October 08, 2009 12:51 ET

Blugrass Enters Into a Letter of Intent With TRexO and Firecreek Global

CALGARY, AB--(Marketwire - October 8, 2009) - Blugrass Energy Inc. (OTCBB: BLUG) is pleased to announce that Blugrass Energy Inc. has entered into a Letter of Intent with TRexO and Firecreek Global on a property located in Andrews County, Texas.

The Big Max South (BMS) is a 9600' Wolfcamp-Leonard/Sprayberry prospect located in Andrews County, Texas, in the Permian Basin. It is on the west side of the Midland Basin approximately three miles east of Andrews and is included in a Wolfcamp-Sprayberry (Wolfberry) production trend along a 90-mile strip from Upton to Gaines County, Texas. The prospect contains approximately 5,000 net acres in a contiguous acreage block of over 7,000 gross acres (drill site and immediate offset is full interest).

Subject to entering into an acquisition contract with the seller, Texas ReExploration Operating, L.C. ("TRexO"), and subject to Bluegrass' approval of the results of due diligence review and the status of title, TRexO would convey at closing a 45% working interest in the complete acreage block for a bonus consideration to be paid by Bluegrass at closing of 50% of the $670 per net leasehold acre delivered (5,000 acres x 50% x $670 = $1,675,000). Bluegrass would pay 75% of the drilling and completion costs of the initial well drilled and completed to first production. Bluegrass and TRexO would each pay 50% of the drilling and completion costs on the second well. Firecreek Global would be carried to the tanks on the first and second wells for ten percent (10%). On all activities subsequent to the second well, Bluegrass, TRexO and Firecreek Global would pay their respective shares of the costs of drilling, leasing, seismic, etc., according to their working interests.

At closing, Bluegrass, TRexO and Firecreek Global would enter into a mutually agreeable joint operating agreement which would name Firecreek Global as the operator, and state a requirement to drill the initial well by February 15, 2010 or sooner, subject to drilling rig availability and completion of due diligence and funding.

By accepting this proposal, Bluegrass evidences its interest in participating in this program and negotiating, together with Firecreek Global, an acquisition agreement with TRexO. The acquisition agreement would contain the terms stated in this letter. The agreement would also provide for a ninety (90) day due diligence period on the part of Bluegrass, with closing to occur within thirty (30) days after due diligence period, subject to Bluegrass' approval of the results of due diligence review including status of title.

Earnest money in the amount of $50,000 will need to be deposited by Bluegrass at the time the acquisition agreement is entered into. The earnest money will be divided into two parts. $40,000 will be deposited into an escrow in the manner stated in the acquisition agreement. This portion of the earnest money would be immediately refundable to Bluegrass if either (i) Bluegrass does not approve in writing the results of due diligence review during the due diligence period, or (ii) Bluegrass does not approve the status of title to the drill site and the two offset drill sites, which evidence must be delivered to Bluegrass within 15 days after the effective date of acquisition agreement, or (iii) TRexO fails to close the subject transaction. If Bluegrass does not close for any other reason, the $40,000 shall be retained by TRexO as TRexO's sole remedy under the acquisition agreement. $10,000 of the earnest money shall be non-refundable under all circumstances and shall be paid to Firecreek Global at the time the acquisition agreement is entered into, to cover Firecreek Global's costs of developing and delivering needed due diligence material to Bluegrass.

This letter is not binding but is merely an expression of interest on the part of Bluegrass and Firecreek Global with respect to the described transaction. If this letter is not accepted by Bluegrass within 72 hours after the date hereof, this letter shall be void. Signatures sent by email or other means of electronic transmission shall be sufficient.

About Blugrass:

Blugrass Energy, Inc. is a development stage oil and gas development and exploration company based in the United States that is traded on the Over the Counter Bulletin Board under the Symbol BLUG. The goal of BLUG is to grow through internally generated and developed prospects, participation with industry partners in oil and gas exploration and in targeted joint ventures.

THIS NEWS RELEASE CONTAINS "FORWARD-LOOKING STATEMENTS", AS THAT TERM IS DEFINED IN SECTION 27A OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE UNITED STATES SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. STATEMENTS IN THIS NEWS RELEASE, WHICH ARE NOT PURELY HISTORICAL, ARE FORWARD-LOOKING STATEMENTS AND INCLUDE ANY STATEMENTS REGARDING BELIEFS, PLANS, EXPECTATIONS OR INTENTIONS REGARDING THE FUTURE. EXCEPT FOR THE HISTORICAL INFORMATION PRESENTED HEREIN, MATTERS DISCUSSED IN THIS NEWS RELEASE CONTAIN FORWARD-LOOKING STATEMENTS THAT ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH STATEMENTS. STATEMENTS THAT ARE NOT HISTORICAL FACTS, INCLUDING STATEMENTS THAT ARE PRECEDED BY, FOLLOWED BY, OR THAT INCLUDE SUCH WORDS AS "ESTIMATE," "ANTICIPATE," "BELIEVE," "PLAN" OR "EXPECT" OR SIMILAR STATEMENTS ARE FORWARD-LOOKING STATEMENTS. RISKS AND UNCERTAINTIES FOR THE COMPANY INCLUDE, BUT ARE NOT LIMITED TO, THE RISKS ASSOCIATED WITH OIL AND GAS EXPLORATION AND DEVELOPMENT AND NEEDS FOR FUNDING AS WELL AS THE RISKS SHOWN IN THE COMPANY'S MOST RECENT ANNUAL REPORT ON FORM 10-KSB AND ON FORM 10-QSB AND FROM TIME-TO-TIME IN OTHER PUBLICLY AVAILABLE INFORMATION REGARDING THE COMPANY. OTHER RISKS INCLUDE RISKS ASSOCIATED WITH THE REGULATORY APPROVAL PROCESS, COMPETITIVE COMPANIES, FUTURE CAPITAL REQUIREMENTS AND THE COMPANY'S ABILITY AND LEVEL OF SUPPORT FOR ITS EXPLORATION AND DEVELOPMENT ACTIVITIES. THERE CAN BE NO ASSURANCE THAT THE COMPANY'S DEVELOPMENT EFFORTS WILL SUCCEED AND THE COMPANY WILL ULTIMATELY ACHIEVE COMMERCIAL SUCCESS. THESE FORWARD-LOOKING STATEMENTS ARE MADE AS OF THE DATE OF THIS NEWS RELEASE, AND THE COMPANY ASSUMES NO OBLIGATION TO UPDATE THE FORWARD-LOOKING STATEMENTS, OR TO UPDATE THE REASONS WHY ACTUAL RESULTS COULD DIFFER FROM THOSE PROJECTED IN THE FORWARD-LOOKING STATEMENTS. ALTHOUGH THE COMPANY BELIEVES THAT THE BELIEFS, PLANS, EXPECTATIONS AND INTENTIONS CONTAINED IN THIS NEWS RELEASE ARE REASONABLE, THERE CAN BE NO ASSURANCE THOSE BELIEFS, PLANS, EXPECTATIONS OR INTENTIONS WILL PROVE TO BE ACCURATE. INVESTORS SHOULD CONSIDER ALL OF THE INFORMATION SET FORTH HEREIN AND SHOULD ALSO REFER TO THE RISK FACTORS DISCLOSED IN THE COMPANY'S PERIODIC REPORTS FILED FROM TIME-TO-TIME WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.

THIS NEWS RELEASE HAS BEEN PREPARED BY MANAGEMENT OF THE COMPANY WHO TAKES FULL RESPONSIBILITY FOR ITS CONTENTS. EACH OF THE NASD, THE SEC AND THE OTCBB NEITHER APPROVES NOR DISAPPROVES OF THE CONTENTS OF THIS NEWS RELEASE. THIS NEWS RELEASE SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH JURISDICTION.

Contact Information

  • Contact:
    Blugrass Energy Inc.
    Tony Collins
    1-877-511-0110