Canadian Overseas Petroleum Signs Bluebell Farm-in Agreement

NOT FOR DISTRIBUTION TO UNITED STATES NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.

CALGARY, Dec. 9 /CNW/ - Canadian Overseas Petroleum Limited ("COPL" or the "Company") (TSX-V: XOP), through its wholly owned subsidiary, Canadian Overseas Petroleum (UK) Limited, has signed a farm-in agreement with Premier Oil UK Limited for the Bluebell prospect in Blocks 15/24c and 15/25f, License P.1466, in the UK North Sea.  Under the terms of the farm-in, the Company will pay 66.67% of the cost to drill a well to earn a 40% equity interest in the prospect.   

The farm-in for Bluebell, together with the farm-in agreement with Faroe Petroleum (U.K.) Ltd. announced December 6, 2010 for Blocks 206/5a and 206/10a, License P.1161, satisfy the requirements for the first release condition of the Company's recent $130 million offering of subscription receipts. As such, $39 million (30% of the gross $130 million financing) currently held in escrow will be eligible to be released to the Company to fulfill its obligations under the foregoing farm-ins.  The farm-in agreements remain subject to certain conditions precedent and regulatory approvals. 

Concurrent to the process of releasing the escrowed funds, 78 million subscription receipts (30% of the total 260 million subscriptions receipts financing) will be automatically exercised into common shares and warrants. Each subscription receipt entitles the holder to one (1) common share and one-half of one (0.5) common share purchase warrant. The common shares will trade on the TSX Venture Exchange ("TSX-V") under the symbol XOP, but the associated warrants will not be listed.  The remaining 182 million subscription receipts will continue to trade on the TSX-V under the symbol XOP.R until the Company satisfies the terms of the second release condition for the remaining 70% of the escrowed funds, or until the expiry deadline of March 1, 2011.

Canaccord Genuity Corp. acted as financial advisor to the Company in connection with the farm-in agreements with Premier Oil UK Limited and Faroe Petroleum (U.K.) Ltd.

For further information, please refer to the Company's Long Form Prospectus, dated November 23, 2010, which can be found at www.sedar.com under the Company's heading. 

The securities described herein have not been, and will not be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States or to a U.S. person absent an exemption from the registration requirements of such Act.

About the Company

COPL's Common Shares are listed under the symbol "XOP", and the Subscription Receipts under the symbol "XOP.R", both of which trade on the TSX-V.

Forward Looking Statements 

This press release may contain forward-looking statements based on COPL's current expectations and assumptions as to a number of factors including access to capital, regulatory approvals, intended acquisitions and general economic and industry conditions.  If those expectations and assumptions prove to be incorrect, or factors change, then actual results could differ materially from the forward-looking statements contained in this press release.

Generally, statements included in this press release that address activities, events or developments that COPL expects, believes or anticipates will or may occur in the future are forward-looking statements. Such forward-looking statements involve substantial known and unknown risks and uncertainties, certain of which are beyond COPL's control, including: the impact of general economic conditions in the areas in which COPL operates, civil unrest, industry conditions, changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in commodity prices, foreign exchange or interest rates, stock market volatility and obtaining required approvals of regulatory authorities. In addition there are risks and uncertainties associated with the oil and gas industry, therefore COPL's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements will transpire or occur, or if any of them do so, what benefits, including the amounts of proceeds, which COPL will derive therefrom. Such statements are based on assumptions made by COPL based on its experience perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances.

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.

For further information:

Mr. Arthur Millholland, President and CEO

Phone: [phone]

Or,

Rob Elgie, Manager of Investor Relations

Phone: [phone]