Second Wave Petroleum Agrees to Acquire Milagro Energy

Second Wave Petroleum Ltd. has entered into a formal agreement with Milagro Energy Inc. whereby Second Wave will make a formal bid to acquire all of the issued and outstanding common shares of Milagro. Pursuant to the Bid Agreement, Second Wave will offer to acquire all of the outstanding Common Shares of Milagro (the "Offer") through the issuance of up to 5,000,000 units comprised of 0.0298 of a Class A Share of Second Wave and 0.0298 of a share purchase warrant to acquire one Class A Share of Second Wave. Each whole warrant shall entitle the holder to purchase one Class A Share of Second Wave at a price of $0.40 for one year from the closing date of the Transaction. Upon closing of the Offer, Second Wave will be assuming all of Milagro's estimated net debt of approximately $22 million.

Second Wave intends to prepare and issue a Take-Over Bid Circular in early March, 2008 in accordance with all applicable corporate and securities laws and the rules of applicable stock exchanges including the TSX for Milagro and the TSXV for Second Wave. The Offer is subject to a minimum of not less than 66 2/3% of the Common Shares of Milagro then outstanding, on a fully diluted basis, being validly tendered and not withdrawn under the Offer. The independent directors of Second Wave and the Board of Milagro have unanimously approved the Transaction. In addition, the Board of Milagro has concluded that the Transaction is fair and in the best interests of Milagro's shareholders and has agreed to recommend that the shareholders of Milagro tender their shares to the Offer. All Officers and Directors of Milagro have entered into Lock-up Agreements with Second Wave whereby they have agreed to support the Transaction and tender their shares to the Offer.

In order to facilitate the Transaction and upon closing of the Offer, Second Wave will be proceeding with a $23 million financing in which Brookfield Bridge Lending Fund Inc. ("Brookfield") has agreed to back stop a private placement of up to $10 million of equity and a new floating rate convertible junior secured debenture financing (the "Debenture") of $13 million principal amount to Second Wave. The private placement and Debenture financings will enable Second Wave to eliminate all of the estimated net debt of Milagro on the completion of the Milagro Transaction. On the closing date of the Transaction, Brookfield will own approximately 57% of the issued Class A Shares of Second Wave and upon conversion of the Debenture, Brookfield will own or control approximately 63% of the issued and outstanding Class A Shares of Second Wave.