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About Underground Energy Corporation
Underground is focused on developing its Zaca Field Extension Project in Santa Barbara County, California. In total, Underground currently holds mineral rights on approximately 64,000 net acres of prospective lands in California and Nevada with an initial focus on the Monterey Shale in California. Underground is listed on the TSX Venture Exchange under the ticker symbol "UGE" and quoted on the OTCQX trading platform under the ticker symbol "UGGYF". For more information on Underground, please visit www.ugenergy.com. Underground's regulatory filings are available under the Company's profile at www.sedar.com.

Statements in this press release contain forward-looking information and forward-looking statements within the meaning of applicable securities laws (collectively, "forward-looking information"). Forward-looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. In particular, forward-looking information in this press release includes, without limitation, statements with respect to the execution of agreements arising from the Letter Agreement and the transactions and operations contemplated by the proposed joint venture agreement between Underground and SRL.

Although we believe that the expectations and assumptions reflected in the forward-looking information are reasonable, there can be no assurance that such expectations or assumptions will prove to be correct. In particular, assumptions have been made that: (i) Underground and SRL will obtain all required regulatory approvals for the farm-in; and (ii) that the parties will utilize the existing well permits in the farm-in; (iii) SRL will have the necessary capital to complete its obligations under the proposed joint venture agreement.

Forward-looking information is based on the opinions and estimates of management at the date the statements are made, and is subject to a variety of risks and uncertainties and other factors (many of which are beyond the control of Underground) that could cause actual events or results to differ materially from those anticipated in the forward-looking information. Some of the risks and other factors could cause results to differ materially from those expressed in the forward-looking information include, but are not limited to: operational risks in exploration, development and production; delays or changes in plans; competition for and/or inability to retain drilling rigs and other services; competition for, among other things, capital, acquisitions of reserves, skilled personnel and supplies; risks associated to the uncertainty of reserve and resource estimates; governmental regulation of the oil and gas industry, including environmental regulation; geological, technical, drilling and processing problems and other difficulties in producing reserves; the uncertainty of estimates and projections of production, costs and expenses; unanticipated operating events or performance which can reduce production or cause production to be shut in or delayed; incorrect assessments of the value of acquisitions; the need to obtain required approvals from regulatory authorities; stock market volatility; volatility in market prices for oil and natural gas; liabilities inherent in oil and natural gas operations; access to capital; and other factors. Readers are cautioned that this list of risk factors should not be construed as exhaustive.

The joint venture agreement is subject to the entry by Underground and SRL into a definitive agreement prior to November 30, 2012. While the parties expect that a definitive agreement will be successfully concluded upon the terms set forth in the Letter Agreement, there can be no assurance that a definitive agreement will be concluded on such terms or at all.

The forward-looking information contained in this news release is expressly qualified by this cautionary statement. Underground does not undertake any obligation to update or revise any forward-looking statements to conform such information to actual results or to changes in our expectations except as otherwise required by applicable securities legislation. Readers are cautioned not to place undue reliance on forward-looking information.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.



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For further information please contact:
Peter Ballachey
Chief Financial Officer
Underground Energy Corporation
Tel: 805-845-4700 x 17

Simon Clarke
Vice President, Corporate Development
Underground Energy Corporation
Tel: 604-551-9665