Second Wave Petroleum Mails Offer to Shareholders of Milagro

Second Wave Petroleum Ltd. announced that the Offer to Purchase and related Circular for all of the common shares of Milagro Energy Inc. by Second Wave Holdings Ltd., a wholly-owned subsidiary of Second Wave, was mailed on March 28, 2008 to the shareholders of record of Milagro. Pursuant to the Offer, Holdings will purchase all of the issued and outstanding common shares of Milagro 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 Offer. Upon closing of the Offer, Second Wave will be assuming all of Milagro's estimated net debt of approximately $22 million.

In order to facilitate 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 at a price of $0.25 per share and a floating rate convertible junior secured debenture financing (the "Debenture") of $13 million principal amount of Second Wave. The Debenture will be exercisable into Class A Shares of the Company at $0.3125 per share until two years after the closing date of the Offer. 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 Offer. On the closing date of the Offer, 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.

The directors of Milagro have determined that the Offer is in the best interests of the Milagro Shareholders and sent a Directors' Circular to all the Milagro Shareholders whereby it advises that the directors of Milagro have unanimously determined that the Offer is fair, from a financial point of view, to the Milagro Shareholders and is in the best interests of Milagro and the Milagro Shareholders and unanimously recommends that the Milagro Shareholders accept the Offer. Thomas Weisel Partners Canada Inc. has acted as financial advisor to Milagro in connection with the Offer and has provided a written opinion that the consideration to be received by the Milagro Shareholders under the Offer is fair, from a financial point of view, to the Milagro Shareholders.

The Offer is subject to certain conditions, including the deposit of not less than 66 2/3% of the outstanding common shares of Milagro being validly tendered and not withdrawn under the Offer. Second Wave's Offer should be received by the Milagro Shareholders this week and shareholders may tender their shares to the Offer up to 4:30 p.m. (Calgary time) on May 5, 2008.

The Milagro Shares are listed and posted for trading on the TSX under the symbol "MIG". Milagro was notified by the TSX on February 5, 2008 that its shares would be delisted on March 5, 2008. Following the announcement of the Offer, Milagro was notified by the TSX that the date for delisting would be extended to the later of the closing date of the Offer or April 30, 2008. As of December 31, 2007, Milagro was in default and continues to be in default on its approximate $18 million credit facilities.

Milagro Shareholders who tender to the Offer and upon the proposed transaction proceeding, will be provided with continued participation in the upside of the existing Milagro asset base while providing exposure to Second Wave's emerging light oil play in Tableland, Saskatchewan. Milagro's core areas are complementary to Second Wave's existing acreage and as such, Second Wave expects that the combined entity will realize significant operational and administrative savings through the combination of the two companies and the restructuring of Milagro's debt facilities. Upon closing of the proposed transaction, the combined entity will have a solid production base consisting of 820 boe/d (62% oil and 38% natural gas) and approximately 74,000 undeveloped acres.

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