AXP Energy Limited confirmws that its newly formed drilling division staffed by existing Company employees will now commence an 8-well back-to-back drill program across 4 leases in the Illinois Basin. AXP has a team of 35 people in its Kentucky operations with geological, drilling and operations capabilities that can operate a fully integrated, internally funded drilling function with only cementing and logging services to be outsourced. AXP has a major cost advantage by tapping its existing resources which will operate a leased drilling rig. Permits are pending on the first wells and drilling will commence in the coming weeks. Permitting is straightforward in the Illinois Basin. AXP has formed this division as a platform to substantially increase current oil production and to add to the gains being realised from ongoing workover programs which will continue uninterrupted. It is anticipated that drilling new vertical wells will increase production much more rapidly as opposed to undertaking workovers alone. The Company is planning an initial 4 + 4 well drilling program, the first phase of which is likely to run for around 3 months and then will model a more extensive drilling development program based on results of the initial wells. All targets are infill drilling locations and offset wells to existing producing wells which means AXP is drilling on proven oil-producing leases. The locations have been identified and chosen after many months of assessment by the Company's head geologist. AXP's focus is to drill low-cost, high impact vertical wells. If the target warrants it, advanced stimulation will be undertaken (capped at approximately $75k per well). This technique has not been deployed on any wells in the area and could yield improved flow rates.