Eagle Star Petroleum Corp.
CNQ : EAGL
FRANKFURT : E6R

Eagle Star Petroleum Corp.

August 09, 2007 18:23 ET

Eagle Star Petroleum Corp. Enters Into Agreement With Cayman Energy Inc.

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 9, 2007) - Eagle Star Petroleum Corp. (CNQ:EAGL)(FRANKFURT:E6R) ("the Company") announces that it has entered into an agreement with Cayman Energy Inc. ("Cayman") to conduct exploration activities on Eagle Star's 100% owned Osborn Property located in the Worsely area of Alberta. The Osborn property covers approximately 1,280 acres and is believed to be located in a favorable geological setting based on technical work performed to date. Each of the land parcels is offset by wells, located within one mile of the lands, which have produced a total of 3.9 BCF in less then seven years. Cayman will conduct a seismic review on the Company's property.

Under the terms of the agreement, the Company will provide Cayman with copies of all proprietary and trade seismic data over the Option lands and Cayman will within thirty (30) days of receipt of the data elect to do one of the following:

a) Drill a Test Well on the property;

b) Shoot a minimum of two miles 2-D seismic or one square mile of 3-D seismic located on or within one (1) mile of the property. Upon completion of the seismic program, Cayman shall have an option exercisable on or before October 31, 2007 to elect to drill an option well at a location of its choice on the property. In the event that Cayman elects to drill the Option Well, it shall commence drilling the option well on or before December 31, 2007 subject to surface access, rig availability and regulatory approval;

c) Purchase trade seismic data and provide the Company with a copy of the seismic data. Upon completion of the acquisition and any reprocessing of the trade seismic data, Cayman shall have the option exercisable on or before October 31, 2007 to elect to drill an Option Well at a location of its choice on the property. In the event that Cayman elects to drill the option well, it shall commence drilling the Option Well on or before December 31, 2007 subject to surface access, rig availability and regulatory approval;

d) Terminate the agreement.

In the event that Cayman Energy elects to drill a test well, subject to surface access, wildlife related restrictions and rig availability, Cayman Energy shall, within sixty (60) days of the election to drill, spud a test well at a location of its choice on the property and pay 100% of the costs.

Upon fulfilling the requirements for drilling a test well Cayman shall have earned an undivided one hundred percent (100%) working interest in all PNG rights to the base of the deepest formation evaluated in the section upon which the well was drilled, subject to a convertible overriding royalty of minimum 5% and maximum 15% on crude oil and 15% for other hydrocarbons. Upon payout of Cayman's costs for the test well the Company will hold a 40% working interest and Cayman 60%. Within 60 days following rig release of the test well, Cayman has the option to drill an option well to earn a further interest in the property on the same basis as the test well. In the event that Cayman elects to drill an option well, such option well shall be spud within 60 days of the election by Cayman.

Eagle Star views this letter of agreement as a strategic financing option for the exploration and development of the Osborn Property. Presently Eagle Star has in excess of $1.9M of working capital, which is sufficient for it to meet its capital requirements under the terms of the letter agreement.

Eran Friedlander, president of the Company, stated, "This agreement presents a great opportunity for both companies and we are pleased to have access to Cayman's knowledge of the area including technical expertise to develop our asset portfolio."

About the Company

Eagle Star Petroleum Corp. is a Canadian oil and gas exploration company. The Company's shares are publicly traded on the CNQ Stock Exchange (Canada) under the ticker symbol EAGL.

On behalf of the Board of Directors

EAGLE STAR PETROLEUM CORP.

Eran Friedlander, President

The CNQ has not reviewed, and does not accept responsibility for the adequacy or accuracy of the content of this news release.

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