NEWS RELEASE                                                                                                      

January 8, 2008

Pearl 2007 Production Exit Rate of 12,100 Boe/d and provides 2008 operating guidance

CALGARY, ALBERTA - Pearl Exploration and Production Ltd. ("Pearl" or the "Company") (TSX Venture: PXX and First North: PXXS) is pleased to report that it has achieved an exit production rate of over 12,100 barrels of oil equivalent per day during the last week of December 2007.   This achievement represents an increase of 55% over the year end exit rate of 2006 and is the result of a focused and committed strategy to create one of North America’s premier heavy oil companies, taking advantage of a much overlooked opportunity in the oil and gas industry. The Company will continue to aggressively grow and upgrade its heavy oil resources, carving out a unique, innovative and highly attractive position for itself in the oil and gas sector.

The Company is also pleased to announce that it has received board approval for a 2008 capital budget of $61 million.  The Company’s intention is to focus a significant portion of this budget on resource conversion activities, including the continued work on the steam pilots in San Miguel, Texas, Onion Lake, Saskatchewan and the Blackrod project in the Athabasca region of Alberta.  The Company will also be initiating studies to examine options for upgrading and/or refining technologies on its core properties to increase per barrel netback economics.  In addition, in order to dedicate more capital and intellectual resources to core properties, the Company has determined that it will investigate the rationalization of certain non-core assets situated in Saskatchewan and Southern Alberta. Upon completion of the rationalization efforts, the Company will provide production guidance for 2008.

Pearl President and CEO Keith Hill commented “We are very committed to our principal strategy of building shareholder value through the acquisition of large scale heavy oil resources and converting them into reserves.  We continue to believe that heavy oil will occupy a much greater position in the world energy market and plan to position ourselves to take advantage of this eventuality.  Therefore in the near term we intend to focus the majority of our efforts on our core properties in both Canada and the United States with less emphasis on continued production growth and a greater emphasis on advancing steam pilot projects designed to convert our captured large scale resources into proven and probable reserves.  We will also pursue various options designed to increase per barrel profitability including various types of unconventional upgrading and low tech refining applications.”

Pearl Exploration and Production Ltd. is a public company focused on delivering disciplined growth by establishing a North American portfolio of heavy oil projects with an emphasis on large resource opportunities.  Additional information on Pearl is available on the Company’s website at www.pearleandp.com.

For further information, please contact:

All references in this release to boe's are based on a 6 to 1 conversion ratio. Boe's may be misleading, particularly if used in isolation. A boe conversion of 6 Mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Pearl’s Certified Advisor on First North is E. �hman J:or Fondkommission AB.

Forward-looking statements:  This document contains statements about expected or anticipated future events and financial results that are forward-looking in nature and as a result, are subject to certain risks and uncertainties, such as general economic, market and business conditions, the regulatory process and actions, technical issues, new legislation, competitive and general economic factors and conditions, the uncertainties resulting from potential delays or changes in plans, the occurrence of unexpected events, and the Company’s capability to execute and implement its future plans.  Actual results may differ materially from those projected by management.  For such statements, we claim the safe harbour for forward-looking statements within the meaning of the Private Securities Legislation Reform Act of 1995.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.