Underground Energy Corporation announced a definitive farm-out agreement with AmRich Energy Inc. Under the terms of the Farm-out Agreement, AmRich will farm-in on and have the right to earn up to a 75% working interest in Underground's and its joint operating partners' interest in 1,063 gross acres of the Central Southern section of the Zaca Field Extension Project in Santa Barbara County, California. Under the Farm-out Agreement, AmRich will enter into a continuous drilling program of 3 wells to earn its full working interest and acreage position in the Farm-out Lands. It will also be required to put these 3 wells onto production and to install appropriate well facilities and infrastructure.

Under the Farm-out Agreement, AmRich will carry UGE on 100% of UGE's interest on the drilling and completion costs of these initial 3 wells, and also the costs of installing associated well facilities and infrastructure. This initial 3 well program includes 2 wells which were originally drilled by Texaco in the mid-1980's and AmRich will re-complete these wells as part of its drilling commitment. Underground has secured the land-use permit for the site of the first well intended to be re-completed on the AmRich Farm-out Lands and, provided that final drilling approval has been received, AmRich is required to commence drilling operations on this initial re-completion well by March 1, 2013.

This Farm-in by AmRich initially targets the upper Monterey Zone at Zaca which was historically the main producing zone at the existing Zaca Field. Under the Farm-out Agreement, AmRich has the option to also secure rights to the deeper sub-thrust play discovered by Underground during its drilling operations in 2012 by drilling at least one of its three (3) well obligation to a depth sufficient to test the subthrust play or by drilling a fourth obligation well to test the subthrust play on or before December 31, 2014. Once the initial drilling program is complete and AmRich has earned its full acreage position, the parties will look to drill additional wells as operating partners with each responsible for its respective share of costs.