CIRCUMPACIFIC ENERGY CORPORATION
TSX VENTURE : CER

CIRCUMPACIFIC ENERGY CORPORATION

October 27, 2009 10:50 ET

Circumpacific Energy Corporation: Press Release

CALGARY, ALBERTA--(Marketwire - Oct. 27, 2009) - Circumpacific Energy Corporation (TSX VENTURE:CER) ('Circumpacific') refers to its announcement of October 19, 2009 concerning legal proceedings brought by Drillsearch Energy Limited (ASX: DLS) ('Drillsearch') in the Supreme Court of British Columbia ('Drillsearch proceedings').

On October 21, 2009 Circumpacific filed an Appearance giving notice of its intention to defend the Drillsearch proceedings.

On October 23, 2009 Circumpacific filed and served its Statement of Defence in the Drillsearch proceedings. A copy of the Statement of Defence is attached. To view the Statement of Defence, please click the following link: http://media3.marketwire.com/docs/1027cer_SOD.pdf.

Broadly, Circumpacific asserts that:

  • Mr Peter Simpson is a director of Circumpacific, and is entitled to remain in that position until the general meeting on November 26, 2009, at which time all existing directors automatically cease to hold office and the voting shareholders may elect a new board;
  • the directors of Circumpacific are under a mandatory obligation to manage and supervise the management of the business and affairs of the company, and have the authority to exercise all such powers, in accordance with the company's Articles and relevant governing laws;
  • the "protocols" demanded by Drillsearch, as set out in paragraph 46 of the Statement of Defence, are extraordinary and contrary to basic tenets of Canadian corporate law. It would be wholly inappropriate for the Circumpacific board to agree to those protocols;
  • Circumpacific is not in breach of its obligations under the Joint Evaluation Agreement with Drillsearch in relation to evaluation of Circumpacific's blocks in Queensland, Australia;
  • Drillsearch's failure to provide information to Circumpacific, and to give to Circumpacific access to accounts and records to which Circumpacific is entitled under the Joint Evaluation Agreement, is in contravention of Drillsearch's obligations to Circumpacific. As a result, Circumpacific has served notice invoking the mandatory dispute resolution provisions to resolve the dispute in accordance with the Joint Evaluation Agreement (paragraph 36). A copy of the notice of dispute under the Joint Evaluation Agreement is attached.

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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