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Avalon Oil & Gas Reports Production Up 69% in Quarter

Avalon Production Update

Upshur County, Texas

Production levels at the New Diana Field have increased from a consistent 20 BOPD to approximately 35 BOPD over the last several months due to workovers and optimization at the property. Further workovers remain in planning stages, pending resolution of various surface facility constraints. The JB Winn well was recently worked over to address a tubing leak, and added perforations to optimize production levels. The well has been successfully put back online.

Miller County, Arkansas

The results of the completed workovers on two of the three wellbores in the Kiblah field were successful, and have both re-established production following minor mechanical problems, and enhanced production efficiency. Two wells in the field, the Deltic Farms #1 and the Gunn #1, have responded positively to the installation of enhanced pumping unit timing and pump-off controllers. One of the wells has been converted to an electric motor for enhanced control. This well, which used to produce only weekly, now operates on a daily basis due to production optimization. Overall, both KROG and Avalon are pleased with the Arkansas operations, and have continued to optimize production levels since the acquisition of these wells. Production has been increasing and is currently averaging 10 BOPD.

Camp County, Texas

Production volumes at this property have improved 25% over previous levels, and associated water production has decreased. The combination of increased production and active property management has enabled this property to return almost 100% of Avalon’s investment in less than two years. This property produces a very reliable volume of approximately 5 BOPD.

Grant Parish, Louisiana

The operator of this property, DRG Energy of Norman, Oklahoma, has recently completed workover operations on four of the five wells on this property. The Doris Hall #1 well was cleaned up, fishing out a polish rod downhole. This well currently produces about 1 BOPD. All of the well tubing was tested on the Doris Hall #3, resulting in four joints being replaced and a new pump installed. This well has improved production of approximately 5 BOPD. The motor on the Doris Hall #6 was repaired to improve performance, with production volumes from this well continuing to increase. The Walter Fletcher #1 well had repairs to a hole in the casing. This well is currently producing both gas (non-commercial) and oil from the Wilcox sand. The Grant Parish property has continued to be a great acquisition for Avalon. At the time Avalon acquired its 25% working interest, there was no production on the property. Currently the wells are producing about 20 BOPD. At these levels, Avalon anticipates having all of its investment capital returned through oil revenues by next year.

Noble County, Oklahoma

The Hughes #1 was successfully reworked this quarter. The tubing was sanded in at 4,694 feet in the Bartlesville Zone. The rods and downhole pump were pulled, circulating the sand up the casing, and a Xylean chemical treatment was administered to remove any paraffin emulsion in the perforations. The well’s production has been steadily increasing, most recently producing both oil and gas at a rate of 5 BOPD and 20 Mcf per day. Expectations are that production should continue to increase over the next month. The Hughes #1 represents a significant revenue opportunity for Avalon. It was tested at 4MMcf per day when it was drilled and completed in 1988. With substantial potential for proven reserves of oil and gas, the well had flush production of 200 BOPD. Avalon and its partners are evaluating other opportunities in the area around this property in Central Oklahoma.

Nowata County, Oklahoma

This property was recently acquired by Avalon, purchasing a 10% working interest. The lease covers over 320 acres, with 20 previously shut-in wellbores and a salt water disposal well. Plans to bring the wells back into production are progressing ahead of expectations and under budget. Six wells have been brought back into production over the past 45 days. The operator anticipates bringing 5 more wells online before the end of the year, and an additional 5 or more in early 2008. Production is currently at 7 BOPD and expected to increase as more wells are brought back online.

Lake Washington Field, Louisiana

This Plaquemines Parish property is comprised of three producing units, currently making over 1000 barrels of oil daily. Lake Washington was discovered in the 1930’s and is located around a shallow piercement salt feature. Since discovery almost 80 years ago, the field has produced approximately 350 million barrels of oil, putting it among the largest oil and gas fields in the United States. Avalon acquired a 0.7% non-operating working interest in this property effective October 1, 2007. Swift Energy Company (NYSE:SFY) is the operator of the field. Avalon will be evaluating possible new drilling opportunities in the field next year.

Wood County, Texas

Avalon and its partner are considering workover options to re-establish production from the Paluxy interval. The well is currently shut-in pending a decision to commence operations. Avalon has also received interest from a third party to acquire the property.

Karnes County, Texas

Avalon owns a 15% working interest in the Janssen #1A well. The well is operated by Tradestar Resources (TSRR.PK) Hot Springs, Arkansas. The well was perforated at approximately the 10,300 foot interval in the Roeder Sand (Wilcox Sand Series). The well has been flowing at an average rate of 250 MCF per day, along with 10 barrels of high grade condensate. The Janssen # 1A has a gas sales contract that fluctuates monthly with the Houston Ship Channel price index. The liquid condensate is sold at the monthly spot price for product in the regional Texas area. Total reserves are estimated to be 75,000 to 100,000 barrels of condensate and 3 to 4 BCF of gas (billion cubic feet of gas). The well is located in an area that is very active in gas and oil production. There are several nearby wells that produce natural gas in excess of over 1 million cubic feet per day. This well should produce revenues for many years to come.

Executive is Upbeat

Kent Rodriguez, Avalon’s CEO summarized “Avalon’s portfolio now includes production assets of 44 producing oil and gas wells in 5 states. By optimizing production and increasing operational efficiency, we continue to generate a consistent rate of return for our shareholders” said Rodriguez. He continued, “We expect to continue this trend by keeping overhead low and expanding our capital deployment over more well interests.”

About Avalon Oil & Gas, Inc.

Avalon Oil & Gas, Inc. is a conservative oil and gas company engaged in the acquisition of proven oil and gas producing properties. The company continues to deploy strategic financial resources for interests in existing production and participation in developmental and rework opportunities. In addition, Avalon's technology group acquires and develops oil production enhancing technologies. Avalon is building an asset portfolio of innovative technologies in the oil and gas industry to maximize enhancement opportunities through Oiltek, Inc., Avalon’s majority-owned subsidiary.

Forward-Looking Statements

This press release contains statements, which may constitute "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. Those statements include statements regarding the intent, belief or current expectations of Avalon Oil & Gas, Inc., and members of its management as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. The Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results.

FOR FURTHER INFORMATION, please visit the company’s website at www.avalonoil.com.

Avalon Oil & Gas, Inc., Minneapolis
Kent Rodriguez, CEO, 952-746-9655
Fax: 952-746-5216
www.avalonoil.com