Eagle Rock Exploration has entered into formal binding agreements for the arm's length acquisition of the outstanding shares of three private oil & natural gas companies for an aggregate cash consideration of $4.5 million. The purchase price is comprised of approximately $4.1 million for petroleum and natural gas interests and $0.4 million for working capital. No debt is being assumed by Eagle Rock on this transaction.

As previously announced, the acquisitions of the Privatecos are expected to add production of approximately 28 bbls/day oil and 390 mcf/d natural gas. Collectively, the Privatecos hold a 100% working interest and operatorship in a natural gas property in the Conrad area of southern Alberta and a 74.5% working interest and operatorship in an oil property in the Beverley area of southwest Saskatchewan. The Beverley property includes a facility which will accommodate the Company's current production from the area and thereby eliminate third party processing costs.

The formal agreements provide for an effective date for the acquisitions of October 1, 2008. The acquisitions do not include any commitments for office facilities or employees.

The Company's demand revolving credit facility with a Canadian chartered bank increased to $15.5 million (previously $9.0 million) in anticipation of this acquisition and in light of production increases. The demand development credit facility has also increased to $4.0 million from $3.5 million. The development facility has been drawn as of this date to finance capital expenditures incurred in Q3 and Q4 2008.

The revolving facility incurs interest at the bank's prime lending rate (currently 4.0%) plus 0.375% and the development facility incurs interest at the bank's prime lending rate plus 0.75%. The development facility also requires principle payments of $100,000 per month commencing February 1, 2009. The credit facilities are subject to review by March 31, 2009.

The acquisitions of the three Privatecos are expected to close on or about December 15, 2008, and will be subject to the valid deposit of at least 90% of the outstanding shares of one of the Privatecos no later than December 15, 2008, and regulatory approval.

Tags: Eagle Rock Exploration Ltd.