Mission Oil & Gas Announces $30.25 Million Equity Financing and Expansion of 2006 Capital Budget

Release Date: June 16, 2006

CALGARY, ALBERTA–(CCNMatthews – June 16, 2006) –

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Mission Oil & Gas Inc. (“Mission” or “the Company”) (TSX:MSO) is pleased to announce the following financing and expanded capital budget:

$30.25 Million Bought Deal Equity Financing

Mission has entered into an agreement with a syndicate of underwriters led by Orion Securities Inc. and including GMP Securities Ltd., Tristone Capital Inc., FirstEnergy Capital Corp., BMO Nesbitt Burns Inc. and Haywood Securities Inc. (collectively, the “Underwriters), pursuant to which the Underwriters have agreed to purchase on a bought deal basis, for resale to the public, 2,500,000 common shares at a price of $12.10 per share for gross proceeds of $30,250,000. In addition, the Underwriters have been granted an option to purchase up to an additional 375,000 Common Shares at a price of $12.10 per share for additional gross proceeds of $4,537,500, exercisable for a period of 30 days from the date of closing.

The common shares will be offered in certain provinces in Canada by way of short form prospectus. Closing is expected on or about July 10. 2006. The offering is subject to the receipt of all necessary regulatory and stock exchange approvals.

Expansion of 2006 Capital Budget

Proceeds from this offering will be used to expand Mission’s successful development of its Bakken light oil play in SE Saskatchewan. Current operating net-back from the Bakken area is in excess of CDN$57.00/Boe. The Company has more than 900 gross drilling locations on its lands including horizontal Bakken locations based on eight wells per section (200 m inter-well spacing). Accordingly, Mission’s Board of Directors has approved an expanded 2006 capital budget, from $82 million to $127 million.

Mission proposes to drill approximately 26 (15.9 net) additional wells, targeting light sweet crude in the Bakken. The expanded capital budget will also fund land acquisition, tie-in of existing producing wells, implementation of a pilot Bakken waterflood and facility construction/de-bottlenecking. Although these activities comprise a significant portion of the incremental capital, they have no impact to 2006 production volumes but have potential positive impact to reserves (land acquisition and pilot waterflood) and improvement of operating net-back (tie-ins and facility work).

Based on the positive results to-date, the Company plans to fracture stimulate all previously drilled Bakken horizontal wells and the majority of the wells drilled in the second half of 2006. However, a number of Bakken horizontal wells drilled in the last four months of the year are not scheduled to be stimulated prior to the end of 2006, therefore, the incremental production from this activity will not be realized until the first quarter of 2007.

Mission now has four operated drilling rigs working on the Bakken play and has arranged for fracture stimulation services to complete the expanded frac program. The pilot waterflood will determine the feasibility of a field-wide secondary recovery scheme and is based on positive laboratory results. Construction of the Viewfield gas plant continues, with completion and tie-in anticipated in August 2006.

Bakken Land Acquisition

During the second quarter of 2006, Mission has aggressively expanded its undeveloped Bakken land holdings in the greater Viewfield area by adding more than a township of land, or 36.5 (18.9 net) sections. The Company now has more than 209 (143 net) section of land in this core area. Further drilling on these acquired lands has the potential to add significantly to Mission’s drilling inventory.

Increase to 2006 Guidance

With its continued drilling success in the Bakken light oil play and expanded capital budget, Mission has increased the Company’s 2006 average daily production estimate to 4,600 Boepd and its 2006 exit production rate estimate to 5,500 Boepd.

Mission is a Canadian junior oil and gas company engaged in the exploration, development and production of light oil and natural gas reserves in the provinces of British Columbia, Alberta and Saskatchewan.

This news release contains statements concerning the reserves of Mission, planned exploration and development activities, anticipated prospects and financial and operational matters that may constitute forward-looking statements or information under applicable securities legislation.

Such forward-looking statements or information are based on a number of assumptions which may prove to be incorrect. Such assumptions include, among other things, that Mission will be able to successfully execute on its planned capital expenditures, that oil and gas prices remaining relatively consistent with their current prices and that Mission achieves drilling success consistent with its expectations.

Forward-looking statements or information are also subject to a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by Mission and described in the forward-looking statements or information. These risks and uncertainties include, but are not limited to: volatility of oil and gas prices, fluctuations in currency and interest rates, product supply and demand, risks inherent in Mission’s operations, imprecision of resource estimates, Mission’s ability to access external sources of debt and equity capital, Mission’s ability to enter into or renew leases, imprecision in estimating the timing, costs and levels of production and drilling, the results of exploration, development and drilling, imprecision in estimates of future production capacity, Mission’s ability to secure adequate product transportation, uncertainty in the amounts and timing of royalty payments, imprecision in estimates of product sales, changes in environmental and other regulations or the interpretation of such regulations, the ability to obtain necessary regulatory approvals, weather and general economic and business conditions.

Although Mission believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because Mission can give no assurance that such expectations will prove to be correct.

The forward-looking statements or information contained in this news release are made as of the date hereof and Mission undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy the securities in any jurisdiction. The common shares offered have not and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws and may not be offered or sold in the United States except in certain transactions exempt from the registration requirements of the U.S. Securities Act and applicable states securities laws.

FOR FURTHER INFORMATION PLEASE CONTACT:

Mission Oil & Gas Inc.
Trent J. Yanko
President and Chief Executive Officer
(403) 263-9964
(403) 263-9965 (FAX)
www.missionoilgas.com
or
Mission Oil & Gas Inc.
Suite 800, 205 – 5 th Avenue S.W.
Calgary, Alberta T2P 2V7
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