Q Investments Ltd. Exercises Conversion Right

VANCOUVER, BC, Sept. 2 /CNW Telbec/ - Exxel Energy Corp. ("Exxel")   
(TSX-V: EXX) announces that Q Investments Ltd. ("Q") has exercised its right
to convert the US$5,000,000 outstanding principal amount of its previously
announced loan to Exxel. The conversion right entitled Q to convert the
principal amount of the loan into common shares of Exxel at the rate of
US$5.00 per share. Accordingly, Exxel will issue 1,000,000 common shares to Q.
The shares are subject to a hold period under applicable securities laws, and
imposed by the TSX Venture Exchange, expiring December 9, 2005.

The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this release.