Enterprise Energy Resources Ltd.
TSX VENTURE : EER

Enterprise Energy Resources Ltd.

May 10, 2011 09:07 ET

Enterprise Enters Into Letter Agreements to Acquire Interests in Oil and Gas Leases in the Williston Basin, Montana

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 10, 2011) -

NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO U.S. WIRE SERVICES

Enterprise Energy Resources Ltd. (the "Company") (TSX VENTURE:EER) is pleased to announce that it has entered into two letter agreements for the acquisition of interests in oil and gas leases in the Williston Basin, Montana.

The increasing oil production from the Williston Basin in North Dakota and Montana is resulting in record levels of drilling activity. The oil and gas leases to be acquired by the Company are in an area that is receiving increased attention as the industry focus that began in North Dakota moves west into Montana.

Cerda Williston acreage (approximately 30,840 net acres)

Under a letter agreement (the "Cerda Agreement") the Company proposes to acquire from EVO Energy Ltd. ("EVO") all of the shares of Cerda Capital Corporation ("Cerda"). Cerda, through a subsidiary, is party to a purchase and sale agreement under which it proposes to acquire from an undisclosed party ("Cerda Vendor") oil and gas leases over approximately 30,840 net acres in the Williston Basin, Montana.

Williston Basin leasing program

Under a second letter agreement (the "Basin Agreement") the Company will acquire from Unconventional Energy Partners L.P. ("UEC") all of the shares of Basin Petroleum Ltd. ("Basin"). Basin, through a subsidiary, is party to a program agreement with Cisk Ventures Ltd. ("Cisk") under which Cisk is assisting Basin in currently leasing lands in the Williston Basin, Montana.

The transactions contemplated under the Cerda Agreement and the Basin Agreement are independent of each other and either may close without the other closing. Together the transactions will be a "Fundamental Acquisition" in accordance with the policies of the TSX Venture Exchange (the "TSXV"). Each transaction is subject to approval by the TSX Venture Exchange, the completion of the financing and other customary conditions.

Cerda Agreement Terms

Under the Cerda Agreement, the Company will acquire all of the shares of Cerda (the "Cerda Acquisition") for a purchase price to be paid at closing consisting of approximately USD$1,000,000 (subject to adjustment) and the issuance of 5,000,000 common shares of the Company. The shares will be issued to the shareholders of EVO (Cerda's parent) on a proportionate basis. In addition, the Company will be required to pay a cash bonus payment of the greater of CAD$5,000,000 and 3.0% of the value of the lands acquired from the Cerda Vendor (the "Cerda Lands"). The bonus is payable on earlier of the third anniversary of closing or the occurrence of certain specified events. The bonus may be paid by the Company returning to EVO all of its interest in the Cerda Lands. The Company has paid a USD$500,000 deposit which is refundable only in certain limited circumstances. The deposit will be applied at closing to the purchase price.

Cerda is a BVI company which indirectly owns all of the shares of Evolution Oil Group, LLC ("Evolution Oil"), a limited liability Delaware company. Evolution Oil is party to a purchase and sale agreement (the "Cerda PSA") with the Cerda Vendor under which Evolution Oil will acquire from the Cerda Vendor the Cerda Lands, which consist of approximately 30,840 net acres in the Williston Basin, Montana. The consideration payable by Evolution Oil to the Cerda Vendor is approximately USD$7,760,000 (subject to adjustment). In accordance to the Cerda's PSA, the Cerda Vendor shall deliver to Evolution Oil an 80% net revenue interest and 100% working interest on the Cerda Lands. The Cerda Vendor will retain an option to acquire an undivided 10% working interest in the Cerda Lands, where the Cerda Vendor may have the option to elect to receive the 10% carried working interest in any of the first four wells drilled within a specified period and the option to elect to participate for a 10% working interest in subsequent wells. Cerda and its subsidiaries have no material assets or operations other than the rights under the Cerda Agreements and certain cash deposits paid to the Cerda Vendor. Subsequent to the closing of the Cerda Acquisition, the Company will be responsible for funding the purchase price payable to the Cerda Vendor.

Closing of the Cerda Acquisition will be subject to a number of conditions, including but not limited to: (a) entering into a formal share purchase agreement to replace the Cerda Agreement; (b) completion of due diligence; (c) the approval of the TSXV; and (d) the completion of a financing to raise in aggregate not less than CAD$20,000,000 or such lesser amount as acceptable to the Company.

Basin Agreement Terms

Under the Basin Agreement, the Company will acquire all of the shares of Basin (the "Basin Acquisition") for a purchase price to be paid at closing consisting of: (a) the amount of equity invested and loans made by UEC into Basin as at the time of closing plus 12.5% of such amounts, and (b) the issuance of up to 9,000,000 common shares of the Company. In addition, the Company will be required to pay a cash bonus payment of the greater of CAD$5,000,000 and 3.0% of the value of the lands acquired under the program agreement with Cisk (the "Cisk Lands"). The bonus is payable on earlier of the third anniversary of closing or the occurrence of certain specified events. The bonus payment may increase to the greater of USD$7,000,000 and 4% of the value of the Cisk Lands if certain events occur prior to closing. The bonus may be paid by the Company returning to UEC all of its interest in the Cisk Lands. The amount payable under (a) above will be not less than USD$3,200,000 but will increase as UEC provides further funding to Basin to enable Basin to continue to lease additional acreage. The Company has paid a USD$500,000 deposit which is refundable only in certain limited circumstances. The deposit will be applied at closing to the purchase price.

Basin is a BVI company which indirectly owns all of the shares of Unconventional Energy Partners, LLC ("UEP"), a limited liability Montana company. UEP is party to a program agreement (the "Cisk Agreement") with Cisk under which Cisk is assisting UEP in leasing acreage in the Williston Basin (the "Basin Lands"). The leasing program is being undertaken in several stages and is already underway. If all of the stages are completed UEP estimates the total leased acreage will cost approximately USD$12,000,000. Under the Cisk Agreement, the Basin Lands will have a minimum net revenue interest to UEP of 80%. Basin and its subsidiaries have no material assets or operations other than oil and gas leases acquired or to be acquired under the Cisk Agreement and the funding and activities necessary to complete such acquisitions. To the extent UEC funds Basin so that UEP may acquire oil and gas leases prior to closing the Basin Acquisition, the purchase price for the shares of Basin will increase. Similarly if Basin requires further funding to continue leasing after the closing of the Basin Acquisition, the Company will be responsible for providing such funding. Under the Cisk Agreement, the Company will issue to Cisk 750,000 common shares of the Company upon completion of each of the three stages of the leasing program, for a total of up to 2,250,000 shares. In addition Cisk may elect to have up to USD$1,800,000 of amounts owing to it to be paid by the issuance of common shares of the Company at a price equal to the greater of the market value at the time of issuance and USD$1.00 per share.

Closing of the Basin Acquisition will be subject to a number of conditions, including but not limited to: (a) entering into a formal share purchase agreement to replace the Basin Agreement; (b) completion of due diligence; (c) the approval of the TSXV; and (d) the completion of a financing to raise in aggregate not less than CAD$20,000,000 or such lesser amount as acceptable to the Company.

Financing

As a condition to each of the Cerda Transaction and the Basin Transaction, the Company must complete a financing (the "Financing"). The proceeds from the Financing will be used to fund the Cerda Transaction and the Basin Transaction, and the commitments assumed by the Company upon closing such transactions under the Cisk Agreement and the Cerda PSA. The Company proposes to raise up to CAD$30,000,000 under the Financing. The terms and conditions of the Financing have not been determined and there is no assurance that Financing will be completed.

ENTERPRISE ENERGY RESOURCES LTD.

Geoff Carrington, President & CEO

This press release does not constitute an offer to purchase securities. The securities to be offered in the offering have not been and will not be registered under the United States Securities Act of 1933, as amended, or any state securities laws and may not be offered or sold in the United States or to, or for the benefit or account of, a U.S. person, except pursuant to an available exemption from such registration requirements.

Cautionary Note Regarding Forward-Looking Statements

Except for the statements of historical fact contained herein, the information presented constitutes "forward looking statements". Such forward-looking statements, including but not limited to those with respect to the closing of the Cerda Acquisition, the closing of the Basin Acquisition, the closing of the transactions under the Cerda PSA, the acquisition of oil and gas leases under the Cisk Agreement and the proposed financing, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, Cerda or Basin to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Although the Company has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

Shares Outstanding: 21,706,782

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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