ELW

ELKWATER RESOURCES LTD. ("Elkwater" or the "Company") (TSX VENTURE:ELW)
announces that it has closed its previously announced acquisition of producing
oil and gas assets primarily located in the Lashburn and Suffield areas of
Saskatchewan and the Pembina and Ewing Lake areas of Alberta. The purchase price
was $5 million cash, subject to final closing adjustments, and was funded using
cash on hand and an expanded bank credit facility. The transaction has an
effective date of December 1, 2010. Elkwater will also acquire approximately $11
million in income tax resource pools with the transaction.


The acquisition increases the Company's production to an estimated net 280
boepd, comprised of approximately 165 bopd oil and NGLs and 115 boepd natural
gas, and approximately one half of the production is operated. Post closing of
the acquisition, the Company's debt/working capital deficiency is estimated at
$3.75 million. Elkwater currently has 14,138,965 shares outstanding.


This press release contains "forward-looking information", within the meaning of
applicable Canadian securities legislation, including but not limited to,
statements with respect to: final closing adjustments of the acquisition; income
tax resource pools; reserve estimates; estimates regarding current or future
production; estimates of debt and working capital deficiency; and the future
financial and operating performance of the Company's assets and its projects. 


Forward-looking information is frequently characterized by words such as
"expect", "schedule", "estimate", "approximate", "intend", "anticipate",
"believe", and other similar words. These statements are only predictions and
are subject to known and unknown risks, uncertainties and other factors that may
cause the actual results to be materially different from those expressed or
implied by such forward-looking information, including but not limited to:
general business, economic, competitive, political and social risks and
uncertainties; risks relating to oil and gas exploration and exploitation
activities; oil and gas prices; acquisition risks; risks relating to greater
resources, and delays in obtaining regulatory approvals. Although the Company
has attempted to identify important factors that could cause actual results to
differ materially from those contained in forward-looking information, there may
be other factors that cause results not to be as anticipated, estimated or
intended. There can be no assurance that such statements will prove to be
accurate, as actual results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not place undue
reliance on forward-looking information. The Company does not undertake to
update any forward-looking information, except in accordance with applicable
securities laws.


Disclosure provided herein in respect of barrels of oil equivalent (boe) may be
misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf
to 1 bbl is based on an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a value equivalency at the
wellhead. All boe conversions in this press release are derived by converting
gas to oil according to this 6 mcf to 1 bbl ratio.

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