Blugrass Announces Letter of Intent to Acquire Producing Properties

DALLAS, May 20, 2011 /PRNewswire/ -- Blugrass Energy Inc. (OTC.BB: BLUGD), currently doing business as Rio Grande Petroleum Inc., today announced that it has entered into negotiations to acquire a non-operating minority interest in producing oil and gas properties located in Texas and Oklahoma.  The properties are comprised of over 90 producing wells, and the minority ownership interest ranges from 2% to 7% per well.

The properties under lease are managed by several nationally-renowned operating companies.  Supported by an independent engineering report, the properties are reported to have a PV10 value of proven reserves of approximately $50 million, and the properties currently generate in the range of $400,000 monthly revenue for the owner of the minority interest.

The Letter of Intent is non-binding and the proposed acquisition would be subject to normal contingencies, including valuation of the properties and financing.  The Company anticipates funding the proposed acquisition and its future development efforts in part, with a combination of traditional bank financing, plus other financing to be arranged through the Company's investment banking professionals.

As earlier announced, the Company is building a portfolio of oil and natural gas projects, and this project, with its large number of oil and gas producing wells, would provide an immediate portfolio effect for the Company's shareholders.  This project would also afford the Company an opportunity to add value – in reserves and cash flow -- as additional drilling opportunities arise on the properties under lease, since the area contains significant proven undeveloped reserves.

The Company will provide updates on the progress of this proposed acquisition, as well as updates on the Company's drilling and development plans for properties which it currently owns.

We invite you to visit the company's website at www.riograndepetroleum.com.

FORWARD LOOKING STATEMENTS SAFE HARBOR

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  Forward-looking statements give our current expectations or forecasts of future events. They include our plans to drill oil and gas wells on the lease lands in a search for economically recoverable reserves.  Actual results could differ materially as a result of a variety of risks and uncertainties.  See the description of risks related to our business in the documents that the company files with the SEC on Forms 10-K, 10-Q and 8-K.  We caution you not to place undue reliance on our forward-looking statements, which speak only as of the date of this news release, and we undertake no obligation to update this information.

Further information will be available on the company's website, where the company will routinely post announcements, updates, events, investor information and presentations, and all recent press releases.

SOURCE Blugrass Energy Inc.