Excelsior Energy Limited

Excelsior Energy Limited

May 03, 2007 10:38 ET

Excelsior Signs Letter of Intent to Acquire Additional Interest in the Hangingstone Oil Sands Asset

CALGARY, ALBERTA--(CCNMatthews - May 3, 2007) - Excelsior Energy Limited. (CNQ:EXEL) ("Excelsior" or "the Company") is pleased to announce that it has entered into a Letter of Intent to acquire up to an additional 22.5 % working interest after earning in its Hangingstone oil sands asset, near Fort McMurray, Alberta, to increase Excelsiors interest to up to 75% after fulfilling all its farmin earning obligations.

The additional interest will be acquired from a private company ("PrivateCo") that holds the balance of the farmee's interest in the Hangingstone oil sands asset previously announced on March 5, 2007. Excelsior will acquire all the shares of PrivateCo in exchange for the consideration outlined below. In addition to its Hangingstone interest PrivateCo has approximately $1,250,000 in working capital.

The transaction contemplates the issuance of up to 16 million common shares of Excelsior with a deemed value of $0.58 per share based on the following events:

a) 6.66 million common shares of Excelsior will be issued to PrivateCo upon closing of the transaction pursuant to a purchase and sale agreement; and

b) 9.34 million common shares or securities convertible into common shares of Excelsior will be issued upon certain performance thresholds being met and exceeded over a three year period. Full details will be disclosed upon the signing of a binding purchase and sale agreement.

PrivateCo and Excelsior will enter into a purchase and sale agreement with a proposed closing date of May 31, 2007. The transaction is subject to the approval of the Boards of Directors of PrivateCo and Excelsior, and the acceptance and approval of the CNQ Exchange.

The Hangingstone 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, located in close proximity to a number of active SAGD projects in various stages of development. The productive reservoir is the McMurray Formation which is comprised of high quality fluvial and estuarine channel sands. Wells drilled on the Hangingstone asset and in immediately adjacent sections confirm the presence of the reservoir sands with gross oil sand thickness ranging between 12 meters and 40 meters.

Further to our press release dated 30 March 2007, Excelsior Energy Ltd. has engaged DeGolyer and MacNaughton to prepare a National Instrument 51-101-compliant evaluation on Excelsior's Hangingstone property; the evaluation report is expected to be completed shortly and will be published at such time.

About Excelsior Energy:

The Company is active in oil sands exploration and appraisal in the Hangingstone area near Fort McMurray, Alberta and also holds a 100% working interest in Blocks 16/1a and 16/6c in the UK North Sea and minor interests in gas production in Alberta.

The Company strategy is to capture oil and gas appraisal and development opportunities where we can leverage Management's diverse international experience and field development expertise, which includes heavy oil reservoir engineering and development of complex fields. The scale of the oil sands resource opportunity in Alberta complements Excelsior's international portfolio and strategy.

Forward-Looking Statements: This news release contains statements about future events that are forward looking in nature and, as a result, are subject to certain risks and uncertainties such as changes in plans or the occurrence of unexpected events. Actual results may differ from the estimates provided by management. Readers are cautioned not to place undue reliance on these statements.

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