Enhanced Oil Resources Inc. Reports $10.3 Million in Revenues (94% Increase), $2.6 Million Cash Flow from Operating Activities and a Net Loss of $1.0 Million for 2010.

HOUSTON, May 4 /CNW/ - Enhanced Oil Resources Inc. (TSX-V: EOR) today announces its audited financial results for the year ending December 31, 2010.

Results of operations for the year ended December 31, 2010, included crude oil and natural gas sales revenues of $10.3 million, and a net loss of $1.0 million, compared to revenues of $5.3 million and a net loss of $6.2 million for the year ended December 31, 2009.  Oil production for 2010 totaled 166,210 gross oil equivalent barrels ("Boe"), an increase of 73% over the 96,237 gross Boe produced in 2009. Improving oil prices also contributed to the Company's increased revenue, with the Company's oil production averaging US $75.40 per Boe for 2010 as compared to US $59.54 per Boe for 2009.  These results continue a trend begun in late 2009 of increased oil production and improved oil prices that has resulted in increased cash flows from operating activities.  Cash flows provided by operating activities for 2010 were $2.6 million compared to cash used in operating activities of $2.2 million in 2009, with 2010 representing the first full year of positive operating cash flow in the Company's history. Our lifting costs increased to US $19.68 per Boe for 2010 as compared to US$13.87 per Boe for 2009, primarily as a result of increased water disposal costs at Crossroads field, and workover costs in our more marginally economic fields initiated primarily as a result of increased regulatory requirements.  For the fourth quarter of 2010, the Company reported a net loss of $0.7 million compared to a net loss of $0.2 million for the fourth quarter of 2009, principally related to increased personnel cost and an unrealized loss on crude oil derivative contracts related to future oil production.

In 2010, the Company's oil production averaged 455 BOPD compared to an average of 349 BOPD in 2009.  Production costs for 2010 increased significantly over 2009 to $4.2 million as compared to $1.7 million, due to increases associated with our higher production volumes.  Production costs also included an increase in workover costs in the Chaveroo and Milnesand fields, principally related to responses to regulatory activity in these two fields and a period of increased water hauling costs from April thru June at the Crossroads field when we expanded our water handling and disposal facilities.

At December 31, 2010, we had cash on hand of $0.6 million and working capital of $0.2 million, a decrease of $0.8 million in cash and $1.2 million in working capital since December 31, 2009.

Our general and administrative costs decreased $0.5 million to $3.3 million for the year 2010 as compared to $3.8 million in 2009, principally associated with reduced personnel costs in 2010 compared to 2009, including reductions in related travel and other related general and administrative expenses.

Chief Executive Officer Barry Lasker stated "2010 was a watershed year for the Company as the $2.6 million of cash provided from operations was the first operating cash flow in its history. We continue to work diligently to increase production from our New Mexico oilfields and to further enhance the value at St Johns. Our focus for the remainder of this year is to initiate our infill drilling program at Milnesand, drill our final two commitment wells at St Johns and to prepare the necessary filings for the proposed St Johns Helium extraction and liquefaction plant. We thank our shareholders for their support this last year."

The Company also announces the grant of incentive stock options to members of the Company's Board of Directors, management and employees entitling the purchase upon vesting, for a period of five years, of 1,710,000 shares of the Company's Common Stock at a price of $0.25 per share pursuant to the terms of the Company's Stock Option Plan approved by shareholders on November 18, 2010.

About Enhanced Oil Resources Inc.

Enhanced Oil Resources Inc. is an early-stage company, with two principal business segments of

(i)     Crude oil and natural gas production through enhanced oil recovery ("EOR") projects it is initiating in the Permian Basin on oil fields acquired by the Company in 2007 and 2008 for that purpose.

(ii)     Helium and CO2 resource exploration and production through property interests it controls in approximately 251,000 gross acres of land within the St Johns Helium/CO2 field in Arizona and New Mexico, and where the Company is developing what is thought to be the largest undeveloped helium and carbon dioxide field in North America.

Forward-Looking Statement

Certain statements contained herein are forward-looking statements, including statements relating to Enhanced Oil Resources' operations; business prospects, expansion plans and strategies.  Forward-looking information typically contains statements with words such as "intends," "anticipate," "estimate," "expect," "potential," "could," "plan" or similar words suggesting future outcomes.  Readers are cautioned not to place undue reliance on forward-looking information because it is possible that expectations, predictions, forecasts, projections and other forms of forward-looking information will not be achieved by Enhanced Oil Resources.  By its nature, forward-looking information involves numerous assumptions, inherent risks and uncertainties.  A change in any one of these factors could cause actual events or results to differ materially from those projected in the forward-looking information.  Although Enhanced Oil Resources believes that the expectations reflected in such forward-looking statements are reasonable, Enhanced Oil Resources can give no assurance that such expectations will prove to be correct.  Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by Enhanced Oil Resources and described in the forward-looking statements or information. The forward-looking statements are based on a number of assumptions which may prove to be incorrect.  Readers should be aware that the list of factors, risks and uncertainties set forth above are not exhaustive. Readers should refer to Enhanced Oil Resources' current filings, which are available at www.sedar.com, for a detailed discussion of these factors, risks and uncertainties.  The forward-looking statements or information contained in this news release are made as of the date hereof and Enhanced Oil Resources 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 laws or regulatory policies.

ON BEHALF OF THE BOARD OF DIRECTORS

(signed)

Barry D Lasker, CEO

Neither 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. 

SOURCE Enhanced Oil Resources Inc.

For further information:

For more information visit our Website at www.enhancedoilres.comor please call Don Currie on 1-888-990-3551.

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Enhanced Oil Resources Inc.

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