Underground Energy announces grant of options

SANTA BARBARA, CA, May 2, 2012 /CNW/ - Underground Energy Corp. ("Underground", "UGE" or the "Corporation") (TSX VENTURE: UGE) announced today the grant of 2.4 million stock options to officers and employees of the Corporation.  The majority of the stock options granted were issued in lieu of certain cash bonuses payable to officers and employees under the Corporation's cash bonus program.  Each stock option entitles the holder thereof to acquire one common share of the Corporation at an exercise price of US$0.284 per share. The stock options vest immediately and expire 3 years from the date of grant, all in accordance with the Corporation's option plan.

About Underground Energy Corporation

Underground Energy is focused on identifying, acquiring rights to, exploring for, developing and producing oil reserves from shale formations in North America using the latest exploration and recovery techniques and technologies. Underground focuses on identifying and acquiring sizable land positions and prospects in historically prolific but under-explored shale formations as well as in emerging shale plays that, in both instances, hold large volumes of prospective resources. Underground currently holds hydrocarbon rights on approximately 68,524 net acres of highly prospective lands in California and Nevada with an initial focus on the Monterey shale in California. Underground is listed on the TSX Venture Exchange under the ticker symbol "UGE". For more information on Underground, including a copy of the Company's latest corporate presentation, please visit www.ugenergy.com. Underground's regulatory filings are available under the Company's profile at www.sedar.com.

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.

Peter Ballachey
Chief Financial Officer
Underground Energy Corporation
Tel: [phone] x 17

Simon Clarke
Vice President, Corporate Development
Underground Energy Corporation
Tel: [phone]