News and Press Releases

Quarterly Update

March 19, 2008

Sefton Resources, Inc., the AIM listed oil and gas production company with assets in California and Kansas, announces that its wholly owned subsidiary TEG Oil and Gas USA, Inc. (“TEG USA”) has completed successful drilling at its eleventh well. TEG USA has now successfully drilled all of the leases, thus extending production in the entire Tapia field. In addition, TEG USA will initiate a pilot steam programme on March 20, 2008 on two wells at its Yule Lease. Recent drilling since November, 2007 has significantly improved cash flow and the four additional wells should add to this improvement.

Q1 Drilling Programme Complete

TEG USA has successfully completed the Q1 2008 four-well drilling programme at its Tapia oil field in California. Each of the four step-out wells encountered greater than 90 feet of oil-saturated Yule sandstone reservoir as follows:

WELL OIL ZONE THICKNESS
Snow #3 142 feet
Snow #4 106 feet
Snow #5 96 feet
Lackie #A-4 92 feet


All four wells had excellent mudlog oil shows while drilling, with oil in the rock cuttings and drilling mud. Wireline logs in all wells displayed resistivity readings indicative of oil productive sands. These appear equal to, or better than, TEG USA’s other development wells drilled in the field over the past two years. These results are particularly exciting since these wells extend TEG USA’s productive area of the Tapia field, both to the west (Snow wells) and to the east (Lackie well). Sefton anticipates that the Snow wells will be placed on production within a week and the Lackie well later, once flow lines and electrical facilities are extended to this lease. Tank facilities for these recent wells have recently been completed.

Snow#3

Gas Zones Verified

Natural gas bearing sandstones were identified in all four wells drilled at a depth of approximately 800 feet. The gas sands encountered were approximately 20 feet in thickness. In the Snow area, these results verify and expand earlier volumetric mapping of the gas sands that had tested at a rate of over 1,200,000 cubic feet of gas per day in the Snow #1 well in December, 2003. It is this gas that Sefton is in the process of piping to the steam generator.

The gas sand identified in the Lackie #A-4 well was previously unknown and may add to the natural gas reserve base. No gas sands had previously been mapped east of the Hartje #2 well, which is located approximately 700 feet west of the recently drilled Lackie #A-4 well.

Additionally, an offset operator’s well, the J.L. Brandon #2 well, encountered gas at a similar depth as indicated on the mudlog when the well was drilled in mid-January, 2008. TEG USA does not have copies of the Brandon well data, but hopes to obtain copies when they are made public in approximately 60 to 90 days. This well is located approximately 800 feet north of the Lackie #A-4 well.

Lackie

Snow#5

Increased Water Handling Ability

TEG USA has completed the realignment of the produced water processing facilities at the Tapia Field. The improvements have effectively doubled the amount of produced water that can be processed at Tapia. Included in the realignment was:

  • Reworking/acidizing the Hartje #8 injection well and returning it to injection for use along with the Hartje #9 injection well.
  • Adding a produced water tank at the Yule Tank facility.
  • Adding a produced water tank at the Hartje tank facility.
  • Installing two new produced water transfer pumps.
  • Increasing the size of the produce water piping at the Yule and Hartje facilities to handle high flow volumes.
  • Relocating the injection pump and installing a backup pump at a more efficient location near the Hartje tank facility.
  • Installing new injection pipelines from the injection pumps to the Hartje #8 and #9 injection wells.
  • Old water tanks for the Tapia field will be removed in the coming weeks.

This improvement should allow TEG USA to seamlessly add new wells to the production stream and allow for increased water production spikes due to cyclic steaming of the wells.

Cyclic Steaming 1

Cyclic Steaming

The 14 million BTU Steam Generator has been surface tested and tuned for the use of propane as a temporary fuel. The testing of the steam generator by venting steam at the surface was very impressive and exciting. The generator was operated at 100% output design capacity during the testing. During the test the nitrous oxide emissions recorded were 10ppm, well under the limits of the air permit. Sefton has received the final permit for the propane tank from the LA Air Quality Management District (AQMD). The steam generator is now capable of running on both propane and natural gas. Sefton is in the process of laying a gas supply from the Snow #1 gas well to the steam generator so both propane and its own leased natural gas can be used at the Company’s option. The Yule #7 well has been prepared for steam injection which will commence on Thursday, March 20, 2008.

Cyclic Steaming 2

Further Development

Now that all leases have been drilled and steam testing will yield results shortly, a comprehensive follow-up drilling and steaming development plan can be formulated for implementation this year through the next several years.

Commenting, Jim Ellerton, CEO, said:

“We are extremely pleased that, with successful drilling results at Tapia and improved cash flow, Sefton and its subsidiaries are now in the position of being able to be flexible in deciding how to:
Complete the full development of Tapia Field Further develop Eureka Canyon Field, and Initiate a pilot drilling programme within its Kansas CBM acreage.”

The Company’s website is being updated with regard to this announcement and will also include items such as photographs, etc., which it is not possible to disseminate via the regulatory information system.

Enquiries:

Jeremy Delmar-Morgan, Chairman, Tel: 077 8900 4874
John James (Jim) Ellerton, CEO, Tel: 00 1 303 759 2700
David Millham, Investor Relations, Tel: 07850 949324
Nicola Marrin, Seymour Pierce Ltd., Tel: 020 7107 8000

Note: The information in this release has been compiled and reviewed by Harry Barnum, a director of Sefton, who is a qualified person for the purposes of the AIM Guidance Note for Mining, Oil and Gas Companies. Mr. Barnum has Bachelors and Masters Degrees in Geology and over 20 years of experience in the oil and gas industry. He is a registered professional geologist in the State of California.
Sefton Resources is an AIM listed oil and gas production company. Its main core area 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 (medium gravity 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 Eastern Kansas where Coal Bed Methane gas, as well as conventional oil and gas deposits, are targets.