Recompletion of the Federal S No. 7 Well

Doral Energy has undertaken operations on its Federal S No. 7 well (formerly known as the Mustang 28 Federal No. 1 drilled by Anadarko Petroleum in 2001) to recomplete it as a Grayburg/San Andres oil producer. Doral Energy has lease rights to a depth of 4,000' on the 240-acre Federal S Lease located approximately 0.5 mile south of Loco Hills, NM. An offset well on the lease, the Federal S No. 6, (located 2,800' south of the Federal S No. 7) has produced over 143 MBO (thousand barrels of oil) from the Grayburg Formation. If successful, Doral Energy expects the Federal S No. 7 well to produce in the range of 35-50 BOPD (barrels oil per day) and 25-35 MCFD (thousand cubic feet of gas per day), increasing Doral Energy's total daily oil production from its Hanson Energy properties by approximately 30%.

To date, the Company has successfully re-entered the well and set two (2) cast iron bridge plugs to abandon the Paddock completion tested by the previous operator. Doral has also run casing inspection and cement bond logs to confirm the operational integrity of the wellbore for recompletion and production. A set of modern cased-hole logs has also been run over the interval from 1,500'-4,000', and the Company's engineers and geologists are evaluating these logs to select perforation intervals for testing and completion in the Grayburg/San Andres formations. Doral plans to perforate and test the well next week, properly stimulate the well as required, and begin production.

When asked to comment on the work to-date, Patrick Seale, Doral Energy's President and Chief Operating Officer, stated, "We have been very encouraged by what we have seen so far in these recompletion operations. We have experienced some delays due to scheduling and bringing in equipment, but we have taken the steps necessary to properly evaluate the well and ensure that the formation intervals selected will be the best for optimizing oil and gas production rates from the Grayburg/San Andres formations. We will keep our shareholders informed when more information is available."

West Artesia Grayburg Unit

The West Artesia Grayburg Unit ("WAGU") is a 640-acre waterflood unit in Eddy County, NM, owned and operated by Doral Energy, which currently has 16 producing wells and 7 water injection wells. The WAGU is surrounded by 5 adjacent Doral Energy leases containing 240 acres and 9 producing wells, bringing the WAGU area totals to 880 acres containing 25 producing wells and 7 water injection wells.