TALON INTERNATIONAL ENERGY, LTD.
TSX VENTURE : TAR

October 16, 2009 13:49 ET

TALON International Energy, Ltd. Announces Amalgamation Agreement and Updates Transaction and Private Placement

CALGARY, ALBERTA--(Marketwire - Oct. 16, 2009) - TALON International Energy, Ltd. ("TALON") (TSX VENTURE:TAR) is pleased to announce that it has entered into an amalgamation agreement (the "Agreement") with Fifth Avenue Diversified Inc. ("Fifth Avenue") effective October 7, 2009. In addition, TALON announces the following updates to its previously announced transaction with Fifth Avenue and proposed private placement (refer to TALON's press release of July 23, 2009).

TALON and Fifth Avenue previously executed a letter agreement dated July 16, 2009 which is superseded by the Agreement. Pursuant to the Agreement, TALON and Fifth Avenue have each agreed to continue (the "Continuance") into the Province of Alberta and amalgamate (the "Amalgamation") under the Business Corporations Act (Alberta) (the Continuance and the Amalgamation are collectively referred to as the "Transaction"). The Transaction shall constitute a Reverse Takeover ("RTO") pursuant to the TSX Venture Exchange (the "Exchange") Policy 5.2 – Changes of Business and Reverse Takeovers.

Fifth Avenue is a private company, incorporated under the Business Corporations Act (British Columbia) and is based in Vancouver, British Columbia. Fifth Avenue is engaged in the acquisition, exploration and development of oil and gas assets in Western Canada.

Prior to the completion of the Transaction, TALON was engaged in the production of small quantities of oil in Western Canada.

The Agreement

Under the Agreement, TALON and Fifth Avenue have agreed to continue into the Province of Alberta and amalgamate to form a new company under the name "Canadian Energy Exploration Inc." ("Amalco"). Pursuant to the Transaction, all of the outstanding TALON securities and Fifth Avenue securities will be exchanged for corresponding securities of Amalco. In particular, Amalco will issue:

  • One Amalco common share ("Amalco Share") for every ten TALON common shares ("TALON Shares") issued and outstanding on the effective date of the Transaction; and
  • One Amalco Share for every two Fifth Avenue common shares ("Fifth Avenue Shares") issued and outstanding on the effective date of the Transaction.

Any fractional interest resulting from the foregoing transactions will be rounded up or down to the nearest Amalco security.

In connection with the Transaction, it is anticipated that prior to the completion of the Private Placement (as defined below), immediately prior to the effective date of the Transaction, there will be 19,350,000 TALON Shares and 11,426,201 Fifth Avenue Shares issued and outstanding.

Upon completion of the Transaction and prior to the completion of the Private Placement, it is anticipated that there will be 7,648,101 Amalco Shares outstanding. In addition, Amalco intends to complete a Private Placement of up to 30,000,000 Amalco shares at $0.05 per Amalco share (see "Private Placement" below). Further, a number of Amalco stock options will be issued in accordance with Amalco's stock option plan.

Steps of the Transaction and Related Transactions

Based on the terms of the Transaction, and assuming the Transaction and related transactions receive regulatory and securityholder approval and satisfaction or waiver of all conditions precedent, the remaining events listed below will occur and be deemed to occur in the following order:

  1. TALON applies for and receives the full revocation of the cease trade orders issued by the Alberta Securities Commission ("ASC") and British Columbia Securities Commission ("BCSC") (see "Cease Trade Orders" below);
  2. TALON applies to and receives the conditional listing approval of the Exchange;
  3. TALON will continue from the Yukon Territory into the Province of Alberta;
  4. Fifth Avenue will continue from the Province of British Columbia into the Province of Alberta;
  5. TALON and Fifth Avenue will amalgamate to become Amalco resulting in the TALON and Fifth Avenue securities being exchanged for the corresponding Amalco securities, in the following anticipated amounts:
    1. 1,935,000 Amalco Shares are exchanged for 19,350,000 TALON Shares; and
    2. 5,713,101 Amalco Shares are exchanged for 11,426,201 Fifth Avenue Shares;
  6. up to 30,000,000 Amalco Shares are issued at $0.05 per Amalco Share pursuant to the Private Placement;
  7. up to 7,500,000 Amalco Shares are issued at $0.05 per Amalco Share pursuant to the conversion of up to $375,000 in Fifth Avenue debt;
  8. up to 4,514,810 Amalco Options are issued to Amalco's directors and officers; and
  9. appropriate filings are made with the Exchange and the Final Exchange Bulletin approving the Transaction is issued.

Shareholder Approval

TALON and Fifth Avenue shareholder meetings have been set for November 9, 2009 to consider the proposed Transaction. The Transaction must be approved by a special resolution of the TALON Shareholders and Fifth Avenue Shareholders. To be effective a special resolution must be passed by 66 2/3% of the shareholders who are entitled to vote on the resolution and are present in person or by proxy at the shareholder meeting.

The Transaction is an "Arm's Length Transaction" under Exchange Policy 1.1.

Conditions of the Transaction

The Transaction contains a number of conditions precedent to the obligations of parties. Unless all such conditions are satisfied or waived by the party for whose benefit such conditions exist, to the extent they may be capable of waiver, the Transaction will not proceed. There is no assurance that the conditions will be satisfied or waived on a timely basis, or at all. Such conditions include the TALON shareholders and Fifth Avenue shareholders approving the Transaction, revocation of TALON's cease trade orders, completion of the minimum Private Placement and that all other consents and approvals (including regulatory approvals) are obtained.

Certain shareholders, including all Fifth Avenue management and directors (including entities with which they are associated), representing approximately 70% of the outstanding Fifth Avenue Shares (on a fully-diluted basis), will be required to enter into lock-up agreements in which they have agreed to vote in favour of the Transaction, except in certain circumstances. Certain shareholders, including all TALON management and directors (including entities with which they are associated), representing approximately 50% of the outstanding TALON Shares (on a fully-diluted basis), will be required to enter into lock-up agreements in which they have agreed to vote in favour of the Transaction, except in certain circumstances.

Cease Trade Orders

Further to TALON's press release dated February 4, 2009, a cease trade order (the "Order") was issued on May 7, 2008 against TALON by the ASC for the failure of TALON to file its audited annual financial statements and management's discussion and analysis for the year ended December 31, 2007 ("Annual Filings"). As a result of the Order, the Exchange suspended trading in TALON's Shares on May 7, 2008. The Annual Filings were filed on the System for Electronic Document Analysis and Retrieval ("SEDAR") on May 8, 2008.

Further to TALON's press release dated July 23, 2009, TALON announced that a cease trade order (the "B.C. Order") was issued on June 4, 2009 against TALON by the BCSC for the failure of TALON to file its audited annual financial statements and management's discussion and analysis for the year ended December 31, 2008 ("2008 Annual Filings") and its unaudited interim financial statements and management's discussion and analysis for the three months ended March 31, 2009 ("2009 Interim Filings").

TALON has made an application to the ASC for a full revocation of the Order, and is currently working with the ASC to this end. In conjunction with TALON's application for revocation of the Order, the ASC has reviewed TALON's financial statements and management's discussion and analysis for the period ended June 30, 2008 and the year ended December 31, 2007 (collectively, the "Financial Statements"), and provided TALON with certain comments in respect of the Financial Statements. TALON has revised its Financial Statements to address issues highlighted by the ASC in its review.

At the request of the ASC, TALON has refiled amended and restated Financial Statements, 2008 Annual Filings and 2009 Interim Filings and related certifications on October 9, 2009. The refiling of the financial statements do not alter financial results previously contained within the statements. The changes include notes to the interim financial statements and to add certain disclosure necessary to address requirements of the CICA Handbook. With respect to the management discussion and analysis, the amendment and restatement of the interim and annual management discussion and analysis involves revisions necessary to more properly address the requirements of National Instrument 51-102 – Continuous Disclosure Obligations and Form 51-102F1.

The amended and restated Financial Statements, 2008 Annual Filings and 2009 Interim Filings and related certifications are available on SEDAR under TALON's profile on the SEDAR website at www.sedar.com.

TALON Statement of Reserves

TALON has filed its Form 51-101F1 - Statement of Reserves Data and Other Oil and Gas Information for its year ended December 31, 2008 (the "Statement of Reserves"). TALON has also filed Form 51-101F2 - Report of Independent Qualified Reserves Evaluator and Form 51-101F3 - Report of Management and Directors, all under National Instrument 51-101. These filings can be accessed electronically under TALON's profile on the SEDAR website at www.sedar.com.

TALON wishes to advise that after further review of it's Statement of Reserves it has been made aware of certain inconsistencies in the Statement of Reserves. In the table entitled "Net Present Value of Future Net Revenue by Production Group" in the Statement of Reserves, TALON included a "unit value" of $15.23 per bbl. As some of TALON's revenues are from solution gas the Statement of Reserves would have been more accurate if the unit value was given in boe and took into account the solution gas. Using this approach the unit value would be $13.24 in the Statement of Reserves. The following table sets forth the corrected information respecting the average net product prices received, royalties paid, operating expenses and netbacks received by TALON in respect of TALON's production of oil and natural gas for the periods indicated:

 2008
 Year
Ended to
Dec. 31, 2008
Q4Q3Q2Q1
      
Selling Prices     
  Oil (light/medium) ($/bbl)(1) 90.87 52.31 109.99 115.67 85.96
  Natural gas ($/Mcf) 7.79 6.51 8.15 9.42 7.09
      
Royalties     
  Oil ($/bbl)(1) 11.41 10.31 12.30 13.13 9.88
  Natural gas ($/Mcf) 2.58 3.09 2.42 2.88 2.03
      
Operating Expenses(3)     
  Oil ($/bbl)(1) 32.68 29.51 24.69 40.69 35.82
  Natural gas ($/Mcf) Note 3 Note 3 Note 3 Note 3 Note 3
      
Field netbacks     
  Oil ($/bbl)(1) 46.78 12.49 73.00 61.85 40.26
  Natural gas ($/Mcf) 5.21 3.42 5.73 6.54 5.06

Note:

  1. Includes a negligible amount of NGLs.
  2. Operating expenses include mineral and surface lease rentals, property taxes and expenses related to the operation and maintenance of wells, production facilities and gathering systems.
  3. As all of the Natural Gas production of TALON is derived from solution gas produced from TALON's oil properties, all of the Operating Expenses have been reported under "Oil ($/bbl)".

Fifth Avenue Reserves Data

Sproule Associates Limited prepared an evaluation (the "Sproule Report") of the petroleum and natural gas reserves of Fifth Avenue dated March 23, 2009. The effective date of the Sproule Report is December 31, 2008 and it consists of an evaluation of the P&NG reserves of Fifth Avenue's interests in Alberta, Canada. The Sproule Report was prepared from a previous report, entitled "Evaluation of the P&NG Reserves of FairWest Energy Fifth Avenue (As of December 31, 2008)", dated March 17, 2009. Interests were changed for Fifth Avenue but no other changes were made to reserves and other parameters.

Subsequent to the completion of the Sproule Report, all of Fifth Avenue's wells began producing. Production began on March 1, 2009. Fifth Avenue expects that this change has affected its reserves data as all of Fifth Avenues wells would be revised as proved developed producing reserves from proved developed non-producing reserves. The average production for Fifth Avenue's wells for the period between March 1, 2009 and July 31, 2009 was 294.51 Mcf/d. The information provided below with respect to Fifth Avenue's oil and gas activities is derived from the Sproule Report and therefore does not indicate that the wells are currently producing.

The following tables set forth certain information relating to the oil and natural gas reserves of Fifth Avenue's properties and the present value of the estimated future net cash flow associated with such reserves as at December 31, 2008 which numbers may vary slightly from those presented in the Sproule Report due to rounding. Also due to rounding, certain columns may not add exactly. Certain tables which are derived by utilizing forecast prices and costs are presented with December 31, 2008 pricing assumptions. The information set forth below is derived from the Sproule Report which has been prepared in accordance with the standards contained in the COGE Handbook and the reserves definitions contained in National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities. All evaluations and reviews of future net cash flow are stated prior to any provision for interest costs or general and administrative costs and after the deduction of estimated future capital expenditures for wells to which reserves have been assigned. It should not be assumed that the estimated future net cash flow shown below is representative of the fair market value of Fifth Avenue's properties. There is no assurance that such price and cost assumptions will be attained and variances could be material. The recovery and reserve estimates of crude oil, natural gas liquids and natural gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual crude oil, natural gas liquids and natural gas reserves may be greater than or less than the estimates provided herein.

SUMMARY OF OIL AND GAS RESERVES
as of December 31, 2008
Reserves
Reserves CategoryLight and Medium OilNatural Gas (non-associated & associated)Natural Gas LiquidsOil Equivalent
Gross
(Mstb)
Net
(Mstb)
Gross
(MMcf)
Net
(MMcf)
Gross
(Mstb)
Net
(Mstb)
Gross
(MBOE)
Net
(MBOE)
PROVED        
  Developed Producing 0 0 0 0 0 0 0 0
  Developed Non-Producing 2.0 1.8 341.1 261.8 2.8 1.9 61.7 47.4
  Undeveloped 0 0 0 0 0 0 0 0
TOTAL PROVED 2.0 1.8 341.1 261.8 2.8 1.9 61.7 47.4
PROBABLE 0.6 0.5 56.8 43.1 0.6 0.4 10.6 8.1
TOTAL PROVED PLUS PROBABLE 2.5 2.3 397.9 304.9 3.4 2.3 72.3 55.4

Notes:

  1. "Gross Reserves" are Fifth Avenue's working interest share of remaining reserves before the deduction of royalties.
  2. "Net Reserves" are Fifth Avenue's working interest share of remaining reserves less all Crown, freehold, and overriding royalties and interests owned by others.

The following table summarizes the undiscounted value and the present value, discounted at 5%, 10%, 15% and 20%, of Fifth Avenue's estimated future net revenue based on forecast price and cost assumptions as of December 31, 2008.

SUMMARY OF NET PRESENT VALUES OF
FUTURE NET REVENUE
as of December 31, 2008

Reserves Category
BEFORE INCOME TAXES
DISCOUNTED AT (%/year)
AFTER INCOME TAXES
DISCOUNTED AT (%/year)
UNIT VALUE BEFORE INCOME TAXES (discounted at 10%)
($/BOE)
0
(M$)
5
(M$)
10
(M$)
15
(M$)
20
(M$)
0
(M$)
5
(M$)
10
(M$)
15
(M$)
20
(M$)
 
PROVED           
  Developed Producing 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0


  Developed Non-Producing
1755.7 1359.5 1112.4 946.6 828.6 1451.8 1147.8 955.9 825.7 732.0

23.47
  Undeveloped 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 
TOTAL PROVED 1755.7 1359.5 1112.4 946.6 828.6 1451.8 1147.8 955.9 825.7 732.0
23.47
PROBABLE 418.2 206.6 118.1 75.8 52.9 314.1 155.2 88.6 56.7 39.6 14.57
TOTAL PROVED PLUS PROBABLE 2173.9 1566.1 1230.6 1022.4 881.5 1766.0 1303.0 1044.5 882.4 771.6

22.21

Selected Consolidated Financial Information of Fifth Avenue
The following selected financial information was derived directly and indirectly from Fifth Avenue's audited financial statements for the year ended November 30, 2008 and the unaudited financial statements for the six months ended May 31, 2009.

Selected Financial Information May 31, 2009
($)
November 30, 2008
($)
Assets  
    Cash and cash equivalents 57,505 76,782
    Deposit on acquisition  – 236,816
    Oil and gas interest 410,192  –
Total Assets 467,697 313,598
   
Liabilities and Shareholders' Equity  
    Accounts payable and accrued liabilities 345,452 141,158
    Long-term financial liabilities  – 116,299
Total Liabilities 345,452 257,457
   
  Shareholders' Equity  
    Share capital 662,556 380,184
    Contributed Surplus 106,287 106,287
    Deficit (646,598) (430,330)
Total Shareholders' Equity 122,245 56,141
   
Total Liabilities and Shareholders' Equity 467,697 313,598
Selected Financial InformationSix Months ended May 31, 2009($)Year ended November 30, 2008 ($)
Revenue  
  Income from continuing operations 832 0
  Interest income 0 0
  Total Revenues 832 0
Expenses  
  General and administrative 34,971 40,730
  Other 162,056 389,606
Net Loss and comprehensive loss (216,268) (430,330)
Net loss per share (basic and diluted) (0.02) (0.11)
   
Cash dividends declared 0 0

Note:

  1. See the notes to the Fifth Avenue financial statements set out in Schedule 2 to the Joint Management Information Circular of TALON and Fifth Avenue dated October 7, 2009 available under TALON's profile on the SEDAR website at www.sedar.com.

Benefits of the Transaction

The Transaction is expected to yield benefits to the securityholders of TALON and Fifth Avenue. The management and Board of Directors of TALON believe that the merger will result in a larger and stronger company with the financial capacity to more effectively explore and develop the opportunities on the Fifth Avenue properties. As at May 31, 2009, Fifth Avenue had approximately 50 boe/d of production that generated $49,249 of cash flow in May 2009, approximately 95% of which was natural gas with the remainder being natural gas liquids. The business combination will provide TALON with additional capital for its expanding exploration and development program, provide a land base that will fuel future growth, as well as provide an improved quality revenue stream.

The business combination will allow TALON Shareholders to participate in Fifth Avenue's exploration and development portfolio including its opportunity in the Karr Area, Northern Alberta.

The principal purposes of the Transaction are to allow for the business of Fifth Avenue to be operated on a more expeditious and cost effective basis through a public company, to provide Fifth Avenue with access to capital through public markets and to provide liquidity to existing Fifth Avenue Shareholders. The Transaction will also constitute a liquidity event for Fifth Avenue Shareholders pursuant to which currently unlisted Fifth Avenue Shares will be exchanged for publicly listed Amalco Shares. The completion of the Transaction is also expected to enhance Amalco's ability to access the public capital markets in order to provide the financial resources necessary to facilitate the exploration and development of Amalco's oil and gas properties and relisting on the Exchange. Following completion of the Transaction, it is anticipated that Amalco will be involved in the exploration for and production of petroleum and natural gas in Western Canada.

Assets

Upon the completion of the Transaction, Amalco is anticipated to have the following interest in oil and gas properties:

  1. TALON's working interests ranging from 2.675% to 8.328% in seven (7) gross (0.38 net) producing oil wells and thirteen (13) gross (0.57 net) non-producing natural gas wells located in Redwater-Bruderheim area located 40 miles northeast of Edmonton, Alberta at sections 8, 9 and 16, township 56, Range 20, West of the 4th Meridian (collectively referred to as the "Redwater Assets"). TALON is not the operator of the wells. During the 5 month period ended June 30, 2009 net production from the Redwater Assets was approximately 2.48 boe/d;
  2. Fifth Avenue's 25% working interest in two (2) producing natural gas wells located in the Berry Creek / Provost Lake area located approximately 100 miles southeast of Edmonton, Alberta and one (1) non-producing oil well located in the Provost area (collectively referred to as the "Berry Creek/Provost Assets"). Fifth Avenue does not act as the operator of the wells. During the 4 month period ended May 31, 2009 net production from the Berry Creek/Provost Assets was approximately 50 boe/d and net revenue of approximately $35,126/month; and
  3. Farmout and Area of Mutual Interest Agreement (the "Farmout Agreement ") dated June 16, 2009, as amended, which requires Fifth Avenue to pay certain land costs and drill two (2) test wells in the Karr Area of Alberta. Subject to completing the test wells, Fifth Avenue will earn a 100% working interest in the test wells and 9 sections of land, subject to the farmor's convertible gross overriding royalty. The Farmout Agreement also provides for an area of mutual interest covering 93 sections in the Karr Area of Alberta.

Private Placement

Immediately after the Transaction, Amalco intends to complete a non-brokered private placement (the "Private Placement") to raise a minimum of CDN.$600,000 and a maximum of CDN.$1,500,000 or such other amount as determined by the parties and as may be acceptable to the Exchange. The Private Placement shall consist of the issuance of any combination of the following securities: (a) Amalco common shares ("Amalco Shares"), at a price of CDN.$0.05 per Amalco Shares; and (b) Amalco Shares, issued on a "flow-through tax basis", at a price of CDN.$0.06 per share. Insiders of TALON, Fifth Avenue and Amalco may participate in the Private Placement.

Prior to the Transaction, Fifth Avenue may complete part of the Private Placement, as determined by the parties which will consist of the issuance of any combination of the following securities: (a) Fifth Avenue common shares ("Fifth Avenue Shares"), at a price of CDN.$0.025 per Fifth Avenue Share; and (b) Fifth Avenue Shares, issued on a "flow-through tax basis", at a price of CDN.$0.03 per share. Any Fifth Avenue securities issued pursuant to the Private Placement will be exchanged upon the Transaction for Amalco Shares based on the Fifth Avenue exchange ratio.

The proceeds of the Private Placement will be used for financing Amalco's obligations under the Farmout Agreement and the Agreement, for exploring other oil and gas opportunities and Amalco's exploration program. Additional amounts have been allocated for costs required to complete the Transaction and for unallocated working capital. There may be circumstances where for sound business reasons, a reallocation of funds may be necessary in order for Amalco to achieve its stated business objectives.

Amalco's Proposed Board of Directors and Officers

If all of the matters placed before the TALON shareholders and Fifth Avenue shareholders meeting are approved, and the Transaction is completed, the following individuals are anticipated to be the management and key personnel of Amalco:

William S. Sudhaus – President, Chief Executive Officer and Director of Amalco

Mr. William Sudhaus, is the proposed President, Chief Executive Officer and a director of Amalco. Mr. Sudhaus is the President, Chief Executive Officer and Chief Financial Officer of TALON. Mr. Sudhaus is also President of Castor Energy Ltd. (a crude oil trading and marketing company).

John D. Wright – Director of Amalco

Mr. John Wright, has been President and Chief Executive Officer of Petrobank Energy and Resources Ltd. since March 2000. Mr. Wright is also the President and Chief Executive Officer of Petrominerales Ltd. Mr. Wright is a director of TALON.

David Stadnyk – Director of Amalco

Mr. David Stadnyk is a proposed director of Amalco and is currently the President and a director of Fifth Avenue. From 1998 to 2006, Mr. Stadnyk was the President of Patch International Inc., an international junior oil and gas exploration and production company. From 2006 -2007 Mr. Stadnyk was President of Park Place Energy Corp., an international junior oil and gas exploration and production company. Mr. Stadnyk was co-founder and a director of Arsenal Energy Inc., President and founder of Starlight Sports and Entertainment Inc., founder of the TEAM 1040 AM Sports Radio Station, owned the Vancouver 86ers/Whitecaps Inc., founder of the Vancouver Angels/Breakers, Vancouver's first Women's professional soccer team, and founder of the Vancouver Ravens Lacrosse team. Mr. Stadnyk was co-founder of Praxis Pharmaceuticals Inc. now Pharmaxis Pharmaceuticals Inc. Mr. Stadnyk is the Chairman of Stadnyk Foundation Inc., a sport philanthropic organization.

George Tsafalas – Chief Operating Officer, Chief Financial Officer and Director of Amalco

Mr. George Tsafalas is the proposed Chief Operating Officer, Chief Financial Officer and a director of Amalco. Mr. Tsafalas is a director of Fifth Avenue. Mr. Tsafalas is the President and CEO of Bedstone Energy Inc., a private oil and gas exploration company. Mr. Tsafalas was formerly President and CEO of AXQP Inc., listed on the NEX Exchange. From 2002 to 2006, Mr. Tsafalas provided consulting roles and administrative contributions to Patch International Inc. and from 2006 to 2008, to Park Place Energy Corp.

Chris J. Bloomer – Director of Amalco

Mr. Bloomer has been the Senior Vice President and Chief Operating Officer, Heavy Oil and a director of Petrobank Energy and Resources Ltd since May 2007. Prior thereto, Mr. Bloomer was Vice President, Heavy Oil and Chief Financial Officer of Petrobank Energy and Resources Ltd. Mr. Chris Bloomer is a director of TALON.

Donald B. Edwards - Corporate Secretary of Amalco

Donald B. Edwards, is a partner with the law firm of Borden Ladner Gervais LLP in Calgary, Alberta and practices in the areas of securities, corporate finance, commercial transactions, natural resources and mergers and acquisitions. Mr. Edwards has practiced in the area of securities, corporate finance and venture capital matters since 1990 and has acted for a broad range of domestic and foreign issuers, investment banks and securities dealers, with a particular emphasis in venture capital and mergers and acquisitions, both domestic and cross border transactions. Mr. Edwards is a member of the Law Society of Alberta and the Canadian Bar Association.

TSX Venture Exchange

Trading of the TALON Shares remains suspended pending receipt and review by the Exchange of acceptable documentation regarding the proposed Transaction. The proposed Transaction has not been approved by the Exchange and remains subject to Exchange approval.

Cautionary Statements

Certain statements contained in this release constitute forward-looking information. These statements relate to future events or future performance. The use of any of the words "could", "intend", "expect", "believe", "will", "projected", "estimated" and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on the TALON's current belief or assumptions as to the outcome and timing of such future events. Actual future results may differ materially. In particular, this release contains forward-looking information relating to the intention of the parties to complete the Continuance and Amalgamation, oil & natural gas properties, cease trade orders and matters related to the Private Placement and information concerning reserves. Various assumptions or factors are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking information. Those assumptions and factors are based on information currently available to TALON. The material factors and assumptions include the parties to the proposed Transaction being able to obtain the necessary director, shareholder and regulatory approvals, including revocation of TALON's cease trade orders; raising the minimum offering under the Private Placement, Exchange policies not changing and completion of satisfactory due diligence. Risk factors that could cause actual results or outcomes to differ materially from the results expressed or implied by forward-looking information include, among other things: conditions imposed by the Exchange; the failure to obtain the revocation of the cease trade orders, the failure to obtain the required directors' and shareholders' approval to the proposed Transaction; the failure to raise the minimum offering under the Private Placement, general economic and business conditions; changes in the regulatory regulation and the implied assessment that the resources described can be profitably produced in the future. TALON cautions the reader that the above list of risk factors is not exhaustive. The forward-looking information contained in this release is made as of the date hereof and TALON is not obligated to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. Because of the risks, uncertainties and assumptions contained herein, investors should not place undue reliance on forward-looking information. The foregoing statements expressly qualify any forward-looking information contained herein.

It should not be assumed that the estimated future net cash flow shown above is representative of the fair market value of Fifth Avenue's oil and gas assets. There is no assurance that such price and cost assumptions will be attained and variances could be material. The recovery and reserve estimates of crude oil, NGLs and natural gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual crude oil, NGLs and natural gas reserves may be greater than or less than the estimates provided herein.

Disclosure provided herein in respect of BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and revocation of the cease trade orders. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.
TALON must apply for a full revocation of the cease trade orders and the Transaction cannot occur until the required revocations are received from the ASC and BCSC. There can be no assurance that the ASC and BCSC revocation orders will be received as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular to be prepared in connection with the transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of TALON should be considered highly speculative.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as such term is defined in the policies of the TSX Venture Exchange) has in any way passed upon the merits of the proposed transaction and neither accepts responsibility for the adequacy or accuracy of the release.

Contact Information

  • TALON International Energy, Ltd.
    William S. Sudhaus
    President, Chief Executive Officer, Chief Financial Officer
    (610) 205-0060
    talonenergy@verizon.net