Exxel Energy Corp.
TSX VENTURE : EXX

Exxel Energy Corp.

July 11, 2007 15:49 ET

Exxel Energy Corp.: Company Announces Entering Into of Letter of Intent

HOUSTON, TEXAS--(Marketwire - July 11, 2007) - Exxel Energy Corp. ("Exxel" or the "Company") (TSX VENTURE:EXX) announced today that, upon completion of due diligence, its board of directors has approved the entering into of a non-binding letter of intent ("LOI") with EnCana Oil & Gas (USA) Inc. ("EnCana") for the purpose of the acquisition of a portion of EnCana's interest in the Columbia River Basin, Washington ("CRB").

The LOI provides for Exxel's wholly owned Subsidiary Exxel Energy USA Inc. ("Exxel USA") to pay approximately US$21,500,000, subject to certain adjustments, to EnCana to acquire an undivided twenty percent (20%) working interest in leases ("Leases") in approximately 375,000 gross (75,000 net) acres in the CRB, including a 20% working interest in the Brown 7-24 well.

Exxel USA and EnCana are attempting to negotiate a formal and definitive binding acquisition and exploration agreement ("AEA") regarding the purchase and sale of the assets over the next several weeks. It is anticipated that the AEA will be subject to Exxel USA raising sufficient funds to effect the completion of the transaction. Additionally, the final AEA will be subject to approval of the board of directors of Exxel and Exxel USA and Exxel obtaining all required regulatory approvals including that of the TSX Venture Exchange.

Exxel entered into the LOI and intends to complete the transaction based on the following rationale:

- Transaction includes leases in the CRB, primarily centered around the key past (Yakima 1-33, BN 1-9) and current (Anderville Farms #1, Anderson 11-5 and Brown 7-24) drilling activity in the basin

- Undivided working interest owner in the Leases

- Participation in the Brown 7-24 well (20% working interest), currently drilling and past the base of basalt

- Ability to participate on an unpromoted basis in current and future exploration and development of acreage covered by the Leases within the CRB, including the Yakima Fold Belt, Saddle Mountain and Hog Ranch High

- Transaction would position the Company as the leading junior exploration and production company in the CRB (all in the state of Washington) with a total interest of over 700,000 gross (425,000 net) acres in this emerging natural gas play

Exxel cautions that since the LOI does not constitute a binding agreement and neither of the parties is currently committed to any definitive agreement and the LOI does not give rise to any binding obligations, except for confidentiality provisions, the acquisition may not be completed. Furthermore, any party may terminate negotiations at any time without any obligation or liability whatsoever.

Cliff Adams, CEO of Exxel, commented that "We are very excited about this opportunity to expand our position in this highly prospective basin. Our due diligence regarding the wells that have been drilled to date and the Brown well, which is currently drilling, confirms our geologic model of the basin. This transaction gives Exxel the opportunity to take advantage of the knowledge gained from the first two wells and to purchase an interest in the Brown well, which is currently drilling past the basalt and in the sedimentary section. With the drilling data gained through our due diligence and our current geologic model and expertise, Exxel management believes it has a knowledge base and acreage position to take advantage of many different prospect play concepts."

About Exxel Energy Corp.

Exxel, headquartered in Houston, is an independent oil and gas exploration and development company focused in the Columbia River Basin of Washington, the Piceance Basin of Colorado, the Great Basin of Nevada, the Greater Green River Basin of Wyoming and the Williston Basin of North Dakota. The company currently has interests in approximately 350,000 net acres in the Columbia River Basin of Washington, approximately 4,500 net acres in the Piceance Basin of Colorado, approximately 200,000 net acres in the Great Basin in Nevada, approximately 31,800 net acres in the Greater Green River Basin in Wyoming and 10,400 net acres in the Williston Basin in North Dakota.

In the interests of providing Company shareholders and potential investors with information regarding the Company, including the Company's assessment of its and its subsidiaries' future plans and operations, certain statements included in this press release may constitute forward-looking information or forward-looking statements (collectively, "forward-looking statements"). All statements contained herein that are not clearly historical in nature are forward-looking, and the words "anticipate", "believe", "expect", "estimate" and similar expressions are generally intended to identify forward-looking statements. Similarly, forward-looking statements in this press release include, but are not limited to anticipated developments of the Company's drilling project in and the timing thereof, the Company's drilling project in and the timing thereof, capital investment levels and the allocation thereof, pipeline capacity, government royalty rates, reserve and resources estimates, the level of expenditures for compliance with environmental regulations, site restoration costs including abandonment and reclamation costs, exploration plans, acquisition and disposition plans including farmout plans, net cash flows, geographic expansion and plans for seismic surveys. In addition, please note that statements relating to "reserves" or "resources" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves and resources described can be profitably produced in the future. Such statements represent the Company's internal projections, estimates or beliefs concerning, among other things, an outlook on the estimated amounts and timing of capital expenditures, anticipated future debt levels and incentive fees or revenues or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance.
These statements are only predictions. Actual events or results may differ materially. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievement since such expectations are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause the Company's actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, the Company and the foregoing list of important factors is not exhaustive. These forward-looking statements are made as of the date hereof disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise. Company shareholders and potential investors should carefully consider the information contained in the Company's filings with Canadian securities administrators at www.sedar.com before making investment decisions with regard to the Company.

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

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