Sky Petroleum Agrees on Second Mubarek Well Location

7/26/2006, 10:00 AM (Source: GlobeNewswire)



Work Continues on H2 Well to Enhance Production

AUSTIN, TX -- (MARKET WIRE) -- July 26, 2006 -- Sky Petroleum, Inc.
(OTCBB: SKPI), an oil and gas company with a development project in
the United Arab Emirates, is pleased to provide an update on the
Mubarek Field Project.

Sky Petroleum and Crescent Petroleum Company International Limited
("Crescent"), the operator of the Mubarek Field, have agreed on a
second well location to be drilled to the Ilam/Mishrif reservoir. The
data from the first well, H2, allowed an up-to-date assessment of the
factors affecting reservoir performance in this mature field which
indicated that the proposed J3 location should be reconsidered. The
second well will now be drilled on the northwest of the field
proximal to the K1 location. Mubarek K1 was drilled as Thamama
producer (a deeper gas condensate reservoir underlying the
Ilam/Mishrif) and electric log readings over the Ilam/Mishrif section
indicate good oil saturated reservoir. Sky Petroleum expects the
drilling of the second well, for which funding has been paid, to
commence during September 2006. Timing will be conditional on when
the rig, which has been contracted, is released from its current
drilling obligation.

Crescent has also continued evaluating the H2 well over the past
month. The well has stabilized and an MPLT production log will be run
again to provide further data on productivity from individual zones
in the well. Based on the results of this logging run an assessment
will be made on the merits of increasing choke size, changing the gas
lift parameters and re-stimulating the well. In the interim, the well
is continuing to produce just over 200 barrels of oil per day, with
high water cut.

We are currently generating revenues of approximately $200,000 per
month and believe we will see improved income from the Mubarek Field
when both wells come fully on line later this year," said Brent
Kinney, chief executive officer of Sky Petroleum, Inc. "We are also
continuing to look at other oil and gas opportunities that will add
shareholder value."

Mubarek Field Program

The Participation Agreement with Crescent gives Sky Petroleum the
right to participate in a share of the future production revenue by
contributing up to $25 million in drilling and completion costs
related to two obligation wells in the Mubarek Field, offshore United
Arab Emirates. The $25 million commitment for both wells was fully
paid by the end of the first quarter of 2006. It is anticipated the
second obligation well will spud in the third quarter of 2006 and be
completed within 90 days. On completion of the two obligation wells a
further well development program will be evaluated. Sky Petroleum
believes that there is potential for 4 additional wells to be drilled
and anticipates production from these wells to commence in late 2007
or 2008 subject to a positive evaluation and rig availability.

About Sky Petroleum

Sky Petroleum (OTCBB: SKPI) is an oil and gas exploration 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

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, the ability
to stabilize the surging of the well, the ability to shut off zones
which are producing water, the ability to carry out additional
stimulation of the zones producing oil, the accuracy of estimated
production rates and the price of crude oil, the accuracy of
operating costs and monthly revenue forecasts, the timing and success
of other proposed infill drilling programs, the contemplated
continued production at the Mubarek Field, if any, 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.

Investor Contact:
Michael Noonan
512-687-3427
mnoonan@skypete.com

Media Contact:
Clint Woods
713-627-2223
cwoods@piercom.com


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