Eagle Rock Exploration Purchases Certain Petroleum, Nat. Gas Rights

Eagle Rock Exploration has accepted a non-binding offer to purchase from an arm's length party, certain petroleum and natural gas rights and associated wells and facilities in the Red Coulee area of southern Alberta and the Beverley area of south west Saskatchewan. The proposed transaction represents 310 bbls/d (July 2009 average production) of crude oil production and 18,000 acres (net) of leases (primarily Crown).

The purchase price is approximately $21 million, subject to normal industry closing adjustments.

The transaction is subject to the completion of due diligence, negotiating a formal purchase and sale agreement and obtaining the necessary third party consents, governmental and regulatory approvals. The transaction will be considered a "reviewable" transaction under the policies of the TSX Venture Exchange ("Exchange"), requiring the approval of the shareholders of Eagle Rock, such approval being acceptable to the Exchange if obtained by the written consent of a majority of shareholders.

The parties expect to complete the due diligence by September 8, 2009. The purchase and sale is expected to close October 15, 2009 with an effective date of September 1, 2009.

National Bank Financial acted as financial advisor to Eagle Rock for this transaction and is expected to continue to assist Eagle Rock in exploring strategic relationships and restructuring alternatives.

Should the transaction proceed as expected, Eagle Rock will retain production of approximately 135 boe/d (80% crude oil and 20% natural gas) from the Coutts, Spring Coulee and Enchant areas of southern Alberta. Eagle Rock reported net debt of $20.3 million as at June 30, 2009 which was reduced by $1.2 million as a result of an August 2009 property sale. Should the transaction announced today close, Eagle Rock will have a positive working capital surplus of approximately $1.5 million.


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