Hillcrest Petroleum Ltd. announced it has executed a Memorandum of Understanding (MOU) with Xstate Resources Limited ("Xstate") to jointly pursue oil and acquisitions in Canada and onshore USA. Hillcrest has identified and is currently reviewing producing oil and gas assets in the Western Canada Sedimentary Basins for the purpose of acquisition and development. Xstate has been participating in and is reviewing potential acquisition of various U.S. oil and gas projects.

Under the Strategic Alliance, Xstate and Hillcrest will offer participation in North American acquisition opportunities to each other. Should either company elect to pursue one or more of the acquisition opportunities, the originating company will facilitate the acquisition on behalf of the both, may operate the acquired assets under joint venture agreements and implement field development plans intended to maximize the market value of the acquired assets with capital funding provided jointly. The strategic Alliance is based on mutual cooperation and assistance in order to support the growth of the respective Partners onshore North America.

Both Hillcrest and Xstate intend that the Alliance will be the primary investment vehicle for material investments by either Party in the Canadian and USA oil and gas sector. Hillcrest will support future investment by Xstate and Xstate will support future investments made by Hillcrest in onshore North America projects. The Parties will include each other in investment opportunities where it is in the best interest of both Companies shareholders as a whole.