Canoel International Energy Ltd.
TSX VENTURE : CIL

Canoel International Energy Ltd.

November 14, 2008 16:42 ET

Canoel Updates Qualifying Transaction and Concurrent Financings

CALGARY, ALBERTA--(Marketwire - Nov. 14, 2008) - Canoel International Energy Ltd. ("Canoel" or the "Corporation") (TSX VENTURE:CIL.P) announces today that the minimum gross proceeds to be raised under its previously announced private placement and Short Form Offering Document financings (collectively, the "Financings"), in a news release dated October 21, 2008, has been reduced from CDN$2,700,000 to CDN$2,300,000.

Canoel previously announced, in its press releases dated July 21 and September 19, 2008, that it has entered into a farmout and participation agreement for the acquisition from Cygam Energy Inc. ("Cygam") of oil and gas interests in three onshore exploration permits in the Bazma, Jorf and Sud Tozeur areas of Tunisia (the "Acquisition"). Canoel intends for the acquisition of the exploration permits to be the Corporation's Qualifying Transaction. The total gross proceeds raised in the combined financing will be used by the Corporation to pay its earning costs under the participation and farmout agreement with Cygam and its wholly owned subsidiary, Rigo Oil Company Limited, which costs are estimated at CDN$2,221,620.

The Corporation has reviewed its anticipated funds available and determined that the estimated net proceeds from its minimum financing will be significantly greater than the amount disclosed in its Short Form Offering Document dated October 21, 2008 (the "SFOD"), because of both lower commission costs and lower expenses. If minimum gross proceeds of CDN$2,300,000 are raised under the Financings, the Corporation will have sufficient funds available to complete the minimum work program as disclosed in the SFOD.

Further, in view of the significant recent developments in credit markets, capital markets, the Corporation has decided to reduce the salaries of its officers at this time. As a result, the Corporation's estimated general and administrative expenses for the next twelve months has been reduced from CDN$300,000 to CDN$150,000.

Funds Available

The total funds available to the Corporation after giving effect to the Acquisition and the Financing (the "Funds Available") are estimated to be CDN$2,482,000 if the minimum Financing is achieved, as derived from the following sources:



Amount
Source (minimum Financing)
----------------------------------------------------------------------------
Working capital of the Corporation as at September
30, 2008 $ 492,000
Net Financing Proceeds(1) $ 1,840,000
Deposit paid to Cygam(2) $ 150,000
-------------------
Total $ 2,482,000
-------------------

Notes:
(1) After deduction of the commissions payable to Northern and AC, being
approximately $185,000 under the minimum Financing, the expenses
relating to the Financing and the Completion of the Qualifying
Transaction, estimated at $275,000.
(2) The Corporation has paid a deposit of $150,000 (of which $125,000 will
be refunded if the Acquisition does not close) to Cygam pursuant to the
Farmout Agreement. This deposit will be applied toward the earning costs
for the Exploration Permits.
(3) In the event ETAP exercise its option to back-in with respect to the
Bazma or Sud Tozeur Exploration Permit, after completion of the
exploration and appraisal phase, ETAP would be required to pay back its
share of past costs through its proportionate share of production
revenues. In such event, ETAP's share of past costs payable to Canoel is
estimated at US$398,000 for the Bazma Exploration Permit and US$539,000
for the Sud Tozeur Exploration Permit.


Principal Purposes

The Corporation intends to use the Funds Available for the purposes set forth below in the estimated amounts set forth opposite the purposes. The available funds will be used to pay the Corporation's earning costs in respect of the three Exploration Permits. For more detail on the Exploration Permits please refer to the section entitled "Information Concerning the Assets" in the Filing Statement (incorporated herein by reference).



Amount
Anticipated Use of Funds (minimum Financing)
----------------------------------------------------------------------------
Earning Costs pursuant to the Farmout Agreement
1. Jorf Exploration Permit - Seismic Costs(1) $ 281,820
2. Bazma Exploration Permit - Seismic Costs(1) $ 128,100
3. Bazma Exploration Permit - Test Well Costs(1) $ 1,140,700
4. Jorf Exploration Permit - Test Well Costs(1) $ 671,000
General and Administrative Expense for 12 months $ 150,000
Unallocated Working Capital(2) $ 110,380
-------------------
Total $ 2,482,000
-------------------

Notes:
(1) This cost will be incurred in U.S. dollars. In this table, this cost has
been converted to Canadian dollars using an exchange rate of US$1.00 =
CDN$1.22. On November 14, 2008, the noon buying rate in New York City
for cable transfers in Canadian dollars as certified for customs
purposes by the Federal Reserve Bank of New York was US$1.00 =
CDN$1.2241.
(2) In the event ETAP exercise its option to back-in with respect to the
Bazma or Sud Tozeur Exploration Permit, after completion of the
exploration and appraisal phase, ETAP would be required to pay back its
share of past costs through its proportionate share of production
revenues. In such event, ETAP's share of past costs payable to Canoel
is estimated at US$398,000 for the Bazma Exploration Permit and
US$539,000 for the Sud Tozeur Exploration Permit.


The Corporation intends to spend the estimated funds available to it on completion of the principal purposes as indicated above. Notwithstanding the foregoing, there may be circumstances where, for sound business reasons, a reallocation of funds may be necessary for the Corporation to achieve its objectives.

Trading in the common shares of the Corporation will remain halted until the Corporation has completed its Qualifying Transaction.

ABOUT CANOEL

Canoel is a capital pool company ("CPC") that was listed on April 10, 2008. Canoel has not commenced commercial operations and has no assets other than cash. Except as specifically contemplated in the CPC policy, until the completion of the qualifying transaction, the Corporation will not carry on business, other than the identification and evaluation of companies, business or assets with a view to completing a proposed qualifying transaction.

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

  • Canoel International Energy Ltd.
    James Lawson
    Director
    (403) 269-3955
    (403) 263-4247 (FAX)