Pearl Announces Expansion of Interests in Blackrod SAGD Project

CALGARY, ALBERTA–(EMWNews – July 16, 2008) – Pearl Exploration and Production Ltd. (“Pearl” or the “Company”) (TSX VENTURE:PXX)(FIRST NORTH:PXXS) announces that the Company has entered into an agreement to acquire an additional 30% working interest in 3,886 contiguous hectares of oil sands leases in its Blackrod project, located south of Fort McMurray, in the Athabasca Oil Sands region of northern Alberta.

The acquisition is expected to close on August 20, 2008. The cost of acquisition will be paid as follows:

– $4.5 million payment on closing

– $4 million payment on SAGD pilot achieving gross accumulated production of 100,000 Bbls

– $4 million payment on full scale commercial development achieving 5,000 Bbl/d of production as reported to the Alberta government for the duration of one month

– $3 million payment on the full scale commercial development achieving 10,000 Bbl/d of production as reported to the Alberta government for the duration of one month

At December 31, 2007 Pearl’s year end reserve report prepared in accordance with National Instrument 51-101 guidelines by DeGolyer and MacNaughton Canada Limited, estimated Pearl’s 35% working interest share within these leases at approximately 107 million barrels of possible(i) recoverable oil reserves. Based on that report, pro-forma this transaction, Pearl’s direct working interest of possible reserves on these leases will now increase to approximately 199 million barrels. In addition, through its approximate 18% ownership of its joint venture partner, Serrano Energy Ltd (“Serrano”), Pearl has an additional indirect ownership of 8% of the project or 19 million barrels of possible oil reserves.

The Company along with Serrano submitted a SAGD pilot proposal to the Alberta EUB on May 30, 2008. Upon receiving regulatory approval, anticipated in Q1 of 2009, the partners intend to initiate a SAGD single well pair pilot. In addition, the partners are continuing with their plans to conduct a 10 to 15 core well program in the 2008/2009 winter to further delineate the deposit.

Pearl President and CEO Keith Hill stated, “We are very excited to expand our interests in this low risk large scale heavy oil property. Blackrod is one of our four core properties that we believe will propel Pearl into a substantial heavy oil project development company over the next 24 months.”

Pearl Exploration and Production Ltd. is a public company focused on delivering disciplined growth by establishing a North American portfolio of heavy oil projects with an emphasis on large resource opportunities. Additional information on Pearl is available on the Company’s website at www.pearleandp.com.

(i) Possible Reserves are those additional reserves that are less certain to be recovered than probable reserves. There is only a 10-per-cent probability that the quantities actually recovered will equal or exceed the sum of the proven plus probable plus possible reserves.

All references in this release to boe’s are based on a 6 to 1 conversion ratio. Boe’s may be misleading, particularly if used in isolation. A boe conversion of 6 Mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Pearl’s Certified Advisor on First North is E. Ohman J:or Fondkommission AB.

Forward-looking statements: This document contains statements about expected or anticipated future events and financial results that are forward-looking in nature and as a result, are subject to certain risks and uncertainties, such as general economic, market and business conditions, the regulatory process and actions, technical issues, new legislation, competitive and general economic factors and conditions, the uncertainties resulting from potential delays or changes in plans, the occurrence of unexpected events, and the Company’s capability to execute and implement its future plans. Actual results may differ materially from those projected by management. For such statements, we claim the safe harbour for forward-looking statements within the meaning of the Private Securities Legislation Reform Act of 1995.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.