Eagle Rock Exploration Ltd.
TSX VENTURE : ERX

Eagle Rock Exploration Ltd.

November 28, 2007 17:25 ET

Eagle Rock Exploration to Acquire Private Oil & Gas Company

CALGARY, ALBERTA--(Marketwire - Nov. 28, 2007) - Eagle Rock Exploration Ltd. ("Eagle Rock" or the "Company") (TSX VENTURE:ERX) announces that it has entered into a formal agreement with Dragonheart Resources Ltd ("Dragonheart"), an arm's length privately held Alberta based oil & gas company.

Eagle Rock will acquire all of the outstanding shares of Dragonheart on the basis of 1.4 common shares of Eagle Rock for each common share of Dragonheart, for a maximum issuance of 6,139,000 common shares of Eagle Rock.

In addition to regulatory approval, the transaction is subject to the approval of the Dragonheart shareholders at a special meeting to be held on December 20, 2007, with closing anticipated to occur shortly thereafter.

The Board of Directors of both Eagle Rock and Dragonheart have unanimously approved the transaction and it is anticipated that management, directors and certain shareholders of Dragonheart will enter into voting agreements representing 62% of the outstanding shares of Dragonheart.

Sayer Energy Advisors is acting as financial advisor to the Board of Directors of Dragonheart, and has provided an opinion that the transaction is fair from a financial point of view, to the Dragonheart shareholders.

The operational benefits anticipated by Eagle Rock from this transaction include:

- Additional production of approximately 55 boed (60% oil & 40% gas)

- Access to an undeveloped land base of over 19,701 acres (gross), 9,427 (net) valued by an independent land evaluator as of September 1, 2007 at $2,024,626. These lands will add two additional core areas of operations for Eagle Rock in the Whitecourt and Enchant areas in Central and Southern Alberta

- Ownership of proprietary 3D seismic independently valued at $900,000 covering a significant portion of the acquired lands

- Based on the Sproule Associates Limited independent reserves evaluation of Dragonheart, effective September 30, 2007, Dragonheart's net present values of reserves before income taxes (discounted at 10%) are $2,540,000 for proven reserves (183.7 mboe) and $630,000 for probable reserves (71.9 mboe) for a total proven plus probable reserves value of $3,171,000

- Tax pools in excess of $5,000,000

This transaction also includes the assumption of Dragonheart's debt and Working Capital Deficiency of approximately $1.4 million.

Jim Silye, President and CEO of Eagle Rock states "This transaction significantly enhances and diversifies Eagle Rock's position in Central and Southern Alberta and provides exposure to a broader base of drilling opportunities."

About Eagle Rock

Eagle Rock Exploration Ltd. is a publicly traded energy company involved in the exploration and development of low to medium risk oil and gas properties in Western Canada.

Eagle Rock Exploration Ltd. trades on the TSX Venture Exchange under the symbol ERX.

For more information please visit us at www.eaglerockexploration.com.

Forward-looking Information

This press release includes forward-looking statements and assumptions respecting Eagle Rock's strategies, future operations, expected financial results, financial sources, commodity prices, costs of production and quantum of oil and natural gas reserves and discusses certain issues, risks and uncertainties that can be expected to impact on any of such matters. By their nature, forward-looking statements are subject to numerous risks and uncertainties that can significantly affect future results. Actual future results may differ materially from those assumed or described in such forward-looking statements as a result of the impact of issues, risks and uncertainties whether described herein or not, which Eagle Rock may not be able to control. The reader is therefore cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements contained in this news release are made as of the date hereof and Eagle Rock undertakes no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement. In addition, the term BOE or BOE's may be misleading, particularly if used in isolation. A BOE (barrel of oil equivalent) conversion ratio of 6 Mcf per one (1) BOE is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

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

Contact Information

  • Eagle Rock Exploration Ltd.
    Jim Silye
    President and Chief Executive Officer
    (403) 269-4040
    (403) 261-1978 (FAX)
    Email: jimsilye@eagler.ca
    or
    Eagle Rock Exploration Ltd.
    Steven J. Glover
    Vice-President, Finance, and Chief Financial Officer
    (403) 269-4040
    (403) 261-1978 (FAX)
    Email: sglover@eagler.ca
    Website: www.eaglerockexploration.com