Excelsior Energy Limited
CNQ : EXEL

Excelsior Energy Limited

March 05, 2007 18:59 ET

Excelsior Executes Binding Farm-in Agreement to Acquire 52.5% of a Hangingstone Heavy Oil Project in Athabasca Heavy Oil Area Near Fort McMurray

CALGARY, ALBERTA--(CCNMatthews - March 5, 2007) - Excelsior Energy Limited. (CNQ:EXEL) ("Excelsior") is pleased to announce that further to its press release dated February 8th 2007 it has signed a binding Farm-in Agreement with Bounty Development Ltd, an Alberta based private company, ("Bounty") to earn a 52.5% interest in the Hangingstone Oil Sands Asset ("the Asset"). The Asset consists of 39 contiguous sections (24,960 acres) in Township 86 and 85, Range 9 W4M Alberta, approximately 28 km south of Fort McMurray. Bounty will retain a 25 % working interest in the Asset.

The Asset is located in close proximity to a number of active SAGD Projects which are in various stages of development. JACOS's Hangingstone producing SAGD project and Connacher's Great Divide Project to the southwest, North American Oil Sands Hangingstone Project to the south, and Nexen/Opti's Long Lake Area to the east. All of these large projects are located within 30km of the Asset.

Excelsior made an initial payment of $1.4 million cash and, subject to regulatory approval, will issue 2,333,333 common shares priced at $0.30 per common share to Bounty to satisfy the initial consideration of $2.1 million towards the reimbursement of land and related costs.

Excelsior will earn the 52.5% working interest and gain operatorship over the next year by paying additional consideration of $16.8 million over the next year that is comprised of: a $4.2 million bonus, which will be paid in Excelsior shares; $6.1 million in cash as reimbursement to Bounty for land acquisition and related costs; $1.4 million cash toward a 2D seismic program currently underway; and an estimated $5.1 million to drill up to 24 evaluation wells.

The first stage of the project is to shoot 134 kilometres of 2D seismic to tie the existing wells and to delineate the size and number of potential SAGD oil sand pods. Acquisition of the 2D seismic program is underway with completion (including processing) targeted towards the end of April. An evaluation well program of up to 24 wells to further delineate the SAGD Pods and identify a core area for a pilot project, is planned for winter 2007/8. The working interest partners are investigating the possibility of accelerating the drilling of wells in areas which can be accessed in the summer.

Excelsior has approximately $2.5 million in working capital, the right to earn a 52.5% interest in the Hangingstone Oil Sands Asset near Fort McMurray, Alberta and a 100% working interest in Blocks 16/1a and 16/6c in the UK North Sea recently awarded in the UK North Sea 24th bid round.

Excelsior is committed to its strategic objectives of capturing oil and gas appraisal and development opportunities where we can leverage Management's diverse international experience and field development expertise. This includes heavy oil reservoir engineering and development of complex fields. Excelsior continues to have excellent access to deal flow in the North Sea, S.E. Asia and North Africa and will vigorously pursue opportunities in its international, core focus areas.

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