Sun River Energy (OTC:SNRV) Closes $5M Katy Purchase

Sun River Energy (OTC:SNRV) announced today that it closed on the purchase of certain oil and gas interests under a definitive Purchase and Sale Agreement ("PSA") with Katy Resources ETX, LLC ("Katy"). Under the PSA Sun River acquired a majority of Katy's operated oil and gas properties. As I write, shares of Sun River were down 4 percent at $4.50 per share on light volume of 13,000 shares.

The original terms of the previously reported PSA called for a payment of $5.0 million in cash and $3.5 million worth of shares of the Company's common stock. The PSA recently was modified to reflect a cash payment of $1,000,000, issuance of a 180 day term note in the amount of $4,000,000 at 8% interest, secured by a deed of trust, and delivery of 1,583,710 shares of the Company's common stock valued at $2.21 per share.

Sun River acquired multiple leases which include three producing gas units containing four existing well-bores, three of which are currently producing. Total acreage held by production under this acquisition is 2,486 gross acres (1,361 net acres). In addition, 9,706 gross acres (7,549 net acres) are included in primary terms on multiple leases.

An independent Evaluation of the Total Proved Reserves of the Katy assets acquired was performed by the firm of Cawley, Gillespie & Associates, Inc., Petroleum Consultants, (Texas Registered Engineering Firm F-693) ("CG&A"). The report, which evaluated the purchased assets under the PSA as of the effective date of the sale of November 1, 2010, sets forth estimated total proved reserves of 19.5 billion cubic feet ("Bcf") of natural gas and 61,000 barrels ("Bbl") of oil(1). The estimated net operating income before income taxes discounted at 10% ("PV10") for all proved reserves is $16.56 Million(2). In addition to proved reserves, the Company's engineers estimate "3P" reserves at 89 Bcf and total potential resources at 270 Bcf. The Company also estimates an aggregate of 253 additional drilling locations if the leases are fully developed.

Sun River's wholly owned subsidiary, Sun River Operating, Inc., assumes operations on all properties acquired under the PSA effective immediately.

Sun River Energy is a Dallas-based, development-stage oil and gas exploration and production company. For further information on the Company, please visit their website www.SunRiverEnergy.com.

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