2009-10-26-2009-10-16-2009-10-30

Acquired 40% WI in Cave Pool Unit in Eddy Co., NM.

Doral Energy Corp. via subsidiary Doral West Corp. has completed its acquisition of a 40% working interest in the Cave Pool Unit in Eddy County, New Mexico, from Blugrass Energy Inc., Calgary (OTCBB: BLUG). Doral will assume operations from Blugrass in a joint-operating agreement that will outline per-well operating charges. Blugrass will pay US$200,000 for start-up costs to rework and repair the assets. Doral will not be responsible for their proportionate 40% share of these initial start up costs. Doral will additionally have the option to acquire Blugrass' 60% working interest for 24 months for either US$2 million or US$40,000 per producing net barrel, but not less than $2 million. The Cave Pool Unit is within the Artesia Vacuum trend in the Grayburg Jackson Pool approximately five miles northwest of Loco Hills, N.M. Blugrass recently completed the acquisition of these assets involving 2,800 acres from Marks and Garner Productions (aka Robin Hood LLC). Current production is approximately 12 barrels of oil and 30,000 cubic feet of gas per day from 32 wells which were drilled on 40-acre spacing in the Grayburg formation of the Grayburg Jackson Pool. An additional 10 shut-in wells on the properties have been identified and will be reworked and returned to production by Doral after closing. The redevelopment of the Cave Pool Unit as a 20-acre five-spot Grayburg waterflood project could potentially add approximately 100 development drilling locations and potential gross reserves in excess of 3 million barrels of oil equivalent. The Cave Pool Unit properties are adjacent to three leases owned and operated by Doral in Square Lake Field. Doral will grant Blugrass access to proprietary geological and engineering data on Doral's adjacent leases. Blugrass president Ken Berscht says, "Blugrass Energy is very pleased to have the opportunity to develop the Cave Pool Unit properties with our new partner, Doral Energy Corp. This property fits well within our business model and will allow Blugrass to bring these wells back into production with all of Dorel's expertise. The redevelopment of the Cave Pool Unit has the potential of being very beneficial to both Doral Energy and Blugrass Energy." H. Patrick Seale, president and chief operating officer of Doral, says, "(We are) pleased to successfully close this acquisition quickly with our new partner, Blugrass Energy. These properties fit well within our existing Eddy County properties and will allow Doral to operate the Cave Pool Unit wells very economically and efficiently along with our existing 186 wells in the Artesia Vacuum trend. The exploitation and redevelopment of the Cave Pool Unit properties should be being very beneficial to both Doral Energy and Blugrass Energy." The effective date is Oct. 12.