Redcliffe Exploration Inc.
TSX VENTURE : RXI.A
TSX VENTURE : RXI.B

Redcliffe Exploration Inc.

October 19, 2007 09:30 ET

Redcliffe Announces Update to Private Company Acquisition

CALGARY, ALBERTA--(Marketwire - Oct. 19, 2007) -

(NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES OF AMERICA)

On August 9, 2007, Redcliffe Exploration Inc. ("RXI") (TSX VENTURE:RXI.A) (TSX VENTURE:RXI.B) announced that it had entered into a letter of intent to acquire Redcliffe Energy Ltd. ("REL"), a related private company, in a share exchange transaction (the "Arrangement"). RXI is pleased to announce that it has now signed a definitive arrangement agreement with REL to effect the Arrangement. Final negotiation resulted in a slight adjustment to the previously announced exchange ratio and now, pursuant to the arrangement agreement, RXI shall issue approximately 10,644,981 Class A shares (previously 10,268,567 Class A shares) and 391,360 Class B shares (previously 327,185 Class B shares) for the 13,625,837 issued and outstanding common shares of REL. This represents an exchange ratio of 0.7812 RXI Class A shares and 0.0287 RXI Class B shares for each REL common share.

The independent members of the Boards of Directors of both RXI and REL, following consultations with their respective financial advisors, have unanimously approved the Arrangement and have resolved to recommend shareholder approval of the Arrangement. In addition, shareholders of RXI, including all directors, officers and key consultants of RXI have entered into lock-up agreements in respect of 6,398,307 Class A shares (20.2%) and 53,350 Class B Shares (4.8%) of RXI, to vote in favour of the Arrangement. Certain shareholders of REL, including all directors, officers and employees of REL have also entered into lock-up agreements in respect of 4,034,646 common shares (29.6%) of REL, to vote in favour of the Arrangement.

Jennings Capital Inc. ("Jennings") was engaged by RXI to provide a formal valuation in accordance with OSC Rule 61-501 in connection with the Arrangement. Jennings has advised the Board of Directors of RXI that it is of the opinion, subject to the review of the final form of the documents effecting the Arrangement, that the consideration to be offered by RXI pursuant to the Arrangement is fair from a financial point of view to the RXI shareholders.

Blackmont Capital Inc. was engaged by REL to act as its financial advisor and has advised the Board of Directors of REL that it is of the opinion, subject to review of the final form of the documents effecting the Arrangement, that the consideration to be offered by RXI pursuant to the Arrangement is fair from a financial point of view to the REL shareholders.

The Arrangement is expected to close before the end of December 2007. The completion of the Arrangement is subject to a number of conditions, including, but not limited to, the approval of the TSX Venture Exchange and shareholder approvals from each of RXI and REL. There can be no assurance that the Arrangement will be completed as proposed or at all.

RXI is a Calgary, Alberta based company engaged in the exploration for, and development and production of conventional crude oil and natural gas reserves in western Canada. RXI's strategy is to build shareholder value through internally generated exploration and development drilling, and through selective acquisitions. RXI's areas of operational focus include the Pembina and Peace River Arch areas of Alberta.

Forward-Looking Statements: This news release contains statements about future events that are forward looking in nature and, as a result, are subject to certain risks and uncertainties such as changes in plans or the occurrence of unexpected events. Actual results may differ from the estimates provided by management.

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

Contact Information

  • Redcliffe Exploration Inc.
    Daryl H. Connolly
    President & CEO
    (403) 539-8440
    (403) 539-8433 (FAX)
    Email: dconnolly@redcliffe.ca
    or
    Redcliffe Exploration Inc.
    George Gramatke
    Vice President, Finance & CFO
    (403) 539-8442
    (403) 539-8433 (FAX)
    Email: ggramatke@redcliffe.ca