XCL Ltd. Announces Production Plans in China and Successful Completion of C-4-2 Appraisal Well.

LAFAYETTE, La.--(BUSINESS WIRE)--Nov. 4, 1998--XCL Ltd. (AMEX:XCL) today announces that, following successful completion of the C-4-2 appraisal well on the Zhao Dong Block, production will begin in China early next year on both its Zhang Dong Block, on which the company is operator and a 49 percent owner, and its Zhao Dong Block, where it is a 24.5 percent owner and Apache Corporation is the operator. With the completion for production of the C-4-2 well, which tested 2,500 barrels of oil per day from one of six productive zones, XCL and its partners have drilled eight successful wells on the Zhao Dong Block with combined test rates, or indicated test rates, of approximately 55,000 barrels of oil per day.

Zhao Dong Block

On the Zhao Dong Block, the Joint Management Committee, consisting of representatives from Dagang Oilfield (Group) Ltd. (Dagang), China National Oil and Gas Exploration and Development Corporation (CNODC), XCL and Apache, has by a resolution adopted by all parties on October 28, 1998, agreed to commence production no later than March 15, 1999, on the C-4-2 well, and to start completion work for production on the C-4 well no later than April 1, 1999. This will allow production from these two wells during the second quarter of 1999.

The accelerated Zhao Dong production schedule is possible because of results from the drilling of the just-completed C-4-2 well. The C-4-2 well was drilled to a total true vertical depth of 9,184 feet (2,800 meters), and successfully appraised the C-4 discovery, which tested 15,359 barrels of oil per day and 10.7 million cubic feet of gas per day in October 1997. A new, deeper zone in the C-4-2, not encountered in the C-4 well, was drill stem tested and found productive in Permian-age sediments. This zone flowed up to 2,500 barrels of oil per day from the Shihezhi formation at 8,960 feet (2,732 meters) with 40-degree API gravity oil. Three zones in the Oligocene Shahejie Formation, which tested oil productive in the C-4 discovery well at a combined rate of 2,668 barrels of oil per day and 5 million cubic feet of gas per day, were also encountered in the C-4-2 well and are productive by log and core analysis. Several additional sands of Miocene and Pliocene ages, which were fault separated and wet in the C-4 well, are productive in the C-4-2 well by formation test and log and core analysis. The Miocene sands tested as high as 4,300 barrels of oil per day in other wells on the Zhao Dong Block, while Pliocene sands on the Zhao Dong Block tested as high as 1,400 barrels of oil per day. Test data from those same zones on the C and D Blocks confirm their productive capability in the C-4-2 well. The zones were not further tested in order to maintain the integrity of the casing and insure that the well could be completed for production.

In addition to starting production from the C-4 and C-4-2 wells, the possibility of beginning earlier production on the C-D Field using temporary facilities, before all permanent production facilities have been completed, is being reviewed.

Zhang Dong Block

After drilling seven wells on the Zhang Dong Block, Dagang projects proven oil reserves on the Block in excess of the proven reserves on the Zhao Dong Block. Dagang has already constructed extensive drilling and production facilities on the block, allowing production to start as soon as wells are completed. XCL and Dagang, beginning next month, will re-enter and side track six existing wells and begin production. The company also plans, in 1999 working with Dagang, to drill two to three wells from the existing causeway, two wells from the existing artificial island, and one well from a jack-up drilling rig. It is planned that drilling on the artificial island will continue at the rate of at least six wells per year during 2000, 2001 and 2002. Each well will be put into production as it is completed, allowing production to steadily increase throughout the period. The Zhang Dong Block is the second production sharing contract awarded to XCL by CNODC by agreement dated August 20, 1998, effective October 1, 1998.

Marsden W. Miller, Jr., Chairman and Chief Executive Officer, stated, "During 1999, we will commence production and start recognizing the considerable value the company has in China. On the Zhao Dong Block, eight successful wells have been drilled with combined test rates, or indicated test rates, of approximately 55,000 barrels of oil per day. The eight wells successfully tested 19 separate sands with approximately 575 feet of maximum net pay in six separate geological zones, the Pliocene, Miocene, Oligocene, Cretaceous, Jurassic and Permian. Two additional wells were dry holes and another well was drilled but could not be evaluated or tested because of mechanical problems. On the Zhang Dong Block, a northwest extension of the Zhao Dong Block, Dagang has performed extensive 2-D and 3-D seismic which reveals the existence of a large geologic structure extending in depth from the shallowest through the deepest of the formations now proven productive on the Zhao Dong Block. Dagang, by drilling seven wells, primarily on the flanks of the structure, has tested the Oligocene zone. Seismic data indicate that all other geologic zones proven productive on the Zhao Dong Block are prospective on the Zhang Dong Block."

XCL Ltd. is an oil and gas exploration and production company with headquarters in Lafayette, Louisiana, and operations in the People's Republic of China. The company's Common Stock is traded on the American Stock Exchange and the London Stock Exchange Limited.

The forward-looking statements reflected in this release are made in reliance upon the safe harbor provisions within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. No assurance can be given that the results discussed herein will be attained, and certain important factors that may cause actual results to differ materially are contained in the company's publicly available filings with the Securities and Exchange Commission.