Sky Petroleum Announces Closing $11.0 Million Financing

9/22/2005, 10:00 AM (Source: GlobeNewswire)
Prior $8.4 Million Private Placement Closed; All Outstanding Debt Fully Paid

AUSTIN, TX -- (MARKET WIRE) -- 09/22/2005 -- Sky Petroleum, Inc. (OTC
BB: SKPI), an oil and gas exploration company, announced today it
completed a placement of 3,055,556 shares of Series A Preferred Stock
(the "Preferred Stock") at a price of $3.60 per share for aggregate
gross proceeds of approximately $11,000,000. Each share of Preferred
Stock is initially convertible at the Conversion Ratio into four
shares of the common stock of the company at the option of the
holder. At any time, if the closing bid price for the company's
common stock exceeds $3.00 during any five consecutive trading days,
Sky Petroleum may, at its sole option, convert the Preferred Stock to
common stock at the Conversion Ratio. The holders of the Preferred
Stock are entitled to elect one director to Sky Petroleum's board of
directors and shall vote on all other matters on an "as-converted"
into common stock basis.

The company previously announced on Sep. 2, 2005, a private placement
of 10,557,865 shares of common stock at $0.80 per share for gross
proceeds of $8.4 million.

"We are very pleased that we have successfully closed this preferred
stock offering as well as the oversubscribed private placement
financing as we believe it demonstrates the strength and potential of
this venture," said Don Cameron, chief executive officer at Sky
Petroleum, Inc. "To date we have raised approximately $22 million and
we are currently exploring financing opportunities to raise
additional capital to complete our funding for the Mubarek project."

The company earlier announced it had received bridge loans totaling
$4.15 million, evidenced by demand notes, to fund a portion of the
financial commitments of Sky Petroleum's wholly owned subsidiary,
Sastaro Limited ("Sastaro"), pursuant to the Participation Agreement,
dated May 18, 2005, between Sastaro and Buttes Gas and Oil Co.
International Inc. ("BGOI"), a wholly owned subsidiary of Crescent
Petroleum Company International Limited ("Crescent"), through which
Sastaro will participate in an off-shore oil and gas project in the
United Arab Emirates. Holders of $2.95 million of the demand notes
converted the principal and interest on the notes into common stock
and the remaining notes were fully paid from the proceeds of the
common stock private placement. As a result of these transactions the
company has no outstanding demand notes.

The alliance with BGOI and Crescent unites Sky Petroleum with one of
the United Arab Emirates' most established and successful, integrated
low-cost operators with over 30 years of extensive experience in the
region. As established operators in the Mubarek oil and gas field for
over three decades, BGOI and Crescent bring extensive knowledge of
the geological formations and reservoir potential of the Mubarek
Field.

Mubarek Development Project

The first commercial oil was produced in the mid 1970s in the Mubarek
Field, marking the beginning of over three decades of continuous
production. The total estimated cumulative recovery to date exceeds
100 million barrels of oil. Sky Petroleum believes that this
represents approximately 30% of the estimated original oil in place
(STOIIP) of 275 million barrels and that there are significant
additional reserves that may be produced by the new infill well
program. The Mubarek Field production facilities have the capacity to
process 60,000 barrels of oil per day. The company expects the first
phase of a proposed two phase infill drilling program into the
Ilam/Mishrif reservoir situated within the Mubarek Field to commence
in early 2006.

About Sky Petroleum

Sky Petroleum (OTC BB: SKPI) is an oil and gas exploration and
development company. Sky Petroleum's primary focus is to seek
opportunities where discoveries can be appraised rapidly, and
developments can be advanced either by accessing existing
infrastructure, or by applying the extensive experience of
established joint-venture partners. In addition, the company also
plans some higher risk, higher reward exploration prospects. For
additional information please visit www.skypetroleum.com

Safe Harbor

The securities offered by the company have not been registered under
the Securities Act of 1933 and may not be offered or sold in the
United States absent registration or an applicable exemption from the
registration requirements of the Securities Act of 1933.

Except for historical information, the matters set forth herein,
which are forward-looking statements, involve certain risks and
uncertainties that could cause actual results to differ. Potential
risks and uncertainties include, but are not limited to, Sky
Petroleum's ability to raise additional capital to fund its
commitments under the Participation Agreement, the success of the
proposed infill drilling programs, Sky Petroleum's ability to access
opportunities, the contemplated continued production at the Mubarek
Field, the competitive environment within the oil and gas industry,
the extent and cost effectiveness with which Sky Petroleum is able to
implement exploration and development programs in the oil and gas
industry, obtaining drilling equipment on a timely fashion, commodity
price risk, and the market acceptance and successful technical and
economic implementation of Sky Petroleum's intended plan.
Contact:
Don Cameron
403-265-3500
dcameron@skypete.com
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