MGM Energy Corp.: Acquisition of Umiak Assets and Bought Deal Financing

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MGM Energy Corp. (TSX:MGX) (TSX:MGX.WT.B) ("MGM Energy" or the "Company") announced today that it has entered into an agreement of Purchase and Sale with EnCana Corporation (EnCana) to acquire all of EnCana's interests in certain assets located in the Mackenzie Delta and elsewhere in the Northwest Territories for a purchase price of CDN $170 million, subject to usual closing adjustments. The assets to be acquired consist of:

- A 60% working interest in the Umiak discovery, including the two discovery wells (N-16 and N-05). A Declaration of Significant Discovery has been issued by the National Energy Board in connection with the N-05 well and surrounding area comprising 16 sections, and a Declaration of Significant Discovery is pending with respect to the N-16 well and surrounding area expected to comprise no fewer than 28 sections and no more than 33 sections (some of which overlap with N-05). Based upon MGM Energy's review of the currently available well information regarding these discoveries, the Company estimates that the Umiak field contains a net mean contingent resource of 265 billion cubic feet (Bcf) of natural gas (169 Bcf, low case, and 396 Bcf high case (both net)). The Company also estimates that the field may contain approximately 100 million barrels of oil (gross), of which up to 25 million barrels (gross) is currently estimated to be recoverable. The Umiak discovery is located approximately 15 kilometers to the east of Imperial Oil's Taglu field, one of the anchor fields for the Mackenzie Valley pipeline project. MGM Energy believes that Umiak itself is of sufficient size to support a stand-alone development and is expected to be developed to deliver gas to the Mackenzie Valley pipeline, once in service, or to support alternative projects should that be necessary.

- A 60% working interest in federal Exploration License 434, located south and west of the Umiak field. EL 434 comprises 56,600 hectares, and has a primary term expiring in 2011. The work commitment associated with EL 434 is approximately $40.2 million (gross) through 2011, of which MGM Energy's share would be approximately $24 million. A number of exploration prospects have been identified on EL 434, along the trend established by the Umiak discovery. Several of these prospects are well defined on 3-D seismic.

- An extensive seismic database, comprising approximately 9,896 kilometers of 2-D seismic and 470 square kilometers of 3-D seismic, covering much of the Umiak discovery, EL 434, and extensive regions of the Mackenzie Delta. Seismic data is critical to exploration success in the Mackenzie Delta, and MGM Energy is very pleased to have acquired such a material volume of seismic data. The transfer of portions of this seismic may be subject to the receipt of third party approvals.

- Interests ranging from 0.62% and 3.89% in 14 separate Significant Discovery Licenses (SDLs) located in the Mackenzie Delta, both onshore and offshore. These interests represent an additional contingent resource of approximately 15 Bcf of natural gas and 1.2 million barrels of oil and natural gas liquids, net to MGM Energy (as estimated by the National Energy Board). While there are no plans in the near term to develop these SDLs, they provide a window on development throughout the Mackenzie Delta for the future.

- Certain other assets, principally consisting of inventory and other tangible assets located both in Alberta and in the Northwest Territories.

The link below shows a map MGM's existing assets in the Mackenzie Delta as well as those to be acquired in this transaction.

http://www.ccnmatthews.com/docs/mgm_map.pdf

"Since MGM Energy was formed in January of this year, our stated business strategy has been to be an acquirer and consolidator of high quality oil and gas assets in the Mackenzie Delta and the Central Mackenzie Valley" said Clay Riddell, Chief Executive Officer of MGM Energy. "This acquisition is a first and very important step in the implementation of that strategy."

"The Umiak discovery is the largest on-shore discovery in the Mackenzie Delta since the 1970's. The acquisition of such an asset is a natural fit with our business strategy as well as with our existing assets. The combination of an attractive existing discovery, numerous prospects and a large body of high quality seismic data is, to our knowledge, unique in the Mackenzie Delta. We're especially pleased that we've been able to acquire these assets at a valuation level that makes sense for both existing and new shareholders." said Henry Sykes, President of MGM Energy.

The Acquisition will be financed with a combination of cash on hand, existing credit facilities and the proceeds of the equity financing described below, and is expected to close upon receipt of required regulatory approvals.

RBC Capital Markets acted as financial advisor to MGM Energy on the acquisition of the assets.

To fund the purchase of the Umiak discovery and the other assets described above, MGM Energy also announced that it has entered into an agreement with a syndicate of underwriters led by RBC Capital Markets and Cormark Securities Inc. and including BMO Capital Markets, Peters & Co. Limited, TD Securities Inc. and First Energy Capital Corp. (collectively, the "Underwriters") pursuant to which the Underwriters have agreed to purchase, on a bought deal basis, 37,181,000 common shares at a price of $3.10 and 10,400,000 flow through shares at a price of $3.85, for gross proceeds of $155,301,100, subject to an underwriters' over-allotment option of up to 15% of the aggregate shares underwritten. C.H. Riddell has indicated his intention to subscribe for a total of $25 million of the shares under this offering.

Completion of this offering is subject to certain conditions including normal regulatory approvals. The common shares and the flow through common shares will be offered in all provinces of Canada by way of a short form prospectus. The closing of the offering is expected to occur on or about May 30, 2007.

The outstanding securities of MGM Energy have not been registered in the United States and the common shares and the flow through common shares to be issued under this offering have not been and will not be registered under the United States securities legislation and may not be offered or sold in the United States except in transactions exempt from such registration. This news release shall not constitute an offer to sell or a solicitation of an offer to buy any securities nor shall there be any sale of securities in any jurisdiction where such offer, solicitation or sale would be unlawful.

MGM Energy is a Calgary based Canadian oil and natural gas exploration, development and production company with operations focused in Northern Canada. MGM Energy's common shares and warrants are listed on the Toronto Stock Exchange under the symbols "MGX" and "MGX.WT.B", respectively.

Forward-Looking Statements: Certain statements or information included in this press release constitute forward-looking statements under applicable securities legislation. Forward-looking statements or information in this press release include but are not limited to estimates of the size of discovered resources, the prospectivity of undeveloped land, business strategy and objectives, exploration and drilling plans and the timing thereof, future plans and operations, as well as the anticipated timing for seeking regulatory approvals. Such forward-looking statements or information are based on a number of assumptions which may prove to be incorrect. Although MGM Energy believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because MGM Energy can give no assurance that such expectations will prove to be correct. Forward-looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by MGM Energy and described in the forward-looking statements or information. The forward-looking statements or information contained in this document are made as of the date hereof and MGM Energy undertakes no obligation 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.

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