Kallisto Energy to Acquire Cumberland Oil & Gas

NOT FOR DISTRIBUTION OR DISSEMINATION IN THE UNITED STATES.

Kallisto Energy Corp. (TSX VENTURE:KEC) ("Kallisto" or the "Company") and
Cumberland Oil & Gas Ltd. (TSX VENTURE:COG) ("Cumberland") are pleased to
announce that they have entered into an arrangement agreement providing for the
acquisition by Kallisto of all of the outstanding common shares of Cumberland
("Cumberland Shares") on the basis of 0.9180 of a common share of Kallisto
("Kallisto Share") for each outstanding Cumberland Share (the "Transaction"). At
closing of the Transaction, Kallisto will have approximately 93.6 million
Kallisto Shares outstanding with Kallisto shareholders owning approximately 65%
and Cumberland shareholders owning approximately 35% of the pro forma Company. 


Cumberland is also pleased to announce that it has closed the sale of its West
Nig property to a senior oil and gas producer for a cash purchase price of $1.8
million.


Kallisto's existing executive team, led by Robyn Lore, will continue to manage
the combined Company. It is expected that Steven Cloutier and Martin Hislop,
current members of the board of directors of Cumberland, will be appointed to
the board of directors of Kallisto at closing.


Kallisto and Cumberland believe that this strategic combination offers an
exceptional opportunity to create substantial value for their respective
companies and shareholders.


About the Combined Company 

Key attributes of the combined Company include:



--  Healthy balance sheet; 
--  Positive cash flow from a current production base of approximately 300
    BOE/d (59% oil and liquids); 
--  A credit facility of $8.8 million to supplement growth capital
    expenditures; 
--  Tax pools of approximately $48.0 million; 
--  Proved Reserves of 1,302 MBOE and Proved plus Probable Reserves of 2,034
    MBOE based on the independent reserve reports effective December 31,
    2011 of each of Kallisto and Cumberland; 
--  A significant land base, including 78,000 net acres of undeveloped land;
--  A diversified asset base with abundant near term drilling opportunities
    including: 
    --  Cardium light oil at Pembina; 
    --  Doe Creek light oil at Valhalla; 
    --  Basal Quartz liquids rich gas and Elkton light oil at Crossfield;
        and 
    --  Shaunavon crude oil in southwest Saskatchewan; 
--  Significant potential upside from a waterflood program being implemented
    at Pembina. 



Transaction Terms and Conditions

The Transaction is to be effected by way of a plan of arrangement under the
Business Corporations Act (Alberta). Completion of the Transaction, which is
anticipated to occur in mid-October 2012, is subject to, among other things, the
approval of at least 66 2/3 percent of the Cumberland shareholders voting on the
arrangement, the approval of the Court of Queen's Bench of Alberta, the receipt
of all necessary regulatory and stock exchange approvals, and certain closing
conditions that are customary for a transaction of this nature.


The boards of directors of each of Kallisto and Cumberland have unanimously
approved the Transaction and Cumberland's board of directors has resolved to
recommend that its shareholders vote in favour of the Transaction. Directors and
officers of Cumberland, who collectively hold approximately 26% of the
outstanding Cumberland Shares, have entered into support agreements with
Kallisto pursuant to which each has agreed to vote in favour of the Transaction.


An information circular is expected to be mailed to Cumberland shareholders in
early-September and a special meeting of the Cumberland shareholders is expected
to be held in early-October. It is expected that the Transaction will be
completed in mid-October on the assumption that Kallisto and Cumberland receive
the requisite approvals and all of the conditions to closing are satisfied.


Cumberland has agreed to not solicit or initiate any discussions regarding any
other business combination or sale of material assets and has granted Kallisto
the right to match competing, unsolicited proposals. The arrangement agreement
provides for a mutual $250,000 non-completion fee payable by Kallisto or
Cumberland, as the case may be, in certain circumstances if the Transaction is
not completed.


Complete details of the terms of the Transaction are set out in the arrangement
agreement, which will be filed by Kallisto and Cumberland and will be available
for viewing under each of Kallisto's and Cumberland's profiles at www.sedar.com.


Financial Advisors

Peters & Co. Limited is acting as financial advisor to Cumberland and has
provided the board of directors of Cumberland with its opinion as of the date
hereof and subject to the review of final documentation, that the consideration
to be received by the Cumberland shareholders pursuant to the Transaction is
fair, from a financial point of view, to Cumberland shareholders.


Acumen Capital Finance Partners Limited is acting as financial advisor to
Kallisto and has provided the board of directors of Kallisto with its opinion as
of the date hereof and subject to the review of final documentation, that the
consideration payable by Kallisto pursuant to the Transaction is fair, from a
financial point of view, to Kallisto shareholders.


About Kallisto and Cumberland

Kallisto is a Calgary-based junior resource company engaged in the exploration,
development and production of oil and natural gas in Alberta.


Cumberland is a Calgary-based junior resource company engaged in the
exploration, development and production of oil and natural gas in Alberta and
Saskatchewan.


Forward-Looking Statements

In the interest of providing Kallisto's shareholders, Cumberland's shareholders
and potential investors with information regarding Kallisto and Cumberland,
including management's assessment of the future plans and operations of Kallisto
and Cumberland, certain statements contained in this joint news release
constitute forward - looking statements or information (collectively
"forward-looking statements") within the meaning of applicable securities
legislation. Forward-looking statements are typically identified by words such
as "anticipate", "continue", "estimate", "expect", "forecast", "may", "will",
"project", "could", "plan", "intend", "should", "believe", "outlook",
"potential", "target" and similar words suggesting future events or future
performance. In addition, statements relating to "reserves" are deemed to be
forward-looking statements as they involve the implied assessment, based on
certain estimates and assumptions, that the reserves described exist in the
quantities predicted or estimated and can be profitably produced in the future.
In particular, this joint news release contains, without limitation, forward-
looking statements pertaining to the following: expectations of management
regarding the proposed Transaction, including the timing of completion of the
Transaction, operating and financial metrics of the Transaction, potential
attributes of the combined Company resulting from the Transaction, including the
effect of the Transaction on Kallisto's balance sheet, tax pools, production,
reserves, asset base and undeveloped land position.


With respect to forward-looking statements contained in this joint news release,
Kallisto and Cumberland have made assumptions regarding, among other things: the
timing of receipt of regulatory, Court and shareholder approvals; Kallisto's
expectations regarding future growth, results of operations production, future
capital and other expenditures (including the amount, nature and sources of
funding thereof); and the ability of Kallisto to execute and realize on the
anticipated benefits of the Transaction. Although Kallisto and Cumberland
believe that the expectations reflected in the forward looking statements
contained in this joint news release, and the assumptions on which such
forward-looking statements are made, are reasonable, there can be no assurance
that such expectations will prove to be correct. Readers are cautioned not to
place undue reliance on forward -looking statements included in this joint news
release, as there can be no assurance that the plans, intentions or expectations
upon which the forward-looking statements are based will occur.


By their nature, forward-looking statements involve numerous assumptions, known
and unknown risks and uncertainties that contribute to the possibility that the
predictions, forecasts, projections and other forward -looking statements will
not occur, which may cause Kallisto's or Cumberland's actual performance and
financial results in future periods to differ materially from any estimates or
projections of future performance or results expressed or implied by such
forward-looking statements. These risks and uncertainties include, among other
things, the following: that the Transaction may not close when planned or at all
or on the terms and conditions set forth herein; the failure of Kallisto and
Cumberland to obtain the necessary shareholder, Court, regulatory and other
third party approvals required in order to proceed with the Transaction;
volatility in market prices for oil and natural gas; incorrect assessment of the
value of the Transaction; failure to realize the anticipated benefits and
synergies of the Transaction; the general economic conditions in Canada, the
U.S. and globally; industry conditions; governmental regulation; imprecision of
reserve and resource estimates; environmental risks; competition from other
industry participants; stock market volatility; Kallisto's ability to access
sufficient capital from internal and external sources; and the other factors
described under "Risk Factors" in Kallisto's most recently filed Annual
Information Form available in Canada at www.sedar.com. Readers are cautioned
that this list of risk factors should not be construed as exhaustive.


The forward-looking statements contained in this joint news release speak only
as of the date of this joint news release. Except as expressly required by
applicable securities laws, Kallisto and Cumberland do not undertake any
obligation to publicly update or revise any forward looking statements, whether
as a result of new information, future events or otherwise. The forward-looking
statements contained in this joint news release are expressly qualified by this
cautionary statement.


Barrels of Oil Equivalent

Barrels of oil equivalent (BOE) are calculated using the conversion factor of 6
Mcf (thousand cubic feet) of natural gas being equivalent to one barrel of oil.
BOE may be misleading, particularly if used in isolation. A BOE conversion ratio
of 6 Mcf: 1 bbl (barrel) is based on an energy equivalency conversion method
primarily applicable at the burner tip and does not represent a value
equivalency at the wellhead. Given that the value ratio based on the current
price of crude oil as compared to natural gas is significantly different from
the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be
misleading as an indication of value.


This joint news release does not constitute an offer to sell or the solicitation
of an offer to buy any securities within the United States. The securities to be
offered have not been and will not be registered under the U.S. Securities Act
of 1933, as amended, or any state securities laws, and may not be offered or
sold in the United States absent registration or an applicable exemption from
the registration requirements of such Act or other laws.