Cork Exploration Inc. (the "Corporation" or "Cork") (TSX: CRK) today provided an update of its operations at Pembina, Brazeau, Carrot Creek and Cochrane to October 12, 2006 and announced Board of Director approval of an increase in the 2006 capital budget from $66.0 million to $86.3 million.

The increased capital budget reflects the Cork's initiatives to acquire more land through a higher number of 100% farm-in commitment wells and the commencement of development drilling in the fourth quarter of 2006 at the Corporation's Carrot Creek project. Cork expects that any incremental production generated by the additional drilling undertaken as a result of the increased capital budget in 2006 will be on-line in the first half of 2007. Independent of any incremental production from this capital budget increase, the Corporation expects to meet its December 31, 2006 exit production target of 2,600 boe/d. The increased capital budget will be funded by operational cashflow and drawings on the Corporation's credit facility, which was expanded to $22 million from $13 million on October 12, 2006. Cork currently targets a 2007 debt to operational cashflow ratio of approximately 0.5:1.

Shunda New Pool Discovery Well on Production

On September 25, 2006, Cork's Pembina Shunda new pool discovery well commenced gross production at an average choked rate of approximately 4,300 mcf/d (2,580 mcf/d net) of sales gas and an estimated 27 bbl/mmcf of natural gas liquids. The Corporation acquired its 60% working interest in this Shunda prospect through a farm-in agreement and deepened a well to 2,265 metres in the Mississippian formation. This new pool discovery was made in April, 2006. Tie-in of this well was postponed until September, 2006 due to uncontrollable government and third party infrastructure delays. Cork is currently drilling and evaluating 2 gross (1.3 net) offsetting wells to this discovery.

Horizontal Development Stage Commences in the September 2006

During the third quarter of 2006, Cork spud its first gross (0.4 net) horizontal well targeting the Rock Creek formation in its Brazeau project and successfully completed the well in October, 2006. It is expected that this well will be on production in the fourth quarter of 2006. On October 4, 2006, Cork spud its first gross (1.0 net) horizontal well for the Carrot Creek project targeting the Rock Creek formation and drilling is currently underway. Cork is also evaluating the use of horizontal drilling applications in its Pembina and West Pembina projects.

Cork Hits Cardium Discovery at Cochrane

Cork drilled 2 gross (1.2 net) wells in its Cochrane project in the third quarter, bringing the total drilled to 3 gross (1.8 net) wells. The Corporation has successfully completed 2 gross (1.2 net) wells in the Cardium formation as at October 12, 2006 with the completion of the remaining well currently in process. It is expected that these wells will be on production towards the end of the fourth quarter of 2006. Initial flow tests and pressures confirm the prospect as a new field discovery and firmly establish Cochrane as a core area for Cork with more than 6 resulting development wells and step-out locations identified. The Corporation is also evaluating the shallow gas potential of the area and expects to drill its first shallow gas well in 2007.

Successful Drilling Activity Results in Higher Production

Drilling activity of the Corporation increased significantly in the third quarter of 2006, with 16 gross (9.5 net) wells drilled in the quarter. From January 1, 2006 to October 16, 2006, Cork has drilled or is in the process of drilling 35 gross (20.2 net) wells, including 2 re-entries. Of these wells, 74% were promoted wells to earn land under farm-in agreements. As at October 12, 2006, Cork's production was approximately 1,500 boe/d with 20 gross (11.5 net) wells on production and 16 gross (8.6 net) wells awaiting completion and tie in. The Corporation expects 10 gross (6.1 net) of these wells awaiting completion and tie-in to be on production in the fourth quarter of 2006 with the remaining wells on production in the first quarter of 2007.

Cork Increases Capital Budget

As a result of Cork's initiatives to acquire additional land through a higher number of 100% farm-in commitment wells and the commencement of development drilling in the fourth quarter of 2006, Cork has increased its 2006 capital budget from $66.0 million to $86.3 million.

Under the increased capital budget, Cork expects to drill approximately 42 gross (25.0 net) wells in 2006 compared to 45 gross (23.8 net) wells anticipated in the original $66 million capital budget. The percentage of promoted wells has increased to 74% of total gross wells budgeted to be drilled in 2006 from the 58% contemplated in the original $66 million capital budget. Under the terms of the related farm-in agreements, Cork is required to pay 100% of the capital cost to drill the well to earn approximately, on average, a 61% working interest on the related lands. Cork currently controls over 148 gross sections of developed, undeveloped and undeveloped right-to-earn lands with an average working interest of 58%. Cork's net undeveloped land position is currently approximately 41,074 net acres, including right to earn lands. Cork anticipates that it will have completed its drilling commitments to earn land under all of its existing farm-in agreements in the first quarter of 2007. Excluding any new farm-in agreements, the majority of the Corporation's 2007 drilling program will be dedicated to straight-up development and exploratory wells on earned lands.

"We are pleased with our progress to date and are excited about the potential implications of our horizontal well program, the significant discoveries at Carrot Creek and Pembina and our Cochrane exploration success," stated Philip E. Collins, President and Chief Executive Officer. "Our increased capital budget will allow Cork to earn additional lands, accelerate our development program and continue this momentum through the fourth quarter of 2006 and into 2007. The commencement of horizontal development drilling at Brazeau and Carrot Creek in the fourth quarter of 2006 sets the stage for expected significant horizontal development drilling by Cork in 2007 in these and other core areas. The Corporation has the financial resources to execute on the increased capital budget and is focused on maintaining a fiscally prudent balance sheet."

Cork Exploration Inc. is a Canadian junior oil and gas company engaged in the exploration, development and production of natural gas in the Western Canadian Sedimentary Basin. The Corporation currently has 43,740,678 shares common shares outstanding and 9,549,323 stock options and performance warrants outstanding.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Certain statements in this news release may constitute "forward-looking information" or "forward-looking statements" which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Corporation, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information. When used in this news release, such information uses such words as "estimates", "expects", "anticipates" and other similar terminology. This information reflects the Corporation's current expectations regarding future events and operating performance and speaks only as of the date of this news release. Forward-looking information involves significant risks and uncertainties, should not be read as a guarantee of future performance or results, and will not necessarily be an accurate indication of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking information, including, but not limited to, the factors discussed below. Although the forward-looking information contained in this news release is based upon what management of the Corporation believes are reasonable assumptions, the Corporation cannot assure investors that actual results will be consistent with this forward-looking information. This forward-looking information is provided as of the date of this news release, and, subject to applicable securities laws, the Corporation assumes no obligation to update or revise such information to reflect new events or circumstances.

In particular, this news release contains forward-looking information pertaining to the following: third quarter operational update, increased 2006 capital budget and drilling program, financing of the 2006 capital budget, and the 2007 drilling program.

The Corporation's actual results could differ materially from those anticipated in the forward- looking information as a result of several factors, including the following: general economic conditions in Canada and internationally; volatility in market prices for oil and natural gas; competition; liabilities and risks, including environmental liabilities and risks, inherent in oil and natural gas operations; sourcing, pricing and availability of materials, equipment, suppliers, drilling services, facilities, and skilled management, technical and field personnel; ability to integrate technological advances and match advances of competition; availability of capital; uncertainties in weather and temperature affecting the duration of the oil and gas operations, drilling and the activities that can be completed; changes in legislation and the regulatory environment, including uncertainties with respect to implementing the Kyoto Protocol; and the other factors considered under "Risk Factors" in the Corporation's final long form prospectus dated June 21, 2006.

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For further information: Cork Exploration Inc., 380, 435 - 4th Avenue S.W., Calgary, Alberta, T2P 3A8., Philip E. Collins, President and CEO; Or Geoffrey D. Krause, Vice-President Finance and CFO, Telephone: (403) 531-1695, Fax: (403) 531-1696, Website: www.corkexploration.com

Source: newswire