Nations Energy Company Ltd.

Tartan Energy Inc.
TSX VENTURE : TEW

Tartan Energy Inc.

May 12, 2005 18:39 ET

Nations Energy Company Ltd. Offer to Acquire Tartan Energy Inc.

CALGARY, ALBERTA--(CCNMatthews - May 12, 2005) -

$0.63 per share offer represents 106% premium for Tartan common shares

Nations Energy Company Ltd. ("Nations") announced today that its wholly-owned subsidiary (the "Offeror") will make an offer to acquire all of the outstanding common shares (the "Tartan Shares") of Tartan Energy Inc. (TSX VENTURE:TEW) ("Tartan") not already held by Nations at a price in cash of $0.63 per Tartan Share. This offer will represent a premium of approximately 106% over the closing price of the Tartan Shares of $0.305 on the TSX Venture Exchange as at Thursday, May 5, 2005 (being the day that Tartan made an announcement that it had received expressions of interest to acquire its shares at prices ranging from $0.20 to $0.45 per share). This offer is also a premium of approximately 93% over the weighted average trading price of the Tartan Shares on the TSX Venture Exchange for the 30 trading days immediately preceding the date of this announcement. The offer is based on there being 109,214,024 Tartan Shares outstanding and 139,390,531 Tartan Shares outstanding on a fully diluted basis.

Tartan, a public junior oil and gas company, is focused on the exploration for, development and production of oil and natural gas and has a producing property in California, U.S.A. The Tartan Shares are listed and posted for trading on the TSX Venture Exchange under the trading symbol "TEW".

Nations is a privately owned Alberta oil and gas company engaged in the exploration for, and the acquisition, development and production of, oil and natural gas reserves internationally. Nations' oil production exceeds 45,000 barrels per day.

Nations currently beneficially owns 20,046,167 Tartan Shares (or approximately 18.35% of the 109,214,024 outstanding Tartan Shares) and 3,333,333 warrants to acquire Tartan Shares at $0.75 (together with its Tartan Shares totalling approximately 20.77% of the outstanding Tartan Shares assuming the conversion of such warrants). Nations also has the right to exchange at a rate of $0.45 per share any of the outstanding principal on a fully-drawn secured credit facility of U.S.$4,800,000 granted by Nations to Tartan Energy U.S.A., Corp., a wholly-owned subsidiary of Tartan, for up to a maximum of 14,186,667 Tartan Shares (bringing Nations' total interest to 29.64% of the outstanding Tartan Shares assuming the conversion of its warrants and the exchange of the loan principal for the maximum amount of Tartan Shares). The repayment of the amounts due under this credit facility is guaranteed by Tartan and is secured with a first and fixed charge against the shares and all of the assets of Tartan Energy U.S.A., Corp., which holds all the oil and gas assets of Tartan.

The Offeror plans to commence the take-over bid as expeditiously as possible after either a formal valuation has been prepared and delivered to the Offeror or exemptions are available from the valuation requirements imposed on insider bids under applicable securities law requirements. Nations and the Offeror have advised the Board of Directors of Tartan of the intention to make the offer and have required that Tartan have an independent valuator prepare a formal valuation of the Tartan Shares at the cost of Nations and the Offeror, all in accordance with applicable securities law requirements.

The offer will be conditional (unless waived or amended by the Offeror) upon the satisfaction of certain conditions. Subject to applicable law, the Offeror will reserve the right to withdraw the offer and not take up and pay for the Tartan Shares deposited under the offer unless each of the conditions of the offer are satisfied or waived by the Offeror prior to the expiry of the offer.

In view of the plans of Nations, Daniel Linnett, Chief Financial Officer of Nations, has resigned as a director of Tartan to avoid any potential conflict of interest at this time. Nations has a contractual right to nominate a director for election to the board of directors of Tartan and to replace the director at any time.

Orion Securities Inc. has been retained as financial advisor and Macleod Dixon LLP has been retained as legal counsel to Nations for the purposes of this transaction.

Contact Information

  • Nations Energy Company Ltd.
    DAVID G. WILSON
    Executive Vice President of Nations Energy Company Ltd.
    and the Offeror
    (403) 206-1420
    (403) 206-1520 (FAX)