2010-08-31-2010-08-27

To earn 60% of the landowner's available mineral interests in the approximate 15,800 gross ares (13,600 net acres) by drilling a minimum of two lateral wells.

Epsilon Energy Ltd., Concord, Ontario, (Toronto: EPS) has entered a letter of intent for a joint venture with a U.S.-based private landowner for development of a potential oil play in the southern U.S.

Epsilon is expected to drill a minimum of two lateral wells to test horizontal enhancement at an estimated cost of US$10 million to earn 60% of the landowner's available mineral interests in the approximate 15,800 gross (13,600 net) acres it owns or controls.

Epsilon executive chairman, president and chief executive Zoran Arandjelovic says, "We are extremely pleased to be partnering with this large land owner and consider it a very advantageous strategic move for Epsilon to better balance its oil and gas interests. The acreage subject to the proposed joint operating agreement is in the immediate proximity of an existing producing oil fairway."

He adds Epsilon expects the expenditures to commence in the second quarter of 2011.

The deal is expected to be effective by Oct. 1.