DALLAS, Dec. 15, 2011 /PRNewswire/ -- Blugrass Energy Inc. (OTC: BLUG) is pleased to announce that it has entered into letters of intent with multiple parties for the acquisition of certain interests in the Mississippian play in Osage and Woods Counties, Oklahoma.

The assets are in two counties:

Osage County

Approximately 90% working interest ("WI") in 9 Mississippian wells on 1,680 gross acres held by production in Osage County, Oklahoma;
Average gross daily production approximated 52.6 barrels of oil (Bbls) and 548.9 thousand cubic feet (Mcf) of natural gas for the three month period ending October 31, 2011. Average net daily production during the period was 35.5 Bbls and 370.5 Mcf of natural gas or 97.3 barrels of oil equivalent based on BTU equivalent;
A 36.9% WI in one shallow Layton oil well with approximately 32.5 gross and 9 net daily barrels of oil production to the interest being acquired, for the three month period ending October 31, 2011;
A package of over-riding royalty interests in the same wells;
An additional 640 acres of undeveloped leasehold;
Associated field infrastructure including 14 storage tanks with 4,200 barrels of storage capacity, 10 separating units and 3 salt water disposal wells;
Approximately 20,000 feet of unfracked horizontal well bore, offering potential upside based on a fracture stimulation program Blugrass is planning for 2012;
Average net monthly cash flow after lease operating expenses, production and severance taxes for the interests being acquired approximated $120,000.00 per month for the three month period ending September 30, 2011 (revenue reporting is one month behind production based on timing of gas receipts).

Woods County

A 19.5% working interest in approximately 4,000 gross acres representing up to 25 potential drilling locations based on typical 160 acre spacing common in the horizontal Mississippian play;
An approximate 13.6% working interest in one drilled Mississippian well bore awaiting completion with expected first production in spring 2012;
A 4.6% working interest in one Hunton well bore being recompleted as a vertical Mississippian well.

The total price for these two asset packages is $10,256,000.00. The cash requirement to close is $1,506,000.00; convertible notes with a conversion price of $0.05 per share in the amount of $1,650,000.00 will be issued as part of the purchase price and the balance will be paid in Blugrass shares at $0.05 per share.

The upside of the acquisition contemplated by the letters of intent consists of (a) opportunities to fracture stimulate the Osage County wells, (b) additional Layton drilling opportunities, and (c) continuing development activities in the Woods County leasehold position -- where up to five new wells are expected to be drilled over the next 18 months.

The acquisition is subject to due diligence, financing and the conversion of at least 80% of currently outstanding debt to common stock at $0.05 per share.

In order to accommodate the share issuances associated with the debt conversion, the asset acquisitions and any future capital raising initiatives, Blugrass is also planning to increase its authorized shares.

We are excited about entering the Mississippian play with this initial acquisition. The Mississippian play has recently received considerable attention in the industry and press as horizontal drilling and fracture stimulation techniques have unlocked considerable reserve and production potential from the area in which these wells are located.

Blugrass is continuing discussions with several parties about additional acquisition and partnering opportunities.

Contact
Abram Janz
President & CEO
Blugrass Energy, Inc.
Ph. 972-404-9995
[ ajanz@riograndepetroleum.com ]

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. 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.

SOURCE Blugrass Energy Inc.

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Blugrass Enters Mississippian Play with Acquisition of Producing Oil and Gas Properties in Oklahoma

Blugrass Enters Mississippian Play with Acquisition of Producing Oil and Gas Properties in Oklahoma