Fox Petroleum Inc. declares natural gas production from its Spears Gas Unit 2, Well #1 in the Gomez Field, in Pecos County Texas.

Initial test production is in the region of 2.5 million cubic feet per day, of which Fox Petroleum will take 22.5%, or over half a million cubic feet of gas per day. The revenue stream from the well should generate over $1,000,000 a year for Fox.

The development of this project represents a successful start to a longer term program of drilling and workovers in this region and a realization of Fox Petroleum's ambition to become an Exploration and Production company with a revenue stream in its first year of operation.

Production Results Stratco, the operating company on behalf of the group, were able to perforate a zone between 16,000 to 17,000 feet early this week. After shutting in the well for pressure build overnight, the well came back on at the increased rate of 3,600psi. Production tubing has been run and connected downhole, the kill fluids have been displaced and the well has now been opened up again for production and the commercial sale of natural gas.

Initial test production is in the region of 2.5 million cubic feet per day, of which Fox Petroleum will take 22.5%, or over half a million cubic feet of gas per day. Stratco Supervisor Tom Stratton, is currently testing flows at various choke sizes to optimize the gas flows into the sales pipeline.

"The well did not yield easily and only through the perseverance of the experienced crew under Tom, were we able to overcome the problems presented by removing a very stubborn tubing string left behind by the previous operator. This, plus the high winds and un-seasonal weather in the region, led to some delays but did not deter us from our objective, which has now been achieved. We are delighted at the results of this well and it augurs very well for the program of similar activity we have planned in West Texas for 2008." said Fox CEO Richard Moore.

Aside from the currently producing zone, Fox still has the option to perforate several other prolific zones in the well, including sidetracking further downhole to the exciting Fusselman target.

The project began in November of 2007 and consisted of reworking of a historically producing gas well. The success of the Spears Gas Unit 2 re-entry represents a move to production status for Fox and provides a revenue source which will enhance Fox's ability to participate in additional drilling and projects.

"The revenue stream from the well should generate over $1,000,000 a year for Fox. With this encouragement, we aim to participate in other similar small projects in 2008 with an aim to increase revenues 6 fold by the end of the year. Although the well was somewhat delayed by operational problems involving the extraction of damaged tubing, we still expect to see a five-month payback of our investment. That pleases us greatly." said Vice President, Finance, Alex Craven.

Production Processes Reworking this type of gas well demands a technically detailed and often difficult process. Confirming the existing data by calibrating the coordinates and geographic characteristics of the hole to the initial set of data provided by the previous well owners is the first step in the reworking process; this step is followed by replacing any damaged or deteriorated infrastructure parts.

Once at the bottom of the existing, further drilling is often required in order to reach deposits that may prove more economically feasible than previously determined. Only after all depreciated production equipment downhole and on the surface is replaced and all relevant safety checks are made on the lines, can the well be put into production.

Project Significance The reworking of the Spears Gas Unit 2, Well #1 is the first of a possible 9 Gas Wells that Fox has the opportunity to participate in and provides the prospect of addition low risk production possibilities in the short term future.

"This project is a perfect example of the fundamentals that Fox Petroleum encompasses in every aspect of its operations, with low risk and solid income opportunities this development is a very significant step forward in the company's pursuit of large scale production and revenue generation. We're grateful for the patience and trust our investors and shareholders have shown." states Alex Craven, Vice President of Finance about the developments.

"I am delighted that we have commenced commercial production from the Spears Gas Unit 2, Well #1. This has been a great effort by all parties concerned. I would like to thank our highly professional engineering and project team as well as our contractors and of course Trius Energy and Stratco for their involvement. This first step has allowed Fox to come of age as a gas producer, and we look forward to a further expansion of gas production from this well and the future development of the Gomez Field, in Pecos County Texas."

"Production from a first project is monumental for a junior exploration company, and this venture allows us to demonstrate to the market and the industry that we intend to maintain an aggressive drilling program to establish Fox as a key player in the industry. Nothing else shows that we mean business more then production results" explains Fox CEO Richard Moore.

About the Spears Gas 2 Unit The Spears Gas Unit 2, Well #1 has produced over 23BCF of natural gas, which equates to $149,500,000 at current market prices. The Unit is currently estimated to contain reserves of natural gas in excess of 16.7 Billion Cubic Feet, worth roughly $108 million. According to evaluation by Trius Energy LLC, in association with Stratco Operating Co. MC, the Spears Gas Unit 2, Well #1 could potentially produce up to 3,000 MCFGPD or greater, which is supported by a data review of the Composite Borehole Compensated Sonic Log, Gamma Ray & Sidewall Neutron Porosity Log, extensive reservoir analysis and recent field data. The Spears Gas Unit neighbors a number of leading world producers of Oil and Gas including Chesapeake Energy, Chevron, and Cimarex Energy.

Numerous wells in the immediate area have been recently re-completed with great success. Most of these wells that permeated the Fusselman & Devonian zones have had initial production of 2,500 to 3,000 MCFG per day. The most significant Fusselman Well is the Cimarex Dewitt Parke #2 Well which is approximately 3 miles NW of the Spears Gas Unit, and has a cumulative production of 7.5BCF and is currently producing 700 MCFGPD. The most significant Devonian Well is the Chesapeake Gomez South Unit which is approximately 2 miles west of the Spears Gas Unit, with a cumulative production of 22 BCF, currently producing 1,040 MCFGPD.

Tags: Fox Petroleum Inc.