Eagle Rock Exploration Ltd. Announces Southwest Saskatchewan Property Acquisitions and $47.4 Million Bought Deal Financing

CALGARY, ALBERTA--(Marketwire - Oct. 15, 2009) -


Eagle Rock Exploration Ltd. ("Eagle Rock" or the "Company") (TSX VENTURE:ERX) is pleased to announce Eagle Rock has entered into agreements to acquire certain properties located in southwest Saskatchewan (the "Acquisitions").

The total aggregate consideration for the Acquisitions is approximately $34 million comprised of $29.5 million of cash in addition to the issuance 30.8 million common share of Eagle Rock ("Common Shares") at a deemed price of $0.15 per Common Share. All of the properties are operated with high working interests ranging from 93% to 100%. Through the Acquisitions, Eagle Rock is acquiring long reserve life, high netback, medium and light oil assets focused in southwest Saskatchewan.

The Acquisitions consist of approximately 235 barrels per day ("Bbls/d") of medium and light gravity oil production and 27.5 net sections of land in the Eastend and Dodsland areas of southwest Saskatchewan.

The primary component of the Acquisitions is a significant acquisition from Bonterra Oil & Gas Ltd. ("Bonterra Asset Acquisition") that is anticipated to close on November 6, 2009.

Highlights of the Bonterra Asset Acquisition(1)


Current Production: 200 Bbls/d (100% medium gravity oil)

Proved plus probable reserves: 1.3 Mmbbls

Proved plus probable RLI: 17.4 years

Land: 12,000 net acres

Total development drilling locations: 110 gross, 102 net

Lower Shaunavon drilling locations: 60 gross, 55 net

Operating net back(2): $35.00 per boe


(1) Reserves evaluated by an independent third party as at

December 31, 2008, in accordance with National Instrument 51-101 and

mechanically updated to September 30, 2009 in each case.

(2) Based on US$70.00/Bbl WTI and US$/CDN$ exchange rate of 0.92

and calculated by subtracting royalties and operating costs

from revenues.


The balance of the properties acquired through the Acquisitions will see Eagle Rock acquire 35 Bbls/d of light oil production and nine net sections of land in the Dodsland area of southwest Saskatchewan.


The Acquisitions and Financing are accretive to Eagle Rock on a per share basis on all key metrics. Net of the internally estimated land value of $10 million based on management understanding of recent land sale prices in the areas, the transaction metrics are as follows:


Production $100,000 per producing boe

Proved plus probable reserves $15.50 per boe

Proven plus probable recycle ratio 2.6 times


FirstEnergy Capital Corp. and Peters & Co. Limited are acting as co-financial advisors with National Bank Financial Inc. acting as strategic advisor to Eagle Rock in respect to the Acquisitions.


To fund the purchase of the Acquisitions, Eagle Rock has entered into an agreement with a syndicate of underwriters, co-led by National Bank Financial Inc. and Peters & Co. Limited, and including FirstEnergy Capital Corp., Paradigm Capital Inc., GMP Securities L.P. and Cormark Securities Inc. (collectively, the "Underwriters"), pursuant to which the Underwriters have agreed to purchase for resale to the public, on a bought deal basis, 316,000,000 subscription receipts of Eagle Rock ("Subscription Receipts") at price of $0.15 per Subscription Receipt for gross proceeds of $47.4 million (the "Financing"). In addition, the Underwriters have been granted an over-allotment option, exercisable for a period of 30 days following closing of the Financing, to purchase a further 47,400,000 Subscription Receipts, at a price of $0.15 per Subscription Receipt for additional gross proceeds of $7.1 million.

Sixty percent (60%) of the proceeds of the Financing (the "Escrowed Funds") shall be held in escrow by Olympia Trust Company as escrow agent, and forty percent (40%) shall be immediately released to Eagle Rock on closing of the Financing. Upon closing of the Bonterra Asset Acquisition, each holder of a Subscription Receipt shall receive one (1) Common Share without any further action or payment of any additional funds, and the Escrowed Funds shall be released to Eagle Rock. If the Bonterra Asset Acquisition is not completed by November 30, 2009, holders of Subscription Receipts shall receive their pro rata portion of the Escrowed Funds and 0.4 of a Common Share for each Subscription Receipt.

The net proceeds may also be used to fund Eagle Rock's ongoing exploration and development activities and for general corporate purposes. Closing of the Financing is subject to customary conditions and regulatory approvals, including the approval of the TSX Venture Exchange (the "TSXV"). Closing is expected to occur on or about November 6, 2009 and, in any event, will occur following the record date for the Company's previously announced rights offering (the "Rights Offering"). Subscribers under the Financing will not be entitled to rights under the Rights Offering.


The Acquisitions increase Eagle Rock' inventory on two resource oil opportunities in its core focus area of southwest Saskatchewan. On closing of the Acquisitions, Eagle Rock will have production of approximately 700 Boe/d, (95% oil) and proven plus probable reserves of approximately 4.1 Mmboe (96% oil). In addition, management estimates that it will have a net resource oil drilling inventory of in excess of 100 locations and 75 net oil wells in its conventional oil drilling inventory.

Upon completion of the Financing and the Acquisitions, Eagle Rock will have approximately $10 million of working capital. With a strong balance sheet, Eagle Rock will be able to undertake an estimated $30-40 million capital program over the next 18 months. Post closing of this Financing Eagle Rock will have an undrawn banking facility of $16 million.


Eagle Rock trades on the TSXV under the symbol "ERX". Eagle Rock currently has 380 million Common Shares outstanding as well as 230 million Common Share purchase warrants. Eagle Rock anticipates that it will have approximately 726.8 million Common Shares outstanding as well as 230 million Common Share purchase warrants following the completion of the Acquisitions and the Financing, but excluding the over-allotment option and the previously announced Rights Offering.


The securities offered have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.


This press release contains forward-looking statements. More particularly, this press release contains statements concerning the anticipated dates for the closing of the disclosed transactions and the anticipated accretive impact of the transactions on Eagle Rock.

The forward-looking statements contained in this document are based on certain key expectations and assumptions made by Eagle Rock, including: (i) with respect to the anticipated closing dates of the transactions, expectations and assumptions concerning timing of receipt of required shareholder, court and regulatory approvals and third party consents and the satisfaction of other conditions to the completion of the transactions and (ii) with respect to the anticipated accretive impact of the transaction on Eagle Rock, expectations and assumptions concerning the success of future drilling and development activities, the performance of existing wells, the performance of new wells and prevailing commodity prices.

Although Eagle Rock believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Eagle Rock can give no assurance that they will prove to be correct.

Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the failure to obtain necessary regulatory approvals or satisfy the conditions to closing the transactions, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price and exchange rate fluctuations and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Certain of these risks are set out in more detail in Eagle Rock's Annual Information Form which has been filed on SEDAR and can be accessed at www.sedar.com.

The forward-looking statements contained in this document are made as of the date hereof and Eagle Rock undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.


When used in this press release, boe means a barrel of oil equivalent on the basis of 1 boe to thousand cubic feet of natural gas. Boepd means a barrel of oil equivalent per day.

Boe's may be misleading, particularly if used in isolation. A boe conversion ratio of 1 boe for 6 thousand cubic feet of natural gas is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Neither the TSX Venture Exchange nor its regulation services provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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