North Peace to be sole owner of Red Earth leases

North Peace Energy Corp. will increase its stake in certain oil sands leases in north-central Alberta's Red Earth area through a proposed plan to buy Peace Oil Corp.'s interest in the Red Earth leases for $20 million (Can.) in cash and stock.

June 18, 2007

By OGJ editors
HOUSTON, June 18 -- North Peace Energy Corp. will increase its stake in certain oil sands leases in north-central Alberta's Red Earth area through a proposed plan to buy Peace Oil Corp.'s interest in the Red Earth leases for $20 million (Can.) in cash and stock.

Peace Oil is North Peace's joint venture development partner in the Red Earth leases.

North Peace has entered into a binding letter agreement with Peace Oil and Peace Oil's indirect parent company, Surge Global Energy Inc., and is committed to issue $5 million (Can.) of common shares, which will be subject to a contractual 1-year hold period.

The transaction is expected to close as early as June 28 or as late as Sept. 1.

Upon closing, North Peace's holdings in the Red Earth leases will increase to 100% interest from 70%.

The company recently reported that it is confident about the commercial potential of the leases in the Red Earth area, and it has confirmed that plans for a cyclic steam stimulation pilot project are advancing as scheduled, with the first steam cycle expected in late 2008 or early 2009.