Ginger Oil Company has entered into an agreement with Royalty Exploration (REX), a privately held company, regarding exploration in an under explored area of Kansas. Ginger Oil is the operator in the area that consists of 5,683 acres with an option for an additional 9,035 acres.

This development is in line with Ginger Oil’s strategy to diversify its prospect portfolio and act as operator to control the project development. Ginger Oil will have 20% of revenues in the first area and 26% in the option area. An estimate of resource potential for the first two prospects we are drilling is 1,250,000 bbl of oil net to Ginger Oil .The first well of these two is expected to spud in mid December 2007.

REX has developed these prospects through the use of a combination of unique surface methods. The basis for this type of exploration is that all oil and gas fields leak to the surface. Their methods are to measure the types of hydrocarbons and compounds that are found to be present in the soils that would indicate underlying potential oil and gas fields. The samples obtained are then analyzed with gas chromatography and mass spectroscopy, targeting over 250 compounds with very high sensitivity.

In our Stephens area in Arkansas area, two exploration wells have been staked and will commence drilling as soon as drilling rigs can be obtained.

In the Texas Arch prospect, well #1 is being re-drilled as planned and is at 3,340 depth as of November 27, 2007, with TD expected at 9,200’. Production testing is under way for well #2 where gas was encountered in the Ellenburger formation at a depth of 3,900 feet. If the flow is commercial the well will be hooked up to a nearby pipeline.

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