Heartland to Acquire Evergreen Resource's Kansas CBM Assets

Heartland Oil and Gas has signed a letter of intent with Evergreen Resources, Inc. to purchase Evergreen's Forest City Basin CBM assets in eastern Kansas for $22 million, of which $2 million has been advanced by way of refundable deposit. The transaction is scheduled to close on September 24, 2004, and is subject to Heartland obtaining the necessary financing, and the execution of a definitive Purchase and Sale Agreement.

The assets to be acquired will comprise all of Evergreen's interests in the Forest City Basin ("FCB"), including leases totaling 766,000 acres, 60 well bores, surface equipment, gathering and surface facilities, as well as all geological, engineering, land and accounting data and records. Evergreen's assets are complimentary and contiguous to Heartland's leasehold interest of approximately 252,000 acres in what is believed to be the thickest of the coal fairway in the FCB.

Upon closing the Evergreen acquisition, Heartland will hold in excess of 1 million acres of prospective CBM leases at various stages of development, 88 wells, including 43 CBM wells in eight pilots that are currently dewatering and/or venting gas, 37 CBM wells awaiting stimulation, and 8 saltwater disposal wells. Essentially all leaseholds are fee acreage, and thus far, water is easily disposed by injection into deeper zones.

As a condition to closing, and to assist Heartland with its analysis and development of its FCB CBM assets going forward, Evergreen's executive officers, consisting of Mr. Mark Sexton (CEO), Mr. Dennis Carlton (COO), Mr. Scott Zimmerman (VP Operations/Engineering) and Mr. Kevin Collins (CFO), have agreed to serve on Heartland's advisory board for a minimum period of two years. Heartland will also retain all of Evergreen's existing Kansas based CBM field personnel.

To facilitate its expanding operations in the FCB, Mr. Phil Winner, the Company's recently appointed COO, will open Heartland's Denver office, as well as a field office in Topeka, Kansas. As COO, Phil's responsibilities will include working with Heartland's Board of Directors, the newly formed "advisory board" as well as managing Heartland's field operating team in Kansas.

To finance the purchase and to provide working capital for development of the FCB assets, Heartland Oil and Gas Corporation has entered into an agreement with C.K. Cooper & Company and Sterne, Agee & Leach to arrange the necessary acquisition and post closing working capital financing.

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