CALGARY--(CCNMatthews - March 8) - NAL Oil & Gas Trust ("NAL" or the "Trust") today announced that it has commenced production from its Horseshoe Canyon coalbed methane ("CBM") project in the Lacombe area of Central Alberta. These CBM interests were acquired as part of the purchase of Addison Energy in February 2005 and build on earlier CBM successes by NAL in the Clive (2006) and Nevis (2005) areas.

In 2006, NAL drilled 37 wells at Lacombe and Clive and installed gas processing and pipeline infrastructure. These wells are being completed and tied-in during the first quarter of 2007. NAL has an average working interest of 67 percent in these lands and is the operator. Capital costs for drilling and facilities construction totaled $20.5 million gross ($13 million net), primarily spent in 2006. Initial production rates for the first wells in the Horseshoe Canyon / Edmonton Sands averaged 110 to 120 Mcfd/well, consistent with industry experience in the area.

The majority of the wells in Lacombe have the opportunity to commingle production from the Horseshoe Canyon CBM and Edmonton Sands. Several wells are currently completed in the Edmonton Sands only and will be additionally completed in the Horseshoe Canyon at a later date when the Edmonton Sands is further depleted. Collectively with several existing conventional wells in the area, production rates in the Lacombe/Clive area are expected to be 5.7 MMcfd gross (3.8 MMcfd net) by the second quarter of 2007.

The second phase of CBM development at Lacombe in 2007 includes planned spending of $14.2 million gross ($10 million net) to drill 25 infill locations, lay gathering lines, and twin the existing compressor. When completed, this phase of development is projected to add another 2.7 MMcfd gross (1.8 MMcfd net) production by year-end for a total of 8.4 MMcfd gross (5.6 MMcfd net) or nearly 1400 boed gross (940 boed net). In 2008 and beyond, NAL plans to develop the remaining undrilled sections of its current land position and evaluate the performance of the existing wells to determine whether or not further downspacing is appropriate.

Horseshoe Canyon coals are shallow at approximately 700 metres, can be produced from vertical wells, and do not require dewatering before gas production commences. Generally, these coals are characterized by a long reserve life with low decline rates. Wells are typically drilled on closer spacing than conventional gas wells and they have a very small footprint. In the Lacombe area, NAL initially drilled 3-4 wells per section, generally along existing road allowances to minimize disruption to land owners. To make most efficient use of oilfield services, these wells were drilled, completed and placed on production in batches.

NAL's Horseshoe Canyon CBM project began with the acquisition of Addison Energy in February 2005. The bulk of Addison's assets were in the Garrington and Westward Ho areas of Central Alberta, immediately adjacent to NAL's existing Sylvan Lake and Medicine River properties. Also included in the acquisition were 28 sections of land near the towns of Lacombe, Clive and Nevis, which were prospective for coalbed methane in the Horseshoe Canyon formation.

NAL's initial phase of Horseshoe Canyon CBM development took place at Nevis in 2005 at a cost of $17.2 million gross ($10 million net). It consisted of 18 wells at Nevis, several of which also produce from the slightly deeper Belly River formation. The production from these Nevis wells came on-stream at approximately 170 Mcfd/well gross versus the 130 Mcfd/well gross that was expected based on Horseshoe Canyon/Belly River production history in the area. In the first quarter of 2007, combined production from the Nevis area now totals 5.3 MMcfd gross (3.0 MMcfd net to the Trust).

NAL forecasts that by year end 2007, total production from the Lacombe/Clive/Nevis area will be 13.7 MMcfd gross (8.6 MMcfd net).

NAL Oil & Gas Trust is an open-end investment trust that generates distributions through the acquisition, development, production and marketing of oil, natural gas and natural gas liquids. The Trust owns high quality assets in Alberta, Saskatchewan and Ontario. Trust units trade on the Toronto Stock Exchange under the symbol "NAE.UN".

Forward Looking Statements:

Certain information regarding NAL Oil & Gas Trust (NAL) set out in this document, including management's assessment of NAL's future plans and operations, contains forward-looking statements that involve substantial known and unknown risks and uncertainties. These forward-looking statements are subject to various risks and uncertainties, some of which are beyond NAL's control. This includes the impact of general economic conditions, industry conditions, volatility of commodity prices, imprecision of reserves estimates, changes in government regulations, environmental risks, competition from other producers, as well as other external factors affecting the resource industry. NAL's actual results, performance, or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will occur, or if any of them do so, what benefits NAL will derive therefrom.

Contact Information:

Gordon Currie
Manager, Investor Relations
(403) 294-3620 or Toll Free: (888) 223-8792
Fax: (403) 515-3407
Email: investor.relations@nal.ca
Website: www.nal.ca