Canadian Phoenix Resources Corp.
TSX VENTURE : CPH

Canadian Phoenix Resources Corp.

February 29, 2008 14:44 ET

Canadian Phoenix to Acquire Control of Marble Point Energy Ltd. and Engagement of J.F. Mackie & Company Ltd.

CALGARY, ALBERTA--(Marketwire - Feb. 29, 2008) -

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

CANADIAN PHOENIX RESOURCES CORP. ("Canadian Phoenix" or "CPH") (TSX VENTURE:CPH) is pleased to announce that it has executed a non-binding letter of intent (the "Letter of Intent") dated February 21, 2008 with Marble Point Energy Ltd. ("Marble Point") which sets out the basic terms and conditions for the acquisition by Canadian Phoenix of not less than a 51% (and potentially up to a 76%) controlling ownership interest in Marble Point through a series of transactions (collectively, the "Marble Point Transaction").

Canadian Phoenix also announces that it has engaged J.F. Mackie & Company Ltd. to act as its agent, on a reasonable commercial efforts basis, for a financing (the "Financing") of subscription receipts to purchase common shares of Canadian Phoenix that is anticipated to be completed immediately prior to the completion of the Marble Point Transaction. Details of the Financing, including pricing and size, will be determined in the context of the market and will be announced in due course. It is not anticipated that the Financing will result in a change of control of Canadian Phoenix. The net proceeds of the Financing will be used by Canadian Phoenix to fund its obligations under the Marble Point Transaction, as described below, and for other purposes as determined by Canadian Phoenix. The Financing will be subject to acceptance by the TSX Venture Exchange.

Marble Point Transaction

The initial transaction provided for in the Letter of Intent is the subscription by Canadian Phoenix for 61,538,461 common shares of Marble Point ("Marble Point Shares") at the price of $0.65 per share for a total subscription amount of $40 million (the "Subscription Transaction"). Following the completion of the Subscription Transaction, 120,324,130 Marble Point Shares will be outstanding of which Canadian Phoenix will own 61,538,461 or approximately 51.1% of the outstanding Marble Point Shares. The subscription amount of $40 million is anticipated to be used by Marble Point to payout existing long term indebtedness, provide working capital for operations and an acquisition of assets currently producing not less than approximately 550 barrels of oil equivalent per day ("BOEPD").This is anticipated to result in Marble Point having total production of approximately 1,300 BOEPD by the end of the second quarter of 2008.

As part of the Subscription Transaction, Canadian Phoenix will covenant to provide to Marble Point, subject to the satisfaction of certain conditions precedent, up to an additional $60 million (the "Bond Funds") for use by Marble Point to carry out future capital projects and acquisitions with a view to increasing Marble Point's daily production to over 5,500 BOEPD. Canadian Phoenix will also be provided with the pre-emptive right to participate in any issuance of equity of Marble Point following the completion of the Subscription Transaction so that Canadian Phoenix may avoid dilution of its ownership interest in Marble Point.

Concurrent with the completion of the Subscription Transaction, a total of 7.1 million Marble Point Shares held by the respective members of Marble Point's management team and Board of Directors will be deposited into escrow and thereafter subject to cancellation should Marble Point's daily production not equal or exceed 5,500 BOEPD within 180 business days of its receipt of the final draw of the Bond Funds. The escrow agreement will provide for additional conditions for the release or cancellation of the escrowed Marble Point Shares. Failure to provide the Bond Funds to Marble Point within the required time period will result in these Marble Point Shares being released from escrow.

In addition, Canadian Phoenix and Marble Point will enter into a voting agreement concurrent with the completion of the Subscription Transaction that will govern certain aspects of the relationship between Canadian Phoenix and Marble Point until the earlier of June 30, 2013 and the date on which Canadian Phoenix holds less than 10% of the outstanding Marble Point Shares. The voting agreement also provides for the appointment of a nominee of each of Canadian Phoenix and Marble Point on the other's Board of Directors.

Following the completion of the Subscription Transaction, Canadian Phoenix will be entitled to make an formal securities exchange takeover bid (the "Offer") to all holders of Marble Shares to purchase their respective shares in exchange for shares of Canadian Phoenix at an exchange ratio to be determined in the context of the market price of Canadian Phoenix shares at the time the Offer is made. The Offer will not include any conditions in favour of Canadian Phoenix regarding a minimum or maximum number of Marble Point Shares to be tendered under the Offer. It is anticipated that directors and officers of Marble Point will not tender their Marble Point Shares under the Offer. As such, it is anticipated that the maximum number of Marble Point Shares that may be exchanged for Canadian Phoenix shares under the Offer will be an additional 30,235,662 Marble Point Shares, which number represents approximately 25% of the number of Marble Point Shares anticipated to be issued and outstanding following the completion of the Subscription Transaction. If all such Marble Point Shares are acquired by Canadian Phoenix under the Offer, Canadian Phoenix would own approximately 76% of the outstanding Marble Point Shares.

About Marble Point

Marble Point Energy Ltd. was incorporated in June, 2005 under the Alberta Business Corporations Act. Marble Point's shares do not trade on any stock exchange. Marble Point has approximately 55.5 million shares outstanding of which approximately 40% are controlled by management and the Marble Point Board of Directors. The principal business activities include the evaluation, acquisition, exploration and development of oil and gas properties. Marble Point's production is predominantly natural gas and natural gas liquids. Currently, Marble Point's net daily gas production, based on field estimates, is approximately 500 BOEPD of which approximately 96% is gas and 4% is oil. An additional 2 wells are expected to be completed, equipped, and on production by March, 2008. These wells tested at a combined rate of 6 MMscf/day (1000 BOEPD) gross (3.0 MMscf/day (500 BOEPD net). Marble Point expects its exit production for the first quarter to be approximately 900 BOEPD. Production declines are anticipated to result in Marble Point's second quarter exit production to be approximately 750 BOEPD.

Marble Point commenced operations in 2005 with essentially no production and has grown its production since that time through its development of its own lands and as well through acquisitions. Marble Point has acquired a significant land position as well as considerable seismic data in oil and gas properties in western Canada. Management's future plans are to grow Marble Point's production through development of these extensive land holdings and through acquisitions. Marble Point anticipates that it will remain focused on natural gas production.

Marble Point's undeveloped land base consists of approximately 62,900 net acres located in Saskatchewan (approximately 12,500 net acres), Alberta (predominantly the Grande Prairie area) (approximately 40,900 net acres) and British Columbia (approximately 9,500 net acres). Marble Point estimates of the value of its undeveloped lands to be $7.0 million based on recent sales by others of interests in the same unproved property and on recent sales of similar properties in the same general area. This estimate was internally prepared by Marble Point..

In addition, Marble Point has an extensive seismic database consisting of 750 square kilometres of 3D data and 53,000 km of 2D data. The acquisition cost of this data was approximately of $26.3 million. The 3D data is mostly concentrated over Marble Point's lands in northeastern British Columbia, and the 2D data is primarily located in the Peace River arch and west central regions of Alberta.

Marble Point has retained GLJ Petroleum Consultants ("GLJ") to evaluate its crude oil, natural gas liquids and natural gas reserves and the net present values of future net revenue for these reserves (the "Reserve Data") with an effective date of December 31, 2007 in accordance with National Instrument 51-101 Standards of Disclosure of Oil and Gas Activities. Summary information regarding the Reserves Data will be announced upon the completion by GLJ of its evaluation, which is expected to occur in early March 2008.

The following is a summary of the audited financial statements of Marble Point for the years ending December 31, 2006 and 2005 and the unaudited management prepared financial statements for the nine month period ending September 30, 2007. Readers are cautioned that this financial information has been provided to Canadian Phoenix by management of Marble Point. Management of Canadian Phoenix has not verified the accuracy of this information.



For the Period
Ended September 30,
Income For the Year Ended For the Year Ended 2007
Statement December 31, 2006($) December 31, 2005($) ($)
--------- --------------------- --------------------- ------------------
Total
Revenue 4,250,180 - 6,154,878

Net Loss (17,645,164) (72,458) (13,229,964)


As at As at As at
December 31, 2006 December 31, 2005 September 30, 2007
Balance Sheet ($) ($) ($)
-------------- ------------------ ------------------ -------------------

Current Assets 15,881,374 10,178,456 10,059,380

Total Assets 53,953,148 11,754,323 41,756,630

Liabilities
(Current) 12,901,199 913,201 11,518,315

Long-Term Debt 7,500,000 - 13,882,253

Shareholders'
Equity 32,752,798 9,759,542 15,675,834


The following table provides the names and brief biography of Marble Point's
senior management and current Board of Directors.

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Name and
Municipality of
Residence Position Biography
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David Hall President, From December 2005 to May 2006,
Calgary, Alberta Chief Director of Norquay Capital Ltd.
Executive (TSX-V, now Xtreme Coil Drilling
Officer and Corp). From October 2002 to April
Director 2005 , President and Director of Argo
Energy Ltd. From March 2007 to present
June, 2005 director of Aqueous Capital Corp. From
November, 2005 to present director of
Tiger-Cat Energy Ltd. From June 1998 to
February 2002 Director and Vice
President of Argonauts Group Ltd. (a
public oil and gas corporation, now
part of Progress Energy Trust). From
June 1998 to January 2000, Manager,
Operations of Anglo Albania Petroleum.
Previously, Coordinator Production,
PanCanadian Petroleum.
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Dennis Chorney Executive From April 2005 to September 2006,
Calgary, Alberta Chairman Director of Sequoia Oil & Gas Trust
and (now Daylight Resources Trust).
Director Currently a director of Daylight
Resources Trust. Currently a director
June, 2005 of TUSK Energy Corporation. Currently a
director of Sandy Cove Energy Ltd.
(a private oil company having interests
in Trinidad & Tobago). From December
2005 to May 2006, Director, Chief
Executive Officer and Chief Financial
Officer of Norquay Capital Ltd. (TSX-V,
now Xtreme Coil Drilling Corp.
Currently a director of Tiger-Cat
Energy Ltd. From October 2002 to April
22, 2005, Director and Chairman of the
Board of Argo Energy Ltd. From June
1998 to February 2002, Director,
Chairman and Chief Executive Officer of
Argonauts Group Ltd. (a public oil and
gas corporation). From June 1998 to
January 2000, Director of Production
and Drilling of Anglo Albania
Petroleum (a private oil and gas
corporation). Previously, Mr. Chorney
was VP Heavy Oil at PanCanadian
Petroleum. Mr. Chorney is a
professional engineer.
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John Zang Secretary From October 2002 to present, sole
Calgary, AB and practitioner lawyer. From July 2003
Director to present, Director, Chief Executive
Officer and Secretary of Tiger-Cat
June, 2005 Energy Ltd. Currently a director of
Sandy Cove Energy Ltd. (a private oil
company having interests in Trinidad &
Tobago). From April 2005 to September
2006 Corporate Secretary and Corporate
Counsel of Sequoia Oil & Gas Trust
(now Daylight Resources Trust). From
July 2005 to May 2006, Corporate
Secretary of Norquay Capital Ltd.
(TSX-V, now Xtreme Coil Drilling
Corp). From October 2002 to April 2005,
director and Secretary of Argo Energy
Ltd. From September 2001 to August
2002, Vice President of El Paso
Buzzards Professional Hockey Team. From
June 1998 to February 2002, Secretary
of Argonauts Group Ltd. (a public oil
and gas corporation). From September
1991 to August 2001, lawyer with Scott
Hall (Barristers and Solicitors).
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Danny Remenda Director Currently a director of Xtreme Coil
Calgary, AB Drilling Corp. From October 2002 to May
June, 2005 Director of 2005, Argo Energy Ltd.
From May 2001 to August 2002 director
of High Plains Energy Ltd
From March 1997 to July 2000 director
of Plains Energy Ltd.
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James Howe Director Currently a director of Ensign Energy
Calgary, AB Services Inc. Currently a director of
June, 2005 Wrangler West Energy Corp. Currently a
director of Seaview Energy Inc.
Currently a director of Pason Systems
Inc. Currently a director of Avery
Resources Inc. Currently a director of
Holloway Lodging Real Estate Investment
Trust. From November 2002 to March 2005
director and senior officer of Kinloch
Resources Inc. From June 2003 to April
2005 director of Argo Energy Ltd.
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Willey Wong Chief Currently, Vice President Finance and
Calgary, AB Financial CFO of Marble Point Energy Ltd.,
Officer and Chief financial Officer of Tiger-Cat
Vice Energy Ltd. From October 2002 to April
President, 2005, Vice-President, Finance and Chief
Finance Financial Officer of Argo Energy Ltd.
Controller of Argonauts Group Ltd. (a
June, 2005 public oil and gas company) from July
2001 to February 2002. From September
1995 to January 2001, VP Finance and
Chief Financial Officer of Western
Oilfield Environmental Services Ltd. (a
private oilfield services corporation).
Mr. Wong is a Certified Management
Accountant.
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Dwayne Chief From November 2002 to April 2005, Vice
Romansky Operating President, Operations of Argo Energy
Calgary, AB Officer Ltd. Currently Chief Operating Officer
of Marble Point Energy Ltd. Formerly
June, 2005 Chief Operating Officer of Tiger-Cat
Energy Ltd. From February 2000 to
October 2002, Production Engineering
Manager of Calpine Canada Inc. (a
public oil and gas corporation). From
August 1998 to February 2000,
Exploitation Manager of COSI Inc. (a
private oil consulting company). Mr.
Romansky is a professional engineer.
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Jason Denney VP Former Development and Exploitation
Calgary, AB Production Group leader at EnCana. Mr. Denney is a
professional engineer.
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Jeff Werner VP Former Manager Exploration of Argo
Ottawa, Ont. Exploration Energy. Eight years of experience with
EnCana prior to joining Argo.
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Jim Thomson VP: Land Former VP Land at Sequoia Oil and Gas
Trust. Previously Manager of Land at
Argo Energy and Murphy Oil.
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In addition, it is anticipated that co-incident with closing of the Marble Point Transaction, David Tuer will be added to the Board of Directors of Marble Point and of Canadian Phoenix. Mr. Tuer has over 30 years of experience in the petroleum industry. From 1994 to 2001, he was President, Chief Executive Officer and a Director of PanCanadian Petroleum Limited and its parent company, PanCanadian Energy Corporation (a public oil and gas company). From January 2003 to March 2005, he was President and Chief Executive Officer of Hawker Resources Inc. (a public oil and gas company). Mr. Tuer currently is a director of Daylight Resources Trust (a public oil and gas trust). He is also the Chairman of the Calgary Health Region. Mr. Tuer also serves as a Director of Canadian Natural Resources Limited (a public oil and gas company), Rockwater Capital Corporation (a public finance company) and Xtreme Coil Drilling Corp. (a public oil and gas drilling company). Mr. Tuer is the Chairman of the Board of Directors of AltaLink Management Ltd. (a private Alberta electricity transmission company). Mr. Tuer is a former Assistant Deputy Minister of Energy for the Province of Alberta and also served as chairman of Mount Royal College in Calgary. Mr. Tuer received his B.Sc. in Mechanical Engineering from the University of Calgary.

Dave Hall, CEO of Marble Point stated that "Marble Point is excited with the opportunity that this transaction provides. Not only does it provide our shareholders with the opportunity to, in effect, have their shares trade on an Exchange through acceptance of the contemplated Canadian Phoenix offer, but also the infusion of capital allows us to accelerate our production growth plans." He further stated that "Marble Point looks forward to developing a synergistic relationship with Canadian Phoenix."

The Canadian Phoenix board of directors and its senior management team are extremely pleased with the opportunities that the transaction with Marble Point provides. CPH President & CEO Robert "Bob" Chenery commented that "the strategic ownership and alignment with companies such as Marble Point fits very well with the ongoing strategy of Canadian Phoenix to maximize value for its shareholders by acquiring and developing undervalued assets within the Western Canadian Sedimentary Basin."

The Marble Point Transaction is an arm's length transaction that is conditional upon the execution of definitive agreements, completion of satisfactory due diligence, receipt of shareholder (if applicable), debentureholder and regulatory approval, and receipt of third party consents and other conditions customary in a transaction of this nature. It is anticipated that Canadian Phoenix will prepare a Filing Statement in accordance with the form prescribed by the TSXV Venture Exchange in respect of the Marble Point Transaction. Where applicable, the transactions disclosed in this news release cannot close until the required shareholder approval is obtained. There can be no assurance that these transactions will be completed as proposed or at all. It is anticipated that the Subscription Transaction will be completed on or before April 30, 2008.

Canadian Phoenix Resources Corp. is a publicly traded junior oil and gas exploration, development and production company with operations in Western Canada. Canadian Phoenix is pursuing a corporate strategy of being a consolidator of undervalued oil and gas assets located in the Western Canadian Sedimentary Basin. Canadian Phoenix's shares trade on the TSX Venture Exchange under the symbol "CPH".

ON BEHALF OF THE BOARD OF DIRECTORS OF CANADIAN PHOENIX RESOURCES CORP.

Robert J. Chenery, President & CEO

This news release does not constitute an offer to sell or the solicitation of an offer to buy the securities of Canadian Phoenix within the United States. Securities of Canadian Phoenix have not been and will not be registered under the United States Securities Act of 1933, as amended (the "1933 Act"), or any state securities laws. Accordingly, none of the securities of Canadian Phoenix may be offered or sold in the United States or to U.S persons (as such terms are defined in Regulation S under the 1933 Act) unless registered under the 1933 Act and applicable state securities law or an exemption from such registration is available.

Forward-Looking Statements

This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. More particularly and without limitation, this press release contains forward looking statements and information concerning completion of the Marble Point Transaction and the assessment of the Marble's Point's petroleum and natural gas production, undeveloped land holdings, business strategy, future development and growth opportunities, prospects, asset base and anticipated benefits from the combination. The forward-looking statements and information are based on certain key expectations and assumptions made by Marble Point, including expectations and assumptions concerning prevailing commodity prices and exchange rates, applicable royalty rates and tax laws, future well production rates and reserve volumes, receipt of regulatory and security holder approvals, the performance of existing wells, the success obtained in drilling new wells, the sufficiency of budgeted capital expenditures in carrying out planned activities, the availability and cost of labour and services and the impact of the Province of Alberta's new royalty regime. Although Canadian Phoenix and Marble Point believe that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward looking statements and information because Canadian Phoenix and Marble Point can give no assurance that they will prove to be correct. Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks.
These include, but are not limited to, the risks associated with the oil and gas industry in general such as operational risks in development, exploration and production delays or changes in plans with respect to exploration or development projects or capital expenditures, the uncertainty of reserve estimates, the uncertainty of estimates and projections relating to reserves, production, costs and expenses, health, safety and environmental risks, commodity price and exchange rate fluctuations, marketing and transportation, loss of markets, environmental risks, competition, incorrect assessment of the value of acquisitions, failure to realize the anticipated benefits of acquisitions, ability to access sufficient capital from internal and external sources, failure to obtain required regulatory and other approvals, and changes in legislation, including but not limited to tax laws, royalties and environmental regulations. There are risks also inherent in the nature of the Marble Point Transaction, including Canadian Phoenix not entering into definitive agreements that provide for such transaction, incorrect assessment of the value of Marble Point, and failure to obtain the required security holder, regulatory and other third party approvals. Readers are cautioned that the foregoing list of factors is not exhaustive. The forward-looking statements and information contained in this press release are made as of the date hereof and Canadian Phoenix undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Significant Assumptions and Uncertainties

The process of estimating reserves is complex requiring significant judgments and decisions based on available geological, geophysical, engineering and seismic data. Although every reasonable effort is made to ensure that reserve estimates are accurate, reserve estimation is an inferential science. As a result, the subjective decisions, new geological or production information and a changing environment may impact these estimates and the impact could be material.

Mr. Dwayne Romansky, P. Eng., of Marble Point, a Petroleum Engineer, is the qualified person who has reviewed the technical information contained in this news release.

Per barrel of oil equivalent amounts have been calculated using a conversion rate of six thousand cubic feet of natural gas to one barrel of oil ("6:1"). The 6:1 conversion ratio is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Barrels of oil per day equivalency disclosure may be misleading, particularly if used in isolation.

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

Contact Information

  • Canadian Phoenix Resources Corp.
    Robert J. Chenery
    President & CEO
    (403) 920-0040
    (403) 920-0043 (FAX)