Source Petroleum Announces Signing of Agreement for Major Acquisition

Source Petroleum Announces Signing of Agreement for Major Acquisition

Source Petroleum, Inc. (OTCBB:SOPO), a Canadian oil and gas exploration and development company, announced today that it has executed a definitive agreement for the acquisition of Source Projects, Inc., a privately held oil and gas company headquartered in Calgary, Alberta. The acquisition, which is anticipated to be completed before the end of August 2006, will be a stock only transaction. Once completed, it will significantly increase Source Petroleum’s opportunities by adding over 1 million acres of drilling leases for heavy oil and natural gas exploration.

“This acquisition holds a tremendous amount of potential for Source Petroleum. This is the next step in our plan to foster rapid growth and build solid, long-term shareholder equity,” says Jeff Gillis, President and Chief Executive Officer of Source Petroleum, Inc.

“This acquisition, once completed, will bring with it the shared drilling rights to a wealth of oil sands and natural gas reserves in some of the most prolific production regions in North America. On the heels of our successful USD $6 million private placement, we anticipate that Source Petroleum could quickly become a major presence in the Canadian oil industry as we exploit the possible resources from this future acquisition. In the meantime, we will continue evaluating a number of other very promising domestic and international opportunities, all aimed at further increasing our heavy oil exposure in Western Canada,” continues Gillis.

Under the terms of the agreement, Source Petroleum will acquire 100% control of Source Projects Inc., which has the following assets:

* 800,000+ acres of exploration leases in the Pasquilla Hills area of Saskatchewan, wherein Source would retain 87.5% interest and Can West Petroleum would retain the remaining 12.5%. These properties are believed to hold reserves in excess of 3.4 Billion bbls of heavy oil (bitumen) and potential shale gas reserves of .5 – 1 tcf of shallow gas. * Six sections in the prolific Peace River oil sands district in Harmon Valley, Alberta (North Sawn Lake), wherein Source Petroleum would retain 50% interest and Dual Exploration would retain the remaining 50%. Operations here would target the Blue Sky formation 12 miles southwest of Shell Canada’s Caddote project (12,700 BOPD), (51,000,000 bbls recovered to date) where historical wells and log data show excellent cold flow recovery potential and potential reserves of 260 million — 400 million bbls. Source would also earn a 50% interest by drilling 6 horizontal wells which can be tied in for immediate production. Secondary recovery methods have the potential to drastically increase recovery amounts.

* High Impact gas play properties targeting the well-defined Wabamun formation in Woking, Grand Prairie, Alberta, approximately 17 miles east of the Saddle Hills discovery that has produced over 41 bcf of gas from 4 wells from same formation since 2002. The properties, which Source would retain 37.5% interest and Dual Exploration would retain the remaining 62.5%, is anticipated to hold 40 – 50 bcf of potential gas reserves from multi zones, is already close to existing infrastructure. Drilling on these properties is expected to begin in September / October of this year.

Closing of the acquisition of Source Project Inc. is subject to a number of customary closing conditions and is scheduled on or before August 8, 2006, or on such other date as the parties may agree.

Except for the historical and present factual information contained herein, the matters set forth in this release include statements of management’s current expectations. Statements identified by words such as “expects,” “projects,” “plans,” “believes,” “estimates,” and similar expressions are forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the possibility that the anticipated benefits from Source’s operations cannot be fully realized, the possibility that commodity prices, costs or difficulties related to the conduct of its business will be greater or lesser than expected, and the impact of competition and other risk factors relating to our industry will be greater than expected, all as detailed from time to time in the company’s reports filed with the SEC. The company disclaims any responsibility to update these forward-looking statements.


Source Petroleum Inc.
Jeff Gillis, 778-863-2259

Source: Source Petroleum Inc.

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