Yangarra Resources Ltd.

Yangarra Resources Ltd.

July 15, 2009 15:00 ET

Yangarra Announces Farmout Agreement

CALGARY, ALBERTA--(Marketwire - July 15, 2009) - Yangarra Resources Ltd. ("Yangarra" or "the Company") (TSX VENTURE:YAN) is pleased to announce that further to its press release dated June 19, 2009, the Company has entered into a participation and farmout agreement (the "Farmout Agreement") dated as of June 24, 2009 with Athabaska Energy Ltd. ("Athabaska"), a non-arms length party, subject to final approval of TSX Venture Exchange Inc.

Gordon Bowerman who holds approximately 17.5% of Athabaska's shares. Mr. Bowerman is also a director of Yangarra Resources Ltd. and owns approximately 16.3% of the outstanding shares of Yangarra. No other director, officer or 10% shareholder of Yangarra owns any shares of Athabaska.

The Farmout Agreement covers seven (7) sections of Yangarra land (4 sections in Jaslan and 3 sections in Medicine Hat), comprising approximately 4% of Yangarra's land base (the "Farmout"). Pursuant to the terms of the Farmout Agreement, Athabaska will earn one section of the farmout lands for each well drilled. Athabaska will contribute 100% of the cost to drill, complete and tie-in each well to Yangarra's facilities in order to earn a 60% working interest (w.i.) in each well at payout. Yangarra will have the option, up to the spud date of each well, to elect to participate for up to a 25% w.i. in the well upon notification by Athabaska of the drilling location. Drilling of the first well under the Farmout Agreement is expected to commence within the next week.

Regulatory Requirements

The Farmout Agreement is a non-arm's length transaction as Gordon Bowerman, a director and principal shareholder of Yangarra, is also a director, officer and principal shareholder of Athabaska. Mr. Bowerman will not increase his shareholdings in Yangarra as a result of the Farmout Agreement.

The Farmout Agreement is a "related party transaction" within the meaning of TSX Venture Policy 5.9 (which incorporates Multilateral Instrument 61-101) ("Policy 5.9") and Multilateral Instrument 61-101 ("MI 61-101") provides that a "related party transaction", such as the Farmout Agreement, must be approved by a majority of the votes cast by holders of securities, excluding holders of securities whose votes cannot be included for the purposes of minority approval, as that term is defined in MI 61-101. Under MI 61-101, as applied to the Farmout Agreement, minority approval of the resolution concerning the Farmout Agreement would require the approval by a majority of all the votes cast by minority shareholders.

The Farmout Agreement is, however, exempt from the minority shareholder approval requirement pursuant to Section 5.7(i)(a) of MI 61-101. Pursuant to this exemption, if at the time the Farmout was agreed to, neither the fair market value of the subject matter, nor the fair market value of the consideration under the Farmout Agreement, exceeds 25% of the market capitalization of Yangarra. On June 30, 2009 (the last day of the month prior to execution of the Farmout Agreement), Yangarra had 75,561,912 common shares outstanding. The "market capitalization" of the Yangarra Shares was approximately $0.04 per share, which was determined by multiplying the number of outstanding Yangarra Shares by the simple average of the closing price of such shares on the twenty business days prior to June 30, 2009 calculated in accordance with Regulation 183(2) and (4) of the Securities Act (Ontario). Since the expected commitments under the Farmout Agreement are approximately $500,000, which is less than 25% of this calculated market capitalization for Yangarra, the Farmout is exempt from the requirement under MI 61-101 to obtain minority shareholder approval for the Farmout.

Board Review

After concluding on the advice of its advisors that the Farmout Agreement is subject to the requirements of MI 61-101, the Board of Directors of Yangarra determined it was appropriate to determine which directors were free from conflict to consider the Farmout Agreement and to determine if it would be in the best interests of Yangarra and its shareholders (the "Non-Interested Directors").

Based on disclosures made by each Yangarra director respecting his relationship to Athabaska and the Farmout Agreement, it was determined that Arthur Dumont, Robert D. Weir, Douglas M. Stuve and James G. Evaskevich were the only directors of Yangarra sufficiently independent and free from conflicts of interest to consider the Farmout Agreement as all of them confirmed they are not currently and have no intention of directly or indirectly becoming shareholders of Athabaska.

None of the Non-Interested Directors is a director, officer or shareholder of Athabaska and will not benefit from the Farmout Agreement in a manner that is different from the other shareholders of Yangarra.

There was no materially contrary view or abstention by any of the Non-Interested Directors with respect to approval of the Farmout and the Farmout Agreement.

After considering a variety of factors, including the reasons for the Farmout Agreement described herein, the Non-Interested Directors of Yangarra approved the Farmout and the Farmout Agreement.

This press release and the resulting material change report to be filed this week have been filed less than 21 days before the anticipated operations under the Farmout Agreement are to commence. This short time frame has become necessary as Yangarra's senior lender provided a deadline for completion of the Farmout by July 31, 2009 and Yangarra was unable to secure a third party arm's length farmout partner on acceptable terms which resulted in the necessity to proceed with the non-arms length Farmout Agreement.

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 securities of Yangarra being offered have not been, nor will be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent U.S. registration or an applicable exemption from U.S. registration requirements. This release does not constitute an offer for sale of securities in the United States.

Neither TSX Venture nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture) accepts responsibility for the adequacy or accuracy of this release.

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