Albion Petroleum Ltd.
TSX VENTURE : ABP.P

April 05, 2007 16:53 ET

Albion Petroleum Announces Qualifying Transaction

Albion Petroleum Ltd. and CEP International Petroleum Ltd. Announce Proposed Combination

CALGARY, ALBERTA--(CCNMatthews - April 5, 2007) -

(NOT FOR DISTRIBUTION TO THE UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES)

Albion Petroleum Ltd. ("Albion") (TSX VENTURE:ABP.P) and CEP International Petroleum Ltd. ("CEP") are pleased to announce that Albion and CEP entered into a binding letter agreement dated March 29, 2007 ("Agreement") to amalgamate or complete another form of business combination to form a new company to be known as CEP International Petroleum Ltd. ("Amalco") (the proposed combination of Albion and CEP is referred to as the "Proposed Combination"). The Proposed Combination is intended to constitute Albion's qualifying transaction pursuant to the policies of the TSX Venture Exchange Inc. (the "TSX Venture"), and is subject to compliance with all necessary regulatory, and if applicable, shareholder approvals and certain other terms and conditions. The proposed transaction is arm's length.

Description of CEP's Business

CEP is a private company incorporated under the laws of the Yukon on November 23, 1998. CEP's principal assets are located in Eastern Russia on the Kamchatka peninsula with additional properties located in British Columbia, Canada. The Kamchatka peninsula sits between the Sea of Okhotsk and the Bering Sea in the North Pacific Ocean. It is located approximately 1000 miles north of Japan.

Upon completion of the Proposed Combination, Amalco will continue as an oil and gas exploration and development company, with focus in Eastern Russia on the Kamchatka peninsula.

It is anticipated that Albion will issue an additional news release next week with further information regarding the business of CEP.

Private Placement for CEP

CEP has signed an agreement with Research Capital Corporation to raise up to $15,000,000 (CDN) on a best efforts agency basis (the "Offering"). CEP has granted to Research Capital Corporation an option to increase the size of the Offering by up to an additional $10,000,000 (CDN) on the same terms as the Offering. The Offering is conditional upon the closing of the Proposed Combination and is expected to close concurrently with the Proposed Combination. The Proposed Combination is conditional upon a minimum closing of the Offering of $10,000,000 (CDN).

Terms of Proposed Combination

Pursuant to the Agreement, current holders of common shares of CEP ("CEP Shares") will receive shares of Amalco ("Amalco Shares") such that all of the securities of CEP will be acquired for up to a maximum of 47,000,000 Amalco Shares or 1.00 Amalco Share for each CEP Share. Securities convertible into CEP Shares will be exchanged for Amalco securities of a similar character based on the CEP exchange ratio of 1 to 1. In addition, CEP securities issued pursuant to the Offering will also be exchanged on the basis of 1.00 Amalco security for each CEP security.

Pursuant to the Agreement, holders of common shares of Albion ("Albion Shares") will receive Amalco Shares such that all of the securities of Albion will be acquired for up to a maximum of 3,503,750 Amalco Shares (assuming no exercise of convertible securities of Albion) or 0.50 of an Amalco Share for each Albion Share. Securities convertible into Albion Shares will be exchanged for Amalco securities of a similar character based on the Amalco exchange ratio of 0.50 to 1.

At the time of closing of the Proposed Combination, there are expected to be 7,007,500 Amalco Shares issued and outstanding and up to 47,000,000 CEP Shares outstanding (not including any CEP Shares issued pursuant to the Offering), resulting in a total of approximately 50,503,750 Amalco Shares (not including any CEP Shares issued pursuant to the Offering). Certain of the Amalco Shares issued pursuant to the Proposed Combination in exchange for CEP Shares may be required to be deposited into escrow and released on terms to be determined in accordance with the requirements of the TSX Venture.

New Management Upon Completion of the Proposed Combination

Upon completion of the Proposed Combination, the directors of Amalco will be Mr. Robert J. Maxwell, Mr. Khusro Mirza, Ms. Hoeun Jung, Mr. Frederic Monnier, and Mr. David Shaw. The officers of Amalco will be Robert Maxwell (President & CEO), Mukesh Shah (CFO), Rustem Tchinakaev (V.P. Russia) and Khusro Mirza (V.P. Exploration).

Biographies for the proposed new officers and directors of Amalco are as follows:

Robert J. Maxwell, M. Sc. - Proposed CEO and Director

Mr. Maxwell holds a Bachelor of Science in Geology and a Master of Science in Geochemistry, is a designated Professional Geologist by the Association of Professional Engineers, Geologists and Geophysicists of Alberta (APEGGA). Mr. Maxwell has over 23 years of experience in project management of petroleum exploration and development, most of which has been in international operations. He is resident in Calgary.

Mr. Maxwell has been the president of CEP since 1998. Prior to November, 1998, Mr. Maxwell was a project manager for PanCanadian Petroleum's international group, and a petroleum geologist for Conoco in Egypt, for Asamera in Indonesia, and for Shell Canada.

Mukesh Shah, FCMA - Proposed CFO

Mr. Shah is a Chartered Management Accountant with over 20 years experience in corporate and project accounting. He is resident in Calgary.

Khusro Mirza, M.Sc. - Proposed Vice President, Exploration and Director

Mr. Mirza is an oil and gas exploration geologist with over 25 years experience in Canada and Internationally. He is resident in Calgary.

Rustem Tchinakaev, Ph.D. - Proposed Vice-President, Russia

Mr. Tchinakaev is a geophysicist with over 25 years of progressively more responsible experience in the oil and gas business in Russia. Mr. Chinakaev graduated in 1976 from Kazan State University with a diploma in engineering geophysics. In 1988 he received a Ph.D. in geophysics from the Institute of Earth Sciences of USSR in Moscow. Mr. Chinakaev has worked for the Marine Arctic Geological Expedition (MAGE) of USSR from 1976 to 1989 as an offshore seismic acquisitions geophysicist. From 1990 to 1996 worked for the Laboratory of Regional Geodynamics (LARGE) working as a project manager for offshore seismic acquisition programs and was based in Houston. He joined CEP in the capacity of Vice President in 1998. From May 2004 - June 2005 he worked as Country Manager for the India Project Office of OAO Gazprom in India. From June 2005 he has been Vice President of Russian Operations for CEP. He is resident in Moscow.

Hoeun Jung, Ph.D. - Proposed Director

Mrs. Jung holds a Ph.D. in French Literature from the Sorbonne. She has been a special advisor to CEP since 2005 and was elected as a director in November 2006. She is resident in Paris.

Frederic Monnier, Ph.D. - Proposed Director

Dr. Monnier holds a Ph.D (Doctores Sciences) and Diploma in geology from the University of Neuchatel, Switzerland, and has over 25 years experience in international oil and gas exploration including over 7 years with Chevron. Dr. Monnier was initially appointed to the Board of Directors of CEP in March 2005 and served as a director until August 2006. He served briefly as a Consulting Geologist to CEP before assuming the role of Non-Executive Director. Dr Monnier is a Senior Petroleum Consultant for BEICIP-FRANLAB in Paris where he specialises in oil geochemistry and basin modelling. He is resident in Paris.

David Shaw, Ph.D. - Proposed Director

Mr. Shaw is President, Chief Executive Officer and a director of Albion. Mr. Shaw holds a Bachelor of Science degree from Sheffield University in England (1973) and a Ph. D. from Carleton University (1980). Since completing his doctorate 25 years ago, Mr. Shaw has worked in both the technical and financial communities within the resource industry. Originally with Chevron Resources, Mr. Shaw was in-house structural consultant on both metal and hydrocarbon exploration programs including the hydrocarbon project financial evaluation team. Since 1986, Mr. Shaw has been involved in the investment banking business, leading the due diligence and financing of a wide variety of global exploration companies in the junior resource sector. Mr Shaw also brings several years of experience having acted as a director for various public companies. He is resident in Vancouver.

Approvals, Conditions, Sponsor and Terms

The Proposed Combination is subject to shareholder approval of CEP and Albion, if applicable, and regulatory acceptance under the policies of the TSX Venture. In addition, a minimum of $10,000,000 must be raised on the Offering as a condition precedent to the completion of the Proposed Combination. The Proposed Combination is also subject to the completion of satisfactory due diligence by both parties and the execution of a definitive agreement setting forth the terms and conditions of the Proposed Combination.

Research Capital Corporation, subject to satisfactory due diligence, will act as a sponsor to Albion in connection with the Proposed Combination. An agreement to sponsor should not be construed as any assurance with respect to the merits of the Proposed Combination or the likelihood of completion.

CEP as agreed to pay all of Albion's legal fees in relation to the Proposed Combination and will pay a deposit of $20,000 to Albion's legal counsel in relation thereto.

Cautionary Statements

The shares of Albion will remain halted until certain filings are made with the TSX Venture.

Completion of the Proposed Combination is subject to a number of conditions, including but not limited to, TSX Venture approval and if applicable, pursuant to TSX Venture requirements, majority of the minority shareholder approval. Where applicable, the Proposed Combination cannot close until the required shareholder approval is obtained. There can be no assurance that the Proposed Combination will be completed as proposed, or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Proposed Combination, any information released or received with respect to the Proposed Combination may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

The TSX Venture has in no way passed upon the merits of the Proposed Combination and has neither approved nor disapproved of the contents of this press release.

Certain information in this press release may contain forward-looking statements. This information is based on current expectations that are subject to significant risks and uncertainties that are difficult to predict. Actual results might differ materially from results suggested in any forward-looking statements. Albion assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward looking-statements unless and until required by securities laws applicable to Albion. Additional information identifying risks and uncertainties is contained in certain of Albion's filings with the Canadian securities regulators, which filings are available at www.sedar.com.

This is not an offer for sale, or solicitation of an offer to buy, in the United States or to any U.S. Person (as defined in Regulation S under the U.S. Securities Act of 1933, as amended) of any equity shares or any other securities of Albion or CEP International Petroleum Ltd.

The TSX Venture Exchange does not accept responsibility for the accuracy or adequacy of this release.

Contact Information

  • Albion Petroleum Ltd.
    Colin Christensen
    Director
    (403) 264-4811
    (403) 503-0822 (FAX)
    or
    Albion Petroleum Ltd.
    David Shaw
    CEO and Director
    (604) 221-4828
    (403) 503-0822 (FAX)
    or
    CEP International Petroleum Ltd.
    Robert Maxwell
    President
    (403) 247-0005
    Email: maxwellr@cep-international.com