Enhanced Oil Resources Inc. Provides Corporate and Operations Update



    HOUSTON, Aug. 27 /CNW/ - Enhanced Oil Resources, Inc. (TSX-V: EOR) today
provides the following update on corporate and operational activity.
    As previously reported the Company has been actively pursuing a
production enhancement program at its oilfields in New Mexico with the purpose
of increasing near term oil production in a cost effective manner at a time
when costs for goods and services have been reduced. At the Company's 98.5%
owned Crossroads Siluro-Devonian Unit in Lea County, New Mexico the Company
has increased water injection capacity at its water disposal well and at the
same time has began the process of increasing the pump capacity in several of
the producing wells. The Crossroads No.302 well which was reactivated on July
30th continues to produce approximately 115 barrels of oil per day (BOPD)
since production recommenced. The Crossroads No.303 well was worked over on
August 18th and is currently producing approximately 70 BOPD (36 BOPD prior).
Unit production has averaged 226 BOPD during August while Company wide
production has averaged approximately 322 BOPD for the same period. The No.303
well is one of four wells where the Company believes production can be
enhanced by using bigger down-hole pumps. Since the Company's acquisition of
the Crossroads Siluro-Devonian Unit, average daily production has increased
600%.
    At the Company's wholly owned Milnesand San Andres Field the CO2 pilot
flood area has now been converted to water injection. Currently there are 7
producers and 9 water injector wells within the pilot flood area and make-up
water is now being injected. Several analogous water floods in the area have
had tremendous results and we are hopeful that the Milnesand Unit will respond
accordingly. We will provide additional information as it comes to hand. A
resource study on the waterflood potential at Milnesand has been commissioned
with results expected within the next 30 days. In addition, all CO2 pilot data
has now been provided to our independent reserves engineers and we expect to
see the results of the Milnesand CO2-EOR mid year reserves study also within
the next 30 days.
    The Company continues to reduce corporate overhead where possible. Our
current forecast for the third quarter General and Administrative costs is a
reduction of approximately 25% over the second quarter and we expect a further
reduction in the fourth quarter of approximately 40% as salary reductions and
severance payments to terminated employees cease. Our current monthly overhead
is approximately $250,000 and the expectation for the fourth quarter is
$220,000 per month. At a current oil price of $70 per barrel and current
production rates of 320 bopd we estimate that net cash to the Company on a
monthly basis is approximately $320,000 and is currently covering our monthly
overhead expense. We estimate that, at our current overhead and with a stable
production base, the Company requires a break even oil price of approximately
$50 per barrel and that presently the Company is generating positive cash from
operations.
    Mr. Barry Lasker reports "With our recent successful developments at the
Crossroads field the Company has averaged in excess of 320 bopd during the
month of August. Congratulations must go to our technical team in Midland and
at the oilfields for these results. As previously reported our current
year-to-date operating cost at Crossroads is approximately $6 per barrel and
at current oil prices of WTI $70 per barrel the approximate netback to the
Company's interest should be above $45 per barrel. We have been diligently
working to reduce corporate overhead where possible and we believe we are now
seeing those efforts resulting in positive cash flow for the Company."

    
    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 CO(2) resource exploration and production through
         property interests it controls in approximately 251,000 gross acres
         of land within the St Johns Helium/CO(2) 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.
    

    %SEDAR: 00004538E




For further information:

For further information: visit our Website at www.enhancedoilres.com. or
please call Don Currie on 1-888-990-3551

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Enhanced Oil Resources Inc.

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