Kootenay Energy Inc. Announces Cash Offer to Purchase Common Shares

Kootenay Energy Inc. ("Kootenay") (TSX VENTURE:KTY) announces that it has
entered into a pre-acquisition agreement ("Agreement"), with Golden Oil
Corporation, a public corporation located in Seoul Korea, ("Offeror") pursuant
to which the Offeror has agreed, subject to certain conditions, to make a cash
offer to the security holders of Kootenay as soon as is practicable but in any
event not later than August 5, 2008 ("Offer"), to purchase all of the
outstanding common shares of Kootenay that are issued after the date of the
Offer, on a fully diluted basis. The cash offer price pursuant to the terms of
the Agreement, shall be the adjusted purchase price divided by the total number
of issued and outstanding common shares of Kootenay on a fully diluted basis as
of the date of the Offer. For the purposes of the Offer, the "adjusted purchase
price" shall be the sum of $30 million plus or minus various working capital and
expense adjustments as at July 31, 2008. As of the date hereof, it is estimated
that the cash Offer price per common share, shall be approximately $0.66 per
common share, subject to adjustments as here before described, representing an
approximate 65% premium to the closing trading price of the common shares of
Kootenay on July 15, 2008, being the date immediately prior to the date of the
Agreement.


It is expected that the Offer will be carried out pursuant to a take over bid
circular under the Business Corporations Act (Alberta) on or before August 5,
2008. The Offeror's obligations to make the Offer is conditional upon, inter
alia, (i) persons holding not less than 66 2/3% of the issued and outstanding
common shares of Kootenay, not on a diluted basis, (including all directors and
officers of Kootenay), shall have entered into lock-up agreements on or before
the date of the Offer; (ii) the execution and delivery to the Offeror of
agreements that the holders of Kootenay convertible debentures or other evidence
satisfactory to the Offeror that prior to the effective time of the Offer all
holders of Kootenay convertible debentures will waive or cancel all conversion
rights under the Kootenay convertible debentures; (iii) the execution and
delivery to the Offeror of agreements that each of the holders of stock options
of Kootenay or other evidence satisfactory to the Offeror, that prior to the
effective time of the Offer, all stock options of Kootenay will be exercised
and, if not so exercised, any stock options of Kootenay shall terminate
immediately prior to the effective time of the Offer in a form and substance
satisfactory to the Offeror; (iv) completion of satisfactory due diligence of
the business operations and affairs of Kootenay prior to July 30, 2008; (v)
regulatory body approval; and (vi) the board of directors recommending to the
security holders of Kootenay acceptance of the Offer.


Pursuant to the Agreement, the board of directors of Kootenay have unanimously
affirmed the Offer and the terms of the Agreement and, subject to the terms of
the Agreement, has determined that the Offer is in the best interests of
Kootenay and the security holders of Kootenay and has unanimously resolved to
recommend acceptance of the Offer by the security holders of Kootenay and to
cooperate with the Offeror in finalizing the Offer.


The Offer shall expire on the first business day which falls after the thirty
fifth day following the date of the mailing of the Offer documents to the
Kootenay security holders, provided however, the expiry time of the Offer shall
in no event be later than September 15, 2008.


The Agreement also contemplates a reciprocal break fee in the amount of $900,000
payable to either the Offeror or Kootenay as the case may be, in the event,
inter alia, either party breaches any of the covenants, agreements,
representations or warranties made in the Agreement.


If the Offeror takes up and pays for more than 66 2/3% of the outstanding common
shares of Kootenay on a fully diluted basis pursuant to the terms of the Offer,
it is anticipated that the Offeror shall use all commercial reasonable efforts
to acquire, and Kootenay has agreed to use all reasonable efforts to assist the
Offeror in acquiring, the balance of common shares of Kootenay by way of a
statutory arrangement, amalgamation, merger, or other form of subsequent
acquisition transaction.


The above disclosure contains certain forward-looking statements that involve
substantial known and unknown risks and uncertainties. These forward-looking
statements are subject to numerous risks and uncertainties, certain of which are
beyond the Corporation's control, including: the impact of general economic
conditions in Canada, industry conditions, increased competition, the lack of
available qualified personnel or management, equipment failures, fluctuations in
product prices and in foreign exchange or interest rates and stock market
volatility. The Corporation's actual results, performance or achievements could
differ materially from those expressed in, or implied by, these forward-looking
statements and, accordingly, no assurances can be given that any of the events
anticipated by the forward-looking statements will transpire or occur, or if any
of them do so, what benefits the Corporation will derive there from.