September 30, 2009 17:22 ET

Circumpacific Energy Corporation: Press Release

CALGARY, ALBERTA--(Marketwire - Sept. 30, 2009) - Circumpacific Energy Corporation (TSX VENTURE:CER) ('Circumpacific') is an independent oil and natural gas producer engaged in the acquisition, exploration, production and development of oil and natural gas properties in North America.

Drillsearch Energy Limited ('Drillsearch'), an Australian company, holds approximately 79.5% of issued share capital in Circumpacific.

The purpose of this Press Release is to notify shareholders of recent correspondence between Circumpacific and Drillsearch, including a threat of legal action made by Drillsearch.

Circumpacific received a letter dated September 10, 2009 from solicitors acting for Drillsearch ('the Drillsearch letter'). By that letter, Drillsearch demanded that the board of Circumpacific agree, by 5:00pm the following day, to enter into a set of protocols. Those protocols included, among other things:

- that materials relating to the forthcoming general meeting on November 26, 2009, be provided to, and pre-approved by, Drillsearch prior to mailing to shareholders and filing on SEDAR;

- that Circumpacific issue a news release announcing the resignation of Peter Simpson as a director;

- that Circumpacific not make any application to any regulatory authority or Court without five business days' prior notice to Drillsearch, and that Circumpacific consent to intervention by Drillsearch in any such application;

- that the agenda and the chairman's script for the forthcoming general meeting be agreed to beforehand by Drillsearch;

- that up to fifteen of Drillsearch's representatives and advisors be admitted to the general meeting without need of share ownership or proxy appointment.

The Drillsearch letter threatened that, failing Circumpacific's acknowledgment and confirmation in writing of its acceptance of the protocols by close of business on September 11, 2009, Drillsearch had instructed that an application be brought in the Supreme Court of British Columbia forthwith for an order confirming the matters set out in the Drillsearch letter.

Drillsearch itself conceded that the protocols demanded by it were "clearly extraordinary".

By letter dated September 15, 2009, Circumpacific, through its lawyers, responded to the Drillsearch letter. Circumpacific pointed out that, among other things, under its Articles of Incorporation and the relevant provisions of the Business Corporations Act (British Columbia) the board of Circumpacific must manage and supervise the business and affairs of Circumpacific, and has the express authority to do so, in the interests of all shareholders, not merely Drillsearch. The protocols demanded by Drillsearch would have required the board of Circumpacific to abdicate the duties and responsibilities it owes to all of its shareholders. Circumpacific asserted that the protocols demanded by Drillsearch are contrary to the basic tenets of Canadian corporate law, and are wholly inappropriate.

Circumpacific also notes that:

- Circumpacific is not a wholly owned subsidiary of Drillsearch;

- Approximately 20.5% of share capital in Circumpacific is owned by a diverse range of over 220 other shareholders, the majority of whom are unrelated to Drillsearch;

- Circumpacific's present board comprises four directors, two of whom are independent;

- Drillsearch's requisition notice of July 29, 2009 seeks to remove both independent directors together with Mr Simpson, and to replace them with Drillsearch's own nominations. One of Drillsearch's nominations, Mr Lingo, is the executive managing director of Drillsearch. The second nomination, Mr Carty, is an executive officer (Chief Operating Officer) of Drillsearch. The third nomination, Mr McKerlie, is the chairman of the Drillsearch board and also chairman of the Drillsearch Audit and Risk Committee.

As at the date of this press release, Circumpacific is unaware of any legal proceedings of the kind described in the Drillsearch letter.

A majority of the existing Circumpacific board has recommended that shareholders vote against their removal at the general meeting on November 26, 2009, on the basis that the resolutions proposed by Drillsearch would give Drillsearch complete control of the Circumpacific board, and would leave Circumpacific with no independent directors.

A copy of the notice calling the meeting, together with the Information Circular and other relevant material, is available on SEDAR at or the Company's website

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.

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