Derek Oil & Gas Corporation (CH) - Derek Oil & Gas Corporation Agr ...

VANCOUVER, BRITISH COLUMBIA -- (MARKET WIRE) -- October 25, 2006 -- Derek Oil & Gas Corporation ("Derek") (TSX VENTURE: DRK) will buy Ivanhoe Energy's ("Ivanhoe") interest in the LAK Ranch oilfield in Weston County, Wyoming subject to the negotiation of definitive documentation and Derek and Ivanhoe board approvals.

 

After a review of the results of the pilot phase of the project it has been determined that the project is not large enough to support a heavy oil upgrading facility using Ivanhoe's HTL upgrading technology. Derek has reached an agreement to purchase all of Ivanhoe's interest in the LAK Ranch Project for US$800,000, comprised of US$600,000 due at closing and US$200,000 to be paid through a 5% gross overriding interest on future production from the LAK Ranch Project. The 5% royalty arrangement will terminate once US$200,000 has been paid. To consummate this agreement Derek and Ivanhoe have entered into a letter of intent reflecting this purchase that mutually benefits both parties.

 

Derek is very pleased with the successful meetings held and with the terms negotiated in the letter of intent. On closing, Derek will have a 95% working interest in LAK Ranch Project and will be the project operator. The LAK Ranch Project fits very well into Derek's corporate focus. Derek and its valued partner, SEC Oil and Gas Partnership, are excited with the project and confident in the ability of Derek's management to drive the project forward.

 

Derek Oil & Gas Corporation is a Canadian based, publicly traded oil exploration, development and production company that utilizes enhanced oil recovery (EOR) techniques to develop new production from reservoirs in North America. Derek's current focus is on the further development and increasing production from their prime property located in NE Wyoming's Powder River Basin.

 

Derek Oil & Gas Corporation is trading in Canada on the TSX Venture Exchange with the symbol DRK.

 

ON BEHALF OF THE BOARD

 

Mr. Barry C.J. Ehrl, President & CEO

 

This document includes forward-looking statements. Forward-looking statements include, but are not limited to, the continued advancement of Derek Oil and Gas's LAK Ranch project. When used in this document, the words "potential", "plan", "could", "estimate", "expect", "intend", "may", "should", and similar expressions are intended to be among the statements that identify forward-looking statements. Although Derek believes that their expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Important factors that could cause actual results to differ from these forward-looking statements include the potential that Derek's LAK Ranch project will experience technological and mechanical problems, geological conditions in the reservoir may not result in commercial levels of oil and gas production, and other risks.

 

The TSX Venture Exchange has neither approved nor disapproved the information contained herein.

 

Contacts:

Derek Oil & Gas Corporation

Corporate Communications Department

1-888-756-0066 or (604) 331-1757

Email: info@derekoilandgas.com / erica@derekoilandgas.com

Website: www.derekoilandgas.com