Piceance Basin agreements amended

VANCOUVER, B.C., Oct. 6 /CNW Telbec/ - Exxel Energy Corp. (TSXV: EXX)
announces that it has entered into certain agreements to amend its previously
announced contractual arrangements with respect to its ownership and
development of acreage in Colorado's Piceance Basin.
Under its lease acquisition and development agreement with Apollo Energy,
LLC and others ("Apollo"), the area of mutual interest subject to the
agreements has been expanded to include approximately 25,000 additional,
contiguous acres. Within the expanded area, Exxel has purchased from Apollo an
assignment of a 75% undivided interest in an oil and gas lease covering
187 acres (the "Piceance Lease"). A portion of the Piceance Lease is located
within a 320-acre drilling and spacing unit for the production of natural gas
from the Williams Fork Formation in which the RWF 14-13 Well (the "Williams
Well") is located, operated by Williams Production RMT Company. The portion of
the Piceance Lease located within the spacing unit comprises 22% of the
spacing unit acreage. As owner of a 16.5% working interest (13.04% net revenue
interest) in the Williams Well, Exxel will begin to receive its first
production revenues from its Piceance Basin properties.
Exxel has previously announced its participation agreement with Dolphin
Energy Corporation ("Dolphin"), most recently in its announcement of June 9,
2005, which called for contributions by Dolphin of up to US$10,000,000 and by
Exxel of up to US$30,000,000, to acquire acreage in the Piceance Basin. The
participation agreement has now been amended to restate the financial
commitments and related obligations of the parties. As a result of the
amendment, Dolphin's initial contribution is capped at the US$7,000,000
already contributed, and Exxel is committed to an initial contribution
US$21,000,000, in total. Also, funds contributed by the parties can now be
employed for both acreage acquisition and operations. Given the percentage
contributions of the parties, their respective working interests in the
acquired acreage will be fixed as 75% to Exxel and 25% to Dolphin. Exxel has
to date contributed US$7,000,000 to acquire project acreage and US$5,000,000
to the project escrow account, for a total contribution of US$12,000,000, and
is required to contribute the balance of US$9,000,000 as costs are incurred
for additional acreage and acquisitions. To date, Dolphin and Exxel have
acquired their respective working interests in a total of over 5,000 net acres
within the project area.
As part of its commitment, Exxel has agreed to advance US$1,000,000 to
secure a drilling rig and meet other immediate commitments with respect to the
drilling of the first well on the acreage, and a further US$1,000,000 within
30 days thereafter, both payments to be made from the US$5,000,000 already
contributed by Exxel to the project escrow account. Drilling of the first well
is expected to commence by the middle of November 2005. Operatorship has been
revised under the amended agreement, with Exxel being designated operator, and
with Dolphin undertaking actual operations as sub-operator.

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