Blugrass Energy's JV Partner Doral Contracting Russell K. Hall for Third Party 51-101 Reserve Report

Blugrass Energy Inc. (OTCBB: BLUG) is pleased to announce its joint venture partner Doral Energy is contracting Russell K. Hall & Associates of Midland, Texas to develop a comprehensive third-party report of reserves for the Cave Pool Unit in Eddy County, NM. The Cave Pool Unit project covers approximately 2,800 acres along the Artesia-Vacuum Trend in Eddy County, NM.

Blugrass Energy has the potential to add 100 infill development drilling locations with potential gross reserves in excess of 3 million barrels of oil equivalent. Gross reserves are based on Doral Energy's in-house engineering, which was derived from an independent Third Party report done by Russell K. Hall & Associates on their adjacent property. At today's value of oil trading over $80 per bbl Blugrass Energy's 60% working interest represents an opportunity of recovering over $140 million of oil equivalent.

Blugrass Energy's initial focus will be restoring its existing wells to optimum production and then perforating and completing additional bypassed pay zones. The objective is to increase oil production and PDP reserves with minimum expenditure and to maximize return.

Blugrass Energy Inc.'s JV partner Doral Energy owns and operates 186 wells in the surrounding area. Doral has significant expertise in rehabilitating wells and improving production using new technologies.

The Artesia-Vacuum Trend produces from the Northwest Shelf of the Permian Basin and has 13 reservoirs that produce over 1 MMBO annually, with cumulative production of 796 MMBO as of 2000. The Cave Pool Unit project lies within the Grayburg Jackson reservoir, which has cumulative production of over 128 MMBO. Development of lower permeability since the mid-1990s has successfully reversed production declines.

Mr. Berscht, President of Blugrass Energy Inc., states, "The Cave Pool project represents a tremendous upside value to Blugrass and its shareholders. It is a conservative project with a good strategy to produce steady returns without a lot of risk."

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Contact:

Blugrass Energy Inc.

Tony Collins

1-877-511-0110