Enhanced Oil Resources Inc. Announces Initiation of Lateral Drilling Program

HOUSTON, June 20, 2012 /PRNewswire/ - Enhanced Oil Resources Inc. (TSX-V: EOR) is pleased to announce that the three well lateral drilling program at the Company's wholly owned Milnesand San Andres oil field has commenced.

As previously reported, the Company is initiating the first ever lateral drilling program at the Milnesand San Andres oil field, located in Roosevelt County, New Mexico. The initial program of 3 horizontal wells is expected to take approximately 30 to 45 days to complete and will be followed by extensive testing and potentially, fracture stimulation.

The Key Energy drilling rig arrived at the Milnesand #522 location over the past weekend and drilling of the window to commence the sidetrack from the existing wellbore began late Tuesday, June 19^th. This well has been permitted as a 2,500ft lateral that will drill through the P1, P2 and P3 reservoirs found to be productive in earlier wells.

The Milnesand San Andres oil field is a legacy oilfield discovered in 1960 and covers an area of approximately 6,000 acres. Independent engineering has estimated that Milnesand contained in place volumes of approximately 90 million barrels of oil of which only 12 million barrels of oil, or 14% of the original oil in place, has been recovered to date. Development of the field has primarily been on 40-acre spacing and the Company believes considerable reserves can be produced by implementing a 20-acre infill program utilizing horizontal drilling technology.

Following this initial three well program the Company will review the results and production information gained from this effort and, if appropriate, will begin planning for a larger second program to begin in the fourth quarter of 2012. In total, the Company has over 70 infill locations to drill at Milnesand. The infill drilling program is a precursor to the ultimate goal of implementing a field wide CO2 flood at Milnesand that is expected to commence no later than September 2015.

In 2009 the Company previously reported that Cawley, Gillespie & Associates (CGA), the Company's independent engineering firm, had completed a Reserve Report based on the results of the Milnesand CO2 pilot project conducted in 2008 and 2009 and concluded that following the initial 12 month injection period, the response indicated that an additional 34,640 barrels of oil could be recovered, in the proven (1P) category, from each 40-acre producer throughout the primary 3,030 acre pattern flood area. Proved plus probable (2P) reserves were assigned based on a combination of factors, such as how the CO2 flood has tracked the Advanced Resources International Inc. (ARI) prediction, correlating to a Denver City San Andres CO2 flood model, and reasonable incremental recovery of two times incremental proved recovery. This resulted in 2P net recoverable reserves of 3.99 MMBO or 70,112 BO per producer. Proved plus probable plus possible (3P) reserves were estimated at 105,280 BO per producer, or 5.9 MMBO to the 3,000 acre Phase 1 area.  As a result of the additional infill studies completed this year, the Company can now expect primary reserves from the 20-acre infill program that were not considered during the original CO2 reserve report. The Company considers that the probable and possible reserves categories in the original report remain valid, however some if not all of the proven CO2 oil reserves can now be moved to the infill volumes. We anticipate additional studies to be completed during the year that will address the effects that the infill program will have on future CO2 oil reserves.

Mr. Barry Lasker reports "The initiation of the drilling campaign at Milnesand is a very important step for the Company as we further the transition into becoming a growing oil producer in the Permian Basin. We are extremely excited to get the infill program started and we will provide additional details as they become available.  As previously discussed, a successful outcome at Milnesand will have considerable bearing on the reserves potential at Chaveroo, an analogous San Andres field, adjacent to Milnesand, yet over three times as large. The Company is in tremendous shape financially, with approximately US$20 million cash in the bank, zero debt and considerable reserves potential at our infill program and longer term at our CO2 flood projects. We are extremely excited about the prospects ahead."

About Enhanced Oil Resources Inc.

Enhanced Oil Resources Inc. is an oil and gas development company, with a principal goal of increasing crude oil production through enhanced oil recovery ("EOR") and infill drilling projects it is initiating in the Permian Basin of New Mexico.

Forward-Looking Statements

Certain statements contained herein are "forward-looking statements" and "forward-looking information" under applicable securities laws, including statements regarding beliefs, plans, expectations or intentions regarding the future relating to Enhanced Oil Resources Inc.'s 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 statements because it is possible that expectations, predictions, forecasts, projections and other forms of forward-looking information will not be achieved.  Forward-looking statements are based on the opinion and estimates of management at the date the statements are made, and are based on a number of assumptions and subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements.  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.  Assumptions upon which such forward-looking statements are based include that the Company will be able to carry out its proposed activity for 2012, that there will be accelerated development of our oil reserves, that production increases from our oilfields will be added, that our infill program will be successful and that our CO2 flood projects will commence as expected. 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 POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE 

SOURCE Enhanced Oil Resources Inc.