To Derek Shareholders & Potential Investors:

The Derek management team & its active board of directors are pleased to inform our shareholders and investors that the past few months have been dedicated to developing new corporate strategies to increase the pace of operations on the LAK Ranch.

Quick Overview for new readers:

• Derek owns approximately 8000 acres of prime property located in NE Wyoming's Powder River Basin
• The property is conveniently located five miles from the Newcastle Refinery
• The reservoir contains millions of barrels of high quality oil
• The oil is viscous and requires an enhanced oil recovery method (EOR) to extract
• The infrastructure required to extract the oil has been built by Bateman Engineering Inc.
• The Pilot Plant and above ground facilities have been paid for by Derek and are successfully operating and producing
• We are producing a high quality, low sulphur and low paraffin oil receiving Wyoming Sweet Crude (other) pricing through TEPPCO
• We believe that the Modified SAGD process is applicable & duplicable on the property
• We have identified several hydrocarbon targets in our extensive 3D seismic survey completed in Q4/04 for future drilling
• Derek management and its highly qualified board of directors are focused and determined on making this property a domestic oil supplier to the United States of America

Shares Issued & Outstanding: 39,526,628
Options: 3,005,000
Warrants: 2,705,000
Fully Diluted: 45,891,128

	Share Price TSX Venture Exchange (DRK)	Share Price OTC Bulletin Board (DRKOF)
High	$ 0.55	$ 0.50
Low	$ 0.37	$ 0.32

Recent Operation Observations:

• The operator's focus has been pre-occupied with projects other than the LAK Ranch
• Derek continues to place full attention on the LAK Ranch project
• The "Continuous Steaming Program" that commenced in November 2005 has demonstrated positive reservoir reactions, increasing temperature readings, decreasing viscosity and increased oil production
• Successful results are being observed in the Pilot Program
• Multiple targets for future development identified in the 3D seismic interpretation by Derek's geophysicist and geology consultants
• Project has surpassed the exploration stage
• Successfully tested an economically viable EOR to extract the viscous oil

• The upside hydrocarbon potential identified in the 3D seismic in deeper horizons is still a major part of Derek's future development program. However, Derek management has decided to resume the discussions and exploration strategies for the deeper hydrocarbon potential when the Newcastle Formation is producing levels that are providing cash flow for re-investing into an exploration program
• Exploration for property located in North America with similar opportunities and characteristics to the LAK Ranch is ongoing
• We are still working on obtaining further acreage contiguous to the LAK Ranch

The above observations have provided Derek with the confidence, drive and knowledge to implement the following strategies for LAK Ranch development:

What is on the short term agenda?

• Preparing economic analysis
• Preparing a reserve report
• Designing a potential development program to be implemented on the LAK Ranch
• Implementing an independent drill program

• Commercial Production from the LAK Ranch
• Ensure the best price is being received for oil produced
• Be a significant oil supplier to the USA
• Re-invest cash flow from the Newcastle Formation's produced oil into the exploration potential in deeper horizons or other properties similar to LAK Ranch

Given the upcoming changes and in order to ensure effective time management on the new developments being implemented by Derek, we have decided to combine the monthly progress reports and provide our shareholders and potential investors with a quarterly President's Report. Please note that Ms. Erica Bearss is always available to update our shareholders and potential investors via email: erica@derekoilandgas.com or telephone toll free: 1-888-756-0066.

Management remains focused on developing strong communications by effectively executing its corporate goals:

• Investor Relations program with Stockgroup - ongoing
• Re-building the Derek website to ensure that the most up to date information is being presented effectively
• Derek will be participating in the Money Show in Las Vegas from May 15 to May 18, 2006 in order to introduce Derek's investment opportunity to the investment community

Please click on the following link to find out more information or to register: http://www.lasvegasmoneyshow.com/MS/lasVegas/main.asp

• Investment Strategy Analyst, Dr. Michael Berry will continue his endeavors for further exposure for Derek in the US market
• Our flash presentation & streamlined corporate package or link is always available for mailing or emailing to current & future shareholders
• Please visit www.sedar.com to view all of Derek's publicly-filed documents
• Watch out for upcoming Press Releases on our website and note that our next President's Report will be sent out in August 2006

Barry C.J. Ehrl
President & CEO
Derek Oil & Gas Corporation

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