Cypress Hills Resource Corp.
TSX VENTURE : CHS

Cypress Hills Resource Corp.

June 30, 2005 18:43 ET

Cypress Hills to Drill in Maverick and Zaval Counties, Texas

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - June 30, 2005) - Cypress Hills Resource Corp. ("Cypress") (TSX VENTURE:CHS) announces that it has entered into an Exploration Agreement with Blue Star Oil & Gas, Ltd. ("Blue Star") of Dallas, Texas. Blue Star is a private oil and gas company controlled by Mr. Jerry Jones with over 190,000 acres of land under lease in Maverick County located about 150 miles southwest of San Antonio, Texas.

Cypress has agreed to initially drill six horizontal wells, paying 100% of the costs to drill, complete and equip to the tanks at the well (approximately $950,000 US per well) and/or plug and abandon then 50% thereafter for tie-in. Cypress will earn a 50% interest in a 320 acre block for each well drilled from the base of the San Miguel to 100 feet below the base of the Sligo (the "earned interval"). It will be necessary for Cypress to obtain financing for the drilling of the six horizontal wells under the Exploration Agreement, which financing will now be actively pursued.

Cypress has also obtained a Seismic License Agreement from Blue Star in respect of 400 square miles of 3D seismic over the prospect area in Maverick and Zaval Counties.

Should Cypress not drill all six initial wells within the time periods set forth in the Exploration Agreement it will forfeit its entire earned interest in the prospect area and the seismic license shall terminate.

The primary target for the wells to be drilled under the Exploration Agreement is the Georgetown formation. In addition, the deeper Glen Rose zone within the earned interval has been identified from the seismic. Other potentially prospective zones within the earned interval beneath the prospect area are the Austin Chalk, Buda, Pearsal and Sligo. After the drilling of the six initial horizontal wells, Cypress will have the option to drill and participate in additional wells on unearned portions of the prospect area as to a 50% working interest. Cypress has identified more than 20 option well locations.

Cypress will operate this project and may initially be subcontracting operatorship to Blue Star Operating Company.

In conjunction with the signing of the Exploration Agreement, Cypress anticipates that Mr. C.W. (Bill) Chemerinski P. Eng. will be joining the Company as VP of US Operations. Mr. Chemerinski has over 24 years of drilling, completion and production experience in Canada, the US and worldwide. Subject to stock exchange approval, Mr. Chemerinski will receive the equivalent of $75,000 US in Cypress stock as a finder's fee for bringing Cypress this opportunity. Subject to regulatory and stock exchange approvals, Cypress will also be granting to each of Mr. Chemerinski and Mr. Fostey 250,000 stock options issued under Cypress' existing stock option plan.

Additional information on the Company and its projects can be viewed at www.sedar.com.

CAUTIONARY STATEMENT:

No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein. This news release includes certain "forward-looking statements". All statements other than statements of historical fact included in this news release, including, without limitation, statements regarding reserves, present value of future cash flow, exploration results, and future plans and objectives of Cypress, are forward looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from Cypress' expectations are exploration risks, production risks and pricing risks detailed herein and from time to time in other filings made by Cypress with securities regulators.


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

Contact Information

  • Cypress Hills Resource Corp.
    Ted J. Fostey
    President
    (403) 691-7736
    or
    Cypress Hills Resource Corp.
    Brian E. Bayley
    Director
    (604) 689-1428
    (604) 681-4692 (FAX)