Daybreak Oil and Gas announced that the Gerald Grove H-3 well, in Lawrence county, Kentucky, was placed on production on 21 December, 2013.

The well has produced and sold approximately 3,303 barrels of oil during this time period. The well is experiencing very large initial production rates, and thus production had to be voluntarily slowed due to storage capacity constraints. The well has only been producing a limited number of hours during daylight due to storage capacity issues.

The eastern portion of Kentucky has also been experiencing inclement weather which inhibits tanker trucks from accessing the well location, thus slowing the distribution process of the produced oil. On a daily basis it is estimated that the well was producing at a rate of approximately 300-325 barrels of oil per day (BOPD).

The Company and its operator/partner App Energy are currently constructing a Central Facility which will allow easier access for tanker trucks; thereby improving the distribution process and allowing for better efficiency in regards to producing the oil.

James F. Westmoreland, president and Chief Executive Officer, commented, "We are extremely pleased with the production results from this well and the previously announced Gerald Grove H-1 well, from which we have already sold 6,435 barrels of oil since production began in late October."

"Both the Gerald Grove H-1 and the Gerald Grove H-3 wells have produced at a predetermined reduced rate until permanent facilities, gas lines and compressors are installed. We expect all work to be completed by mid-February 2014."

Separately, Daybreak and its partner, App Energy, are finalizing plans to drill approximately 20 wells in 2014 beginning in late February. With data, such as electric logs on deeper wells drilled in the Twin Bottoms Field, we believe we have at least 50 low risk locations to drill over the next several years. This drilling program will accelerate the production growth and will take revenues to new levels in 2014 and 2015 which will lead the Company to sustained profitability.