Canadian Phoenix Resources Corp.
TSX VENTURE : CPH

Canadian Phoenix Resources Corp.

May 01, 2008 18:08 ET

Canadian Phoenix Resources Corp.: News Release

CALGARY, ALBERTA--(Marketwire - May 1, 2008) - Canadian Phoenix Resources Corp. (TSX VENTURE:CPH) -

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

CORPORATE UPDATE:

PROPOSED $100 MILLION TRANSACTION - MARBLE POINT ENERGY LTD.

COMPLETION OF ACQUISITION OF ASSETS FROM TRUE ENERGY LTD. AND RESULT ENERGY INC.

ANNUAL GENERAL AND SPECIAL MEETING OF SHAREHOLDERS

CANADIAN PHOENIX RESOURCES CORP. ("Canadian Phoenix" or "CPH") is pleased to announce that Marble Point Energy Ltd. ("Marble Point") has completed the acquisitions of oil and gas assets referred to in its April 16, 2008 press release for a total purchase price of $51.8 million, subject to closing adjustments.

Acquisition from True Energy Ltd.

Marble Point has purchased oil and gas assets located in the Dodsland area of Saskatchewan from True Energy Ltd. in consideration of $40 million, subject to closing adjustments. These assets produce approximately 4.5MMscf/day of natural gas net to Marble Point, and contain excess processing and compression capacity that will be available for future development. The property contains 128,000 net acres of developed and undeveloped land and has a current inventory of 120 drilling locations. Additional downspacing will significantly increase the drilling inventory.

Acquisition from Result Energy Inc.

Marble Point has purchased oil and gas assets located in the Dodsland area of Saskatchewan from Result Energy Inc. in consideration of $11.8 million, subject to closing adjustments. These assets produce approximately 1.5MMscf/day of natural gas net to Marble Point and also contain excess processing and compression capacity. The property contains 13,500 net acres of developed and undeveloped land and currently has a drilling inventory of 20 net wells. Additional downspacing will significantly increase the drilling inventory.

Total Production Update :

Upon the completion of the above noted acquisitions Marble Point has total corporate production of approximately 1,700 BOE/D and 220,000 net acres of developed and undeveloped land.

Financings by Marble Point

Marble Point, as borrower, and Canadian Phoenix, as guarantor, entered into a secured credit facility (the "Facility") dated April 15, 2008 with Ionic Capital Corp. ("Ionic"), as amended on April 30, 2008, pursuant to which Marble Point has now borrowed the total amount of $42 million. In addition, with the assistance of Canadian Phoenix, Marble Point completed the initial tranche of its previously announced private placement (the "MPE Private Placement") of preferred shares for gross proceeds of $33.45 million by the issue of 51,461,539 preferred shares at the price of $0.65 per share. Refer to Canadian Phoenix's news release dated April 16, 2008 for additional information regarding the MPE Private Placement. Canadian Phoenix has currently arranged the aggregate proceeds of $75.45 million out of the $100 million total financing from the Facility and the MPE Private Placement, which proceeds were used by Marble Point to pay the purchase price for the oil and gas assets and to payout indebtedness owed to secured lenders (approximately $16.5 million), with the balance to be used by Marble Point as working capital for operations. One or more additional closings of the MPE Private Placement are anticipated to be completed prior to the end of May 2008.

Canadian Phoenix has issued an additional 23,165,467 common shares ("CPH Shares") to Ionic at the deemed price of $0.144 in partial consideration of the final advance under the Facility. These CPH Shares will be held in escrow and released to Ionic upon the successful completion of the acquisition (the "Marble Point Transaction") by Canadian Phoenix of a controlling shareholder interest in Marble Point. If the Marble Point Transaction is not completed, these CPH Shares will be returned to Canadian Phoenix for cancellation and Canadian Phoenix and Marble Point will be obliged to pay the amount to Ionic in cash. In addition, Marble Point has issued a promissory note in the amount of $1,839,750 to a finder acting on its behalf in connection with the MPE Private Placement, this amount being equal to 5.5% of the amount raised. Marble Point has the right to assign this note to Canadian Phoenix concurrently with the successful completion of the Marble Point Transaction, at which time Canadian Phoenix shall, subject to acceptance by the TSX Venture Exchange, issue 12,265,000 units ("Units") of Canadian Phoenix in satisfaction of the indebtedness under the note. Each Unit shall be comprised of one CPH Share and one non-transferable CPH Share purchase warrant ("Warrant"). Each Warrant will entitle the holder thereof to purchase one additional CPH Share at a price of $0.20 on or before the earlier of the date that is:

(a) two years from the date of the completion of the Marble Point Transaction; and

(b) 30 days after the giving of notice of early termination by Canadian Phoenix of the Warrants, which notice may be given by Canadian Phoenix, in its sole discretion, if the closing price of the CPH Shares on the TSX Venture Exchange is at least $0.30 for a minimum of 30 consecutive trading days (whether or not trading occurs on such days) (the "Triggering Event") within 30 days of the Triggering Event by written notice to the finder that the exercise period of the Warrant has been reduced to 30 days following delivery of such notice.

Canadian Phoenix hereby reserves the issue price of $0.15 for the additional Units that may be issued to the finder acting on behalf of Marble Point in connection with the MPE Private Placement and $0.20 for the exercise price of the Warrants that would comprise part of such Units.

The Marble Point Transaction 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 or an Information Circular in accordance with the form prescribed by the TSX 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 now anticipated that the Marble Point Transaction will be completed on or before June 30, 2008.

Annual General and Special Meeting of Shareholders

Canadian Phoenix will hold an Annual General and Special Meeting of its Shareholders on Monday, June 30, 2008. Among other matters to be considered at this Meeting, which will include the Marble Point Transaction and the previously announced transaction with Serrano Energy Ltd., the shareholders will be asked to consider and, if thought appropriate, approve the adoption by the Corporation of a new 10% rolling stock option plan (the "Plan") under which that number of CPH Shares equal to 10% of the number of CPH Shares outstanding from time to time will be reserved and available for issue under options granted pursuant to the Plan. The Plan will also be subject to acceptance by the TSXV Venture Exchange. Canadian Phoenix hereby reserves the price of $0.165 for the exercise price of up to 25 million stock options which may be issued under the Plan concurrently with the completion of the Marble Point Transaction.

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". There are presently 557,199,860 Common Shares of Canadian Phoenix issued and outstanding.

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 MPE Private Placement. The forward-looking statements and information are based on certain key expectations and assumptions made by Canadian Phoenix and Marble Point. 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. There are risks also inherent in the nature of the Marble Point Transaction and the MPE Private Placement, including financing risk, 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.

Barrels of Oil Equivalent

"BOE" means barrel of oil equivalent on the basis of 1 BOE to 6,000 cubic feet of natural gas. BOE's may be misleading, particularly if used in isolation. A BOE conversion ratio of 1 BOE for 6,000 cubic feet of natural gas is based on an energy equivalency conversion method primarily applicable a t the burner tip and does not represent a value equivalency at the wellhead.


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)