Silk Road Energy Inc. Announces Proposed Qualifying Transaction

NOT FOR DISSEMINATION IN THE UNITED STATES. FAILURE TO COMPLY WITH THIS
RESTRICTION MAY CONSTITUTE A VIOLATION OF UNITED STATES SECURITIES LAW.


Silk Road Energy Inc. (the "Corporation") (TSX VENTURE:SLK.P) is pleased to
announce that it has entered into a non-binding letter of intent dated August
29, 2012 (the "LOI") to acquire (the "Acquisition") certain oil and gas assets
located in the Long Coulee and Parkland regions of southern Alberta (the
"Assets") from Verity Energy Ltd. ("Verity"). 


The Corporation intends for the Acquisition to constitute its Qualifying
Transaction as a Tier 1 Oil & Gas Issuer, as set out in the policies of the TSX
Venture Exchange (the Exchange"). The Acquisition is subject to certain
conditions, including Exchange approval.


Summary of the Qualifying Transaction

The LOI contemplates that the Corporation and Verity will enter into a formal
purchase and sale agreement (the "Purchase Agreement") governed by the laws of
the Province of Alberta, pursuant to which the Corporation would acquire the
Assets from Verity for a purchase price of C$1,000,000, subject to certain
adjustments detailed therein, to be satisfied by the issuance to Verity of
5,000,000 common shares of the Corporation ("Common Shares") at a deemed issue
price of C$0.20 per Common Share (the "Share Consideration"). The parties
contemplate the Purchase Agreement will have customary terms and conditions for
a transaction of this type. Each of the Corporation and Verity shall pay their
own costs in respect of the Acquisition. 


At the request of the Corporation, trading in the Common Shares has been halted
by the Exchange. Trading is expected to remain halted until, at the latest,
filing of a filing statement in connection with the Acquisition. Trading may
also resume upon granting of an exemption from sponsorship by the Exchange.


Verity is a privately held Alberta corporation engaged in the exploration and
development of oil and gas properties in the western Canadian sedimentary basin.
Verity currently has production from three properties in Alberta and one
property in British Columbia. Other than David Hall, of Calgary, Alberta, who
has control of, manages or directs in excess of 20% of the shares of Verity,
there are no "control persons" (as defined pursuant to Exchange policies) of
Verity. A summary of significant financial and technical information in respect
of the Assets will be provided in a subsequent news release.


The Assets

The Assets currently produce approximately 1,000 mcf/d of gas and approximately
5 bbls/d of oil and liquids. The Assets are located in the Long Coulee/Parkland
area of Alberta and production is predominantly from the Belly River, Medicine
Hat, Bow Island and Mannville formations.


Closing of the Qualifying Transaction

It is contemplated that closing of the Acquisition shall be subject to a number
of terms and conditions, including:




a.  entry into of the Purchase Agreement and satisfaction or compliance with
    the terms and conditions of such Purchase Agreement; 
b.  satisfactory completion, acting reasonably, by the Corporation and
    Verity of their respective due diligence examinations; 
c.  the receipt of any necessary contractual and other third party consents;
d.  the receipt of all necessary regulatory consents and approvals required
    pursuant to applicable law (including consent of the Exchange and all
    applicable securities commissions); 
e.  if necessary, shareholder approval by the shareholders of the
    Corporation and/or Verity; 
f.  the Share Consideration shall represent not more than 50% of the total
    issued and outstanding securities of the Corporation; 
g.  the Share Consideration shall be approved for listing on the Exchange or
    such other stock exchange as is approved by Verity; 
h.  Mr. John Zang, an insider of Verity, shall be appointed to the board of
    directors of the Corporation on closing; 
i.  the parties shall have agreed to a voting and escrow agreement whereby
    Verity agrees to vote the Share Consideration owned by it in favor of
    any reasonable transaction approved and recommended by the board of
    directors of the Corporation, provided that transaction does not result
    in an immediate depreciation in the value of the Share Consideration or
    results in the Share Consideration being not liquid and whereby Verity
    agrees not to sell the Share Consideration through the open market for a
    period of the greater of 90 days and any hold period required in
    accordance with securities laws (but in any event not to exceed four
    months); and 
j.  closing of the Acquisition no later than the earlier of (i) three
    business days following the receipt of all necessary conditional
    approvals from the Exchange and (ii) December 15, 2012. 



The LOI has been filed by the corporation by way of SEDAR concurrently with the
issue of this press release. 


The acquisition does not constitute a Non-Arm's Length Qualifying Transaction
(as such term is defined in the policies of the Exchange) and does not require
approval from the securityholders of the Corporation. 


Sponsorship

Sponsorship of a Qualifying Transaction is required by the Exchange unless
exempt therefrom in accordance with the Exchange's policies. The Corporation
intends to apply for an exemption from the sponsorship requirements pursuant to
the policies of the Exchange. There is no assurance that such an exemption will
be granted. If the exemption is not granted by the Exchange, then Corporation
would be required to engage a sponsor.


Board of Directors and Management of the Resulting Issuer

Upon completion of the Acquisition, the Corporation anticipates appointing Mr.
John Zang, an insider of Verity, to the board of directors of the Corporation.
The biographies of each of the contemplated directors and officers of the
Corporation after the completion of the Acquisition are detailed below. 


Vladimir Katic, President, Chief Executive Officer and Director

Mr. Katic is currently the Managing Director of Pacific States Energy LLC, an
oil & gas limited liability corporation formed in the state of California. From
May 2000 to September 2009, Mr. Katic was the President, Chief Executive Officer
and a Director of Pacific Energy Resources Ltd. (formerly Shamrock Resources
Inc. - listed on the TSX Venture Exchange), an oil & gas company based in
California and listed on the Toronto Stock Exchange. Mr. Katic is a resident of
Hermosa Beach, California, U.S.A. 


Patrick Devlin, Chief Financial Officer, Secretary and Director

Mr. Devlin has over 29 years of experience in the securities industry, as a
lawyer, regulator, certified management accountant and entrepreneur. Mr. Devlin
is currently self-employed and practicing law in the Province of British
Columbia. From March 2004 to April 2009, Mr. Devlin was a Director and then
President, Chief Executive Officer and Director (August 2004 to April 2009) of
NEMI Northern Energy & Mining Inc., a mining company listed on the Toronto Stock
Exchange. Mr. Devlin was also a Director of Pacific Energy Resources Ltd.
(formerly Shamrock Resources Inc. - listed on the TSX Venture Exchange), an oil
& gas company, from 1993 to November 2010. From March 1987 to October 2007, Mr.
Devlin was a lawyer in the law firm of Devlin Jensen in the City of Vancouver,
in the Province of British Columbia. Mr. Devlin obtained a Diploma of Technology
in Finance from the British Columbia Institute of Technology in May 1974 and
then attended the University of British Columbia where he obtained his
designation as a Certified Management Accountant in May 1976. Subsequently Mr.
Devlin obtained his Bachelor of Laws from the University of British Columbia in
1981 and became a member of the Law Society of British Columbia in May 1982. Mr.
Devlin is a resident of Vancouver, British Columbia. 


Zulfikar Rashid, Director

Mr. Rashid has been the owner of Rodeo Express Delivery Ltd., a mail and courier
service, since January 1976. He obtained a Bachelor of Engineering in Electrical
and Electronics Engineering from the University of Napier in Edinburgh, Scotland
in 1974. Mr. Rashid has also been a member of the Association of Science and
Engineering Technology Professionals of Alberta (ASET) since 1976. Mr. Rashid is
a resident of Calgary, Alberta. 


Jonathan Lexier, Director

Mr. Lexier has been a Director of Terrex Energy Inc. (TSXV: TER) since June
2010. From February 2008 to October 2009, Mr. Lexier was the President and Chief
Executive Officer of Highpine Oil & Gas Limited, a company formerly listed on
the Toronto Stock Exchange. From July 1999 to January 2008, he was the Chief
Executive Officer of NAL Resources Management Limited, an oil & gas company. Mr.
Lexier was also a senior officer of NAL Oil & Gas Trust, a company formerly
listed on the Toronto Stock Exchange, from October 2000 to January 2008. Mr.
Lexier obtained a Bachelor of Science in Engineering (Mechanical) from the
University of Manitoba in 1981 and a Master of Business Administration from the
University of Western Ontario in 1983. Mr. Lexier is a Professional Engineer and
has been a member of APEGGA since 1985. Mr. Lexier is a resident of Calgary,
Alberta. 


John Zang, Director

Mr. Zang is a member of the Law Society of Alberta and is a sole practitioner
lawyer. He is the President and a director of Verity Energy Ltd. He is a
director of Touchstone Exploration Ltd. (TSXV:TAB) and of RMS Systems Inc.
(TSXV: RMS). He is also a director and officer of Morro Bay Capital Ltd. He is
the former President, C.E.O. and director of Tiger Cat Energy Ltd (now RMS
Systems Inc.). John was also formerly a director and corporate secretary of
Marble Point Energy Ltd., Argo Energy Ltd. (now part of Daylight Energy),
Argonauts Group Ltd. (now part of Progress Energy Ltd) and Sandy Cover Energy
Ltd. He was also corporate secretary and corporate counsel of Sequoia Oil and
Gas Trust and corporate secretary of Norquay Capital Ltd. (now Xtreme Coil
Drilling Corp). Mr. Zang is a resident of Calgary, Alberta.


Cautionary Statements

This press release contains forward-looking information. More particularly, this
press release contains statements concerning the prospective Qualifying
Transaction of the Corporation. The information about Verity contained in the
press release has not been independently verified by the Corporation. Although
the Corporation believes in light of the experience of its officers and
directors, current conditions and expected future developments and other factors
that have been considered appropriate that the expectations reflected in this
forward-looking information are reasonable, undue reliance should not be placed
on them because the Corporation can give no assurance that they will prove to be
correct. Forward-looking information involves known and unknown risks,
uncertainties, assumptions (including, but not limited to, assumptions on the
performance and financial results of Verity and the Corporation) and other
factors that may cause actual results or events to differ materially from those
anticipated in such forward-looking information. The terms and conditions of the
prospective Qualifying Transaction may change based on the Corporation's due
diligence on Verity, the entering into a binding agreement for the Qualifying
Transaction and the Acquisition, regulatory and third party comments, consents
and approvals and the ability to meet the conditions of the required timeframes.
The forward-looking statements contained in this press release are made as of
the date hereof and the Corporation undertakes no obligations to update publicly
or revise any forward-looking statements or information, whether as a result of
new information, future events or otherwise, unless so required by applicable
securities laws.


Completion of the Acquisition is subject to a number of conditions, including
but not limited to, Exchange acceptance and if applicable pursuant to Exchange
Requirements, majority of the minority shareholder approval. Where applicable,
the transaction cannot close until the required shareholder approval is
obtained. There can be no assurance that the transaction will be completed as
proposed or at all.


Investors are cautioned that, except as disclosed in the management information
circular or filing statement to be prepared in connection with the transaction,
any information released or received with respect to the transaction may not be
accurate or complete and should not be relied upon. Trading in the securities of
a capital pool company should be considered highly speculative.


This press release is not an offer of the securities for sale in the United
States. The securities have not been registered under the U.S. Securities Act of
1933, as amended, and may not be offered or sold in the United States absent
registration or an exemption from registration. This press release shall not
constitute an offer to sell or the solicitation of an offer to buy nor shall
there be any sale of the securities in any state in which such offer,
solicitation or sale would be unlawful.