Blugrass Signs LOI for Major Acquisition in the Permian Basin

Blugrass Signs LOI for Major Acquisition in the Permian Basin in
Crockett County, Texas 
CALGARY, AB -- (Marketwire) -- 10/26/10 --   Blugrass Energy, Inc.
(OTCBB: BLUGE) is pleased to announce that it has signed a letter of
intent to acquire an oil and gas lease covering 4,807 acres located
in the Permian Basin in Crockett County, Texas. The lease is
currently owned by Dallas, Texas-based Petro Grande, LLC, which owns
an 87.5% working interest. Acquisition of the lease includes full
access to 3D seismic imaging of the lands under lease, from which
geophysicists have identified a number of drilling locations in the
Canyon Sands, Strawn and Ellenburger formations. The land position is
on trend with numerous giant, multi-pay gas fields currently under
production by major oil and gas companies, and is close to pipeline
gathering and treating infrastructure. An independent geoscientist
has estimated that there may be a resource of up to 168 BCF (billion
cubic feet) of natural gas in this lease in the probable resource
In addition to the lease, Blugrass Energy would acquire an option to
participate as a working interest owner in Petro Grande's other 9,850
acre leases, all of which include 3D seismic imaging.  
The letter of intent contemplates that upon closing, Blugrass Energy
would issue to Petro Grande, LLC a promissory note in the amount of
$3.5 million, secured by the lease, plus shares of common stock
comprising 75.0% of the outstanding shares. 
The company anticipates that its head office will be moved to Dallas,
Texas, and that the company's name will be changed to Rio Grande
Petroleum, Inc. Senior management will be appointed by Petro Grande,
LLC. The transaction is subject to due diligence and necessary
approvals, including approval of an amendment to the Blugrass Energy
Articles of Incorporation to increase the number of authorized
Blugrass Energy is looking forward to completing this transaction and
moving forward with a drilling and development program. 
Finally, the company advises that it anticipates that its outstanding
Form 10-K Annual Report filing for the year ended June 30, 2010 will
completed shortly and the "E" removed from the company's trading
symbol shortly thereafter. 
Forward-Looking Statements 
This news relea
se contains "forward-looking statements," as that term
is defined in Section 27A of the United States Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934. Statements in
this news release that are not historical facts are forward-looking
statements that are subject to risks and uncertainties. Words such as
"expects," "intends," "plans," "may," "could," "should,"
"anticipates," "likely," "believes" and words of similar import also
identify forward-looking statements. Forward-looking statements are
based on current facts and analyses and other information that are
based on forecasts of future results, estimates of amounts not yet
determined and assumptions of management, including, but not limited
to: the completion of the transaction with Petro Grande, the
existence of any economically recoverable reserves in the subject
lease, any future exploration of the lease, or the drilling of
additional wells in the lease lands.  
Actual results could differ from those projected in any
forward-looking statements due to numerous factors. Such factors
include, among others, the inherent uncertainties associated with oil
and gas exploration; changes in reserve estimates if any; the
potential productivity of our properties; changes in the operating
costs and changes in economic conditions and conditions in oil and
gas exploration. These forward-looking statements are made as of the
date of this news release, and we assume no obligation to update the
forward-looking statements, or to update the reasons why actual
results could differ from those projected in the forward-looking
statements. Although we believe that the beliefs, plans, expectations
and intentions contained in this press release are reasonable, there
can be no assurance those beliefs, plans, expectations or intentions
will prove to be accurate. Investors should consult all of the
information set forth herein and should also refer to the risk
factors disclosure outlined in our current and periodic reports filed
from time-to-time with the Securities and Exchange Commission. 
Tony R. Collins
Investor Relations
Blugrass Energy Inc.
Office: 877.511.0110
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