcastle Formation of the reservoir, Derek requires the use of an enhanced oil recovery ("EOR") technology to extract. The oil being produced is low in sulphur content, has negligible paraffin and sells for West Texas Intermediate ("WTI") less US$14.25 per barrel.

Blue Sky Potential:

A high definition 3D seismic survey was completed on 4.5 square miles of the property. The seismic identified multiple formations with hydrocarbon potential. Current operations have focused on the Newcastle Formation lower alluvial section only and these recent interpretations have provided Derek with increased potential. Please note that an EOR may or may not be required on the deeper formations identified with hydrocarbon potential.

In Summary:

Derek is operator of an 8000 acre property located in NE Wyoming just five miles or 15 minutes from the Newcastle refinery. Derek has a 95% working interest and is in partnership with SEC Oil & Gas who has a 5% working interest. Derek also has a 4.4% Royalty on all oil production to basement within the property. To date, approximately 10 million US dollars has been spent on a first-class Bateman Engineered above ground facility that is now in pilot phase operation and production. In 2006 the LAK Ranch property demonstrated the highest levels of production on the property's history (when conventional means were applied). These observations conclude that the EOR being utilized is proving to be a solid base for a highly successful oil project. Derek management and its board of directors believe that they possess the expertise and resources to drive this project forward. The Derek team is confident that they have acquired the necessary ingredients to develop and implement the most cost effective EOR to maximize production from the LAK Ranch.