NOT FOR DISTRIBUTION OR DISSEMINATION IN THE UNITED STATES.

Kallisto Energy Corp. (TSX VENTURE:KEC) ("Kallisto" or the "Company") and Cumberland Oil & Gas Ltd. (TSX VENTURE:COG) ("Cumberland") are pleased to announce that they have completed their previously announced arm's length business combination by way of a plan of arrangement under the Business Corporations Act (Alberta). The plan of arrangement was approved by an overwhelming majority of more than 99% of the votes cast by the Cumberland shareholders at the special meeting of Cumberland shareholders held on October 10, 2012. Final approval of the plan of arrangement was granted by the Court of Queen's Bench of Alberta on October 10, 2012.

Pursuant to the terms of an arrangement agreement between the parties, Kallisto acquired all of the outstanding common shares of Cumberland ("Cumberland Shares") on the basis of 0.9180 of a common share of Kallisto ("Kallisto Share") for each outstanding Cumberland Share (the "Transaction"). After completing the Transaction, Kallisto has 93,601,536 Kallisto Shares outstanding with Kallisto shareholders owning approximately 65% and Cumberland shareholders owning approximately 35% of the combined Company.

Following closing of the Transaction, Kallisto and Cumberland completed a short form amalgamation and continued under the name Kallisto Energy Corp.

Kallisto's existing executive team, led by Robyn Lore, continues to manage the combined Company. Steven Cloutier and Martin Hislop, members of the board of directors of Cumberland immediately prior to completion of the Transaction, were appointed to the board of directors of Kallisto at closing.

The Cumberland Shares are currently halted from trading on the facilities of the TSX Venture Exchange and it is expected that the Cumberland Shares will be delisted on October 15, 2012. The Kallisto Shares continue to trade on the facilities of the TSX Venture Exchange under the symbol "KEC".

Pembina, Alberta Wells

Kallisto also announces that wells three and four of the planned water-flood scheme at Pembina, Alberta have been drilled, completed and placed on production. The horizontal wells, located at 102/04-04-048-03 W5M and 100/05-04-048-03 W5M, were completed using multi-stage fracture stimulations. The drilling of the first two wells of the water-flood scheme was announced on August 13, 2012. Production from the four new horizontal wells is in line with historical performance from previous wells. Kallisto now has an interest in twelve producing Cardium oil wells at Pembina.

The water-flood scheme is expected to result in the drilling of a total of five horizontal oil wells in section 4-048-03 W5M, four in 2012 (which have now all been drilled, completed and are on production) and one in 2013, bringing the total number of wells in the section to seven. The new wells are expected to be produced through the 5% royalty period for horizontal oil wells (the earlier of two years or 60,000 bbls). Three of the seven wells in the section will be converted to water injection wells; the first well in Q4 2012 and the next two wells in 2014/2015. Kallisto's share of the water-flood project costs is estimated to be approximately $4.2 million.

Following a successful evaluation of the results of the water-flood in section 4, the water-flood project is expected to be expanded to include part or all of the remaining two sections of land in the Pembina project.

The development of its Pembina lands has added significant reserve value and cash flow to the Company. Since the beginning of production operations in November 2009, the first ten Pembina wells have produced a total of approximately 460,000 BOE, including 392,000 bbls of oil. Initial 30 day field production rates from the first ten wells averaged approximately 230 BOE/d (69 net), including 210 bbls (63 net) of oil. Kallisto has a 30% working interest in the Pembina project.

About the Combined Company

The combined Company is a Calgary-based junior resource company engaged in the exploration, development and production of oil and natural gas in Alberta and Saskatchewan. Key attributes of the combined Company include:

• Healthy balance sheet;
• Positive cash flow from a current production base of approximately 430 BOE/d (approximately 70% oil and liquids);
• A credit facility of $8.8 million to supplement growth capital expenditures;
• Tax pools of approximately $48.0 million;
• Proved Reserves of 1,302 MBOE and Proved plus Probable Reserves of 2,034 MBOE based on the independent reserve reports effective December 31, 2011 of each of Kallisto and Cumberland;
• A significant land base, including 78,000 net acres of undeveloped land;
• A diversified asset base with abundant near term drilling opportunities including:
  • Cardium light oil at Pembina;
  • Doe Creek light oil at Valhalla;
  • Basal Quartz liquids rich gas and Elkton light oil at Crossfield; and
  • Shaunavon crude oil in southwest Saskatchewan;
• Significant potential upside from a waterflood programs being implemented at Pembina and Valhalla.

Forward-Looking Statements

In the interest of providing shareholders and potential investors with information regarding the combined Company, including management's assessment of the future plans and operations of the combined Company and ongoing operations in the Pembina, Alberta area, certain statements contained in this joint news release constitute forward-looking statements or information (collectively "forward-looking statements") within the meaning of applicable securities legislation. Forward-looking statements are typically identified by words such as "anticipate", "continue", "estimate", "expect", "forecast", "may", "will", "project", "could", "plan", "intend", "should", "believe", "outlook", "potential", "target" and similar words suggesting future events or future performance. In addition, statements relating to "reserves" are deemed to be forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated and can be profitably produced in the future. In particular, this joint news release contains, without limitation, forward-looking statements pertaining to the potential attributes of the combined Company, including the effect of the Transaction on Kallisto's balance sheet, tax pools, production, reserves, asset base and undeveloped land position, as well as statements pertaining to Kallisto's proposed activities in the Pembina, Alberta area.

With respect to forward-looking statements contained in this joint news release, assumptions have been made regarding, among other things: Kallisto's expectations regarding future growth, results of operations production, future capital and other expenditures (including the amount, nature and sources of funding thereof); and the ability of Kallisto to execute and realize on the anticipated benefits of the Transaction. Although Kallisto believes that the expectations reflected in the forward looking statements contained in this joint news release, and the assumptions on which such forward-looking statements are made, are reasonable, there can be no assurance that such expectations will prove to be correct. Readers are cautioned not to place undue reliance on forward-looking statements included in this joint news release, as there can be no assurance that the plans, intentions or expectations upon which the forward-looking statements are based will occur.

By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur, which may cause Kallisto's actual performance and financial results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things, the following: volatility in market prices for oil and natural gas; incorrect assessment of the value of the Transaction; failure to realize the anticipated benefits and synergies of the Transaction; the general economic conditions in Canada, the U.S. and globally; industry conditions; governmental regulation; imprecision of reserve and resource estimates; environmental risks; competition from other industry participants; stock market volatility; Kallisto's ability to access sufficient capital from internal and external sources; and the other factors described under "Risk Factors" in Kallisto's most recently filed Annual Information Form available in Canada at www.sedar.com. Readers are cautioned that this list of risk factors should not be construed as exhaustive.

The forward-looking statements contained in this joint news release speak only as of the date of this joint news release. Except as expressly required by applicable securities laws, we do not undertake any obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this joint news release are expressly qualified by this cautionary statement.

Barrels of Oil Equivalent

Barrels of oil equivalent (BOE) are calculated using the conversion factor of 6 Mcf (thousand cubic feet) of natural gas being equivalent to one barrel of oil. BOE may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1 bbl (barrel) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.

This joint news release does not constitute an offer to sell or the solicitation of an offer to buy any securities within the United States. The securities to be offered have not been and will not be registered under the U.S. Securities Act of 1933, as amended, or any state securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of such Act or other laws.