Carmen Energy Inc.
TSX VENTURE : CEI.P

April 25, 2011 08:55 ET

Carmen Energy Inc. Announces Proposed Qualifying Transaction

CALGARY, ALBERTA--(Marketwire - April 25, 2011) - Carmen Energy Inc. (TSX VENTURE:CEI.P) ("Carmen" or the "Corporation") today announced details concerning its proposed qualifying transaction involving the acquisition of certain assets from four private companies for consideration comprised of a mix of cash and work commitments (collectively the "Acquisitions"). The Acquisitions, when completed, will collectively constitute the qualifying transaction of the Corporation pursuant to Policy 2.4 of TSX Venture Exchange Corporate Finance Manual.

Summary of the Qualifying Transaction

Carmen has entered into two letters of intent, a farm-in agreement and a lease with several companies whom are partners in a package of assets comprised of (i) an oil well and specified undeveloped lands in the Jumpbush area of Alberta; and (ii) freehold and crown leases in the Ferrybank area of Alberta. Additionally, in order to finance the transaction as well as fund Carmen's proposed future development program, Carmen has engaged Macquarie Private Wealth Inc. to lead, on a commercially reasonable efforts basis and subject to satisfactory completion of due diligence, an offering (the "Brokered Offering") by way of private placement of a minimum of 10 million units, to a maximum of 14 million units of Carmen (the "Units") for gross proceeds of a minimum of $2.5 million, to a maximum of $3.5 million. Carmen's management will also undertake to place an additional 4 million Units, up to a maximum of 6 million Units on a non-brokered private placement basis (the "Non-Brokered Offering") for gross proceeds of a minimum of $1.0 million, to a maximum of $1.5 million. The Brokered Offering and the Non-Brokered Offering are collectively referred to herein as the "Offerings".

Summary of the Acquisitions

Carmen has entered into agreements with each of the following privately held, Alberta-based companies: Red Mountain Resources Inc., Brit Oil Inc., Admiral Exploration Ltd. and Lakeridge Resources Ltd., the details of which are outlined as follows.

Pursuant to two letter of intents dated April 5, 2011, Carmen agreed to acquire from Red Mountain Resources Inc. ("Red Mountain") and Brit Oil Inc., a combined 37.5% working interest in a single producing Glauconitic oil well (100/12-6-20-19w4/2) in the Jumpbush area of Alberta. The assets to be acquired include the associated quarter section of petroleum and natural gas rights held pursuant to a freehold lease, subject to a 16% lessor overriding royalty, for an aggregate cash payment of $262,000. The well is currently producing at 10.3 boe/d net company share (approximately 40% oil and 60% gas). In addition Carmen intends to acquire from Red Mountain, a 100% working interest in six contiguous sections of freehold mineral leases with development potential in a number of zones within the Jumpbush area for a purchase price of (i) $500,000 cash, and (ii) the grant of a 5% non convertible overriding royalty on these sections.

Red Mountain is a private company wholly-owned by Randy Harrison, a director of Carmen. Accordingly, pursuant to the rules of the TSX Venture Exchange (the "TSXV") the transaction with Red Mountain is considered to be a non-arm's length transaction and will require the approval of Carmen's disinterested shareholders who will be advised of the details of the transaction by way of an information circular.

Carmen has also entered into two arm's-length agreements to secure a working interest in certain undeveloped lands in the Ferrybank area of Alberta. Specifically, Carmen has entered into a lease agreement, dated February 27, 2011, with Lakeridge Resources Ltd. ("Lakeridge") to secure a 50% working interest in one section land for a term of 18 months (the "Lakeridge Lease") which becomes effective upon the payment of $50,000. The Lakeridge Lease has a 20% lessor overriding royalty payable to Lakeridge. In addition, Carmen has entered into a farm-in agreement dated February 2, 2011 with Admiral Exploration Ltd. ("Admiral") which provides Carmen with the right to acquire an additional section of land within the Ferrybank area upon the satisfaction or waiver of certain conditions precedent, namely: (i) Carmen negotiating an acceptable agreement with the holders of the remaining 50% working interest; and (ii) Carmen entering into the Lakeridge Lease. Upon satisfaction of these conditions, Carmen will earn a 100% working interest in the additional section of land provided that: i) it has received a drilling license and all other regulatory requirements to proceed with drilling a test well on the Lakeridge Lease; and ii) within 15 days of receipt of such license, Carmen has paid $50,000 to Admiral. Under the agreement with Admiral, Carmen has also agreed to grant a 10% overriding royalty to Admiral on the lands underlying the Lakeridge Lease.

The Acquisitions are subject to the policies of TSXV relating to qualifying transactions. The transaction with Red Mountain will require the approval of Carmen's disinterested shareholders at a meeting of the shareholders. At such meeting, Carmen's shareholders will also be asked to approve, as one item of business, the proposed transactions with Admiral, Lakeridge and Brit Oil Inc. An information circular outlining the Acquisitions will be mailed to Carmen shareholders. All of the directors, with the exception of Mr. Harrison, have agreed to vote in favour of the Acquisitions. Mr. Harrison, the sole shareholder of Red Mountain, will abstain from voting to approve the transaction with Red Mountain. In addition, a committee of independent directors reviewed the transaction with Red Mountain and have voted unanimously to approve the transaction. Upon completion of the Acquisitions and subject to TSXV acceptance, Carmen Energy will be listed on the TSXV as a Tier 2 oil and gas company focused on oil and gas exploration in Western Canada and other areas as opportunities arise and are deemed appropriate for participation by management.

The Properties

Jumpbush, Alberta

The Jumpbush area is a southern Alberta strike area with long established oil and natural gas production from a number of zones such as Basal Quartz, Glauconitic, Bow Island, Medicine Hat/Milk River and the Belly River/Judith River. The six sections are prospective for the majority of the listed zones.

Insite Petroleum Consultants Ltd. ("Insite") prepared an assessment with an effective date of January 1, 2011, of the development potential in the Jumpbush land parcel detailing the expected recoverable reserves for the 12-6 oil well as well as the proven, probable and possible reserves for the undeveloped lands. The report prepared by Insite has been prepared in accordance with the standards contained in the COGE Handbook and the reserve definitions contained in National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities. It should not be assumed that the undiscounted or discounted net present value of future net revenue attributable to the reserves estimated by Insite represent fair market value of those reserves. The recovery and reserve estimates of oil, natural gas liquids and natural gas reserves provided herein are estimates only. Actual reserves may be greater than or less than the estimates provided herein.

SUMMARY OF OIL AND NATURAL GAS RESERVES                                     
AND NET PRESENT VALUES OF FUTURE NET REVENUE AS OF JANUARY 1, 2011          
FORECAST PRICES AND COSTS (DECEMBER 31, 2010 PRICES)                        
                                            RESERVES                        
                                  ------------------------------------------
                                           LIGHT AND                        
                                          MEDIUM OIL          NATURAL GAS   
                                  -------------------  -------------------  
                                    Gross        Net     Gross        Net   
RESERVES CATEGORY                  (Mbbls)    (Mbbls)    (MMcf)     (MMcf)  
--------------------------------  --------  ---------  --------  ---------  
PROVED:                                                                     
 Developed Producing                  3.6        3.1      16.7       14.0   
 Undeveloped                            -          -         -          -   
                                  --------  ---------  --------  ---------  
TOTAL PROVED                          3.6        3.1      16.7       14.0   
PROBABLE                              1.6        1.3     378.2      284.3   
                                  --------  ---------  --------  ---------  
TOTAL PROVED PLUS PROBABLE                                                  
                                      5.2        4.4     395.0      298.4   
                                  --------  ---------  --------  ---------  
POSSIBLE                                -          -   4,339.5    3,432.3   
                                  --------  ---------  --------  ---------  
TOTAL PROVED PLUS PROBABLE                                                  
PLUS POSSIBLE                         5.2        4.4   4,734.5    3,730.7   
                                  -------   --------   -------   --------   
Note: Possible reserves are those additional reserves that are less certain 
 to be recovered than probable reserves. There is a 10% probability that the
 quantities recovered will equal or exceed the sum of the proved plus       
 probable plus possible reserves.                   
SUMMARY OF OIL AND NATURAL GAS RESERVES                            
AND NET PRESENT VALUES OF FUTURE NET REVENUE AS OF JANUARY 1, 2011 
FORECAST PRICES AND COSTS (DECEMBER 31, 2010 PRICES)               
                                      RESERVES                     
                              -------------------------------------
                                   NATURAL GAS                     
                                       LIQUIDS               TOTAL 
                              -----------------    ----------------
                                Gross      Net      Gross      Net 
RESERVES CATEGORY              (Mbbls)  (Mbbls)     (Mboe)   (Mboe)
-------------------------------------------------  -------  -------
PROVED:                                                            
 Developed Producing                -        -        6.4      5.4 
 Undeveloped                        -        -          -        - 
                              -------------------  -------  -------
TOTAL PROVED                        -        -        6.4      5.4 
PROBABLE                            -        -       64.6     48.7 
                              -------------------  -------  -------
TOTAL PROVED PLUS PROBABLE                                         
                                    -        -       71.1     54.1 
                              -------------------  -------  -------
POSSIBLE                         19.9     14.9      743.1    587.0 
                              -------------------  -------  -------
TOTAL PROVED PLUS PROBABLE                                         
PLUS POSSIBLE                    19.9     14.9      814.2    641.1 
                              ------- --------     ------   ------ 
Note: Possible reserves are those additional reserves that are less
 certain to be recovered than probable reserves. There is a 10%    
 probability that the quantities recovered will equal or exceed the
 sum of the proved plus probable plus possible reserves.           
                                   NET PRESENT VALUES OF FUTURE NET REVENUE 
                                 BEFORE INCOME TAXES DISCOUNTED AT (%/year) 
--------------------------------------------------------------------------- 
                              0          5         10         15         20 
RESERVES CATEGORY        ($000s)    ($000s)    ($000s)    ($000s)    ($000s)
-------------------------------  ---------  ---------  ---------  --------- 
PROVED:                                                                     
 Developed Producing      212.0      201.3      191.9      183.5      175.0 
 Undeveloped                  -          -          -          -          - 
                      ---------  ---------  ---------  ---------  --------- 
TOTAL PROVED              212.0      201.3      191.9      183.5      175.0 
PROBABLE                  483.1      391.2      312.9      247.2      192.5 
                      ---------  ---------  ---------  ---------  --------- 
TOTAL PROVED PLUS                                                           
 PROBABLE                 695.1      592.5      504.8      430.7      368.5 
                      ---------  ---------  ---------  ---------  --------- 
POSSIBLE              10,705.60   7,758.60    5,769.7    4,395.4   3,420.20 
                      ---------  ---------  ---------  ---------  --------- 
TOTAL PROVED PLUS                                                           
 PROBABLE PLUS                                                              
 POSSIBLE              11,400.7   8,351.10   6,274.50    4,826.1   3,788.70 
                      ---------  ---------  ---------  ---------  --------- 
Note: Possible reserves are those additional reserves that are less certain 
 to be recovered than probable reserves. There is a 10% probability that the
 quantities recovered will equal or exceed the sum of the proved plus       
 probable plus possible reserves.        
                                   NET PRESENT VALUES OF FUTURE NET REVENUE 
                                  AFTER INCOME TAXES DISCOUNTED AT (%/year) 
                              0          5         10         15         20 
RESERVES CATEGORY        ($000s)    ($000s)    ($000s)    ($000s)    ($000s)
-------------------------------  ---------  ---------  ---------  --------- 
PROVED:                                                                     
 Developed Producing      203.4      193.0      183.7      175.6      168.2 
 Undeveloped                  -          -          -          -          - 
                      ---------  ---------  ---------  ---------  --------- 
TOTAL PROVED              203.4      193.0      183.7      175.6      168.2 
PROBABLE                  388.1      309.2      241.4      184.5      137.1 
                      ---------  ---------  ---------  ---------  --------- 
TOTAL PROVED PLUS                                                           
 PROBABLE                 591.5      502.1      425.2      360.0      305.3 
                      ---------  ---------  ---------  ---------  --------- 
POSSIBLE                7,978.2    5,676.8    4,128.0    3,065.4    2,318.5 
                      ---------  ---------  ---------  ---------  --------- 
TOTAL PROVED PLUS                                                           
 PROBABLE PLUS                                                              
 POSSIBLE              8,569.70    6,179.0   4,553.20   3,425.40   2,623.80 
                      ---------  ---------  ---------  ---------  --------- 
Note: Possible reserves are those additional reserves that are less certain 
 to be recovered than probable reserves. There is a 10% probability that the
 quantities recovered will equal or exceed the sum of the proved plus       
 probable plus possible reserves.                                           
The forecast cost and price assumptions above assume increases in wellhead
selling prices and take into account inflation with respect to future
operating and capital costs. Crude oil and natural gas benchmark reference
pricing, inflation and exchange rates utilized in the assessment by Insite
were as follows:
SUMMARY OF PRICING ASSUMPTIONS                                              
AS OF DECEMBER 31, 2010 FORECAST PRICES AND COSTS                           
                                        OIL                      NATURAL GAS
                    --------------------------------------------------------
                                            Hardisty     Cromer             
                                 Edmonton        LLB     Medium             
                           WTI  Par Price                  29.3             
                       Cushing 40 degrees 12 degrees    degrees     AECO Gas
                      Oklahoma        API        API        API        Price
                    --------------------------------------------------------
Year                 ($US/Bbl) ($Cdn/Bbl) ($Cdn/Bbl) ($Cdn/Bbl) ($Cdn/MMBtu)
----------------------------------------------------------------------------
2011                     88.00      87.30      77.30      81.19         4.14
2012                     90.00      90.28      78.28      83.96         4.71
2013                     92.00      93.83      79.83      87.27         5.29
2014                     94.00      95.88      79.88      89.17         5.76
2015                     96.00      97.92      81.60      91.06         6.27
2016                     97.92      99.88      83.23      92.89         6.77
2017                     99.88     101.88      84.90      94.74         7.02
2018                    101.88     103.91      86.59      96.64         7.16
2019                    103.91     105.99      88.33      98.57         7.30
2020                    105.99     108.11      90.09     100.54         7.45
2021                    108.11     110.27      91.89     102.55         7.59
There-after           +2.0%/yr   +2.0%/yr   +2.0%/yr   +2.0%/yr     +2.0%/yr
SUMMARY OF PRICING ASSUMPTIONS                                            
AS OF DECEMBER 31, 2010 FORECAST PRICES AND COSTS                         
                          NATURAL GAS LIQUIDS                             
                   ----------------------------------                     
                     Edmonton   Edmonton              INFLATION           
                      Propane     Butane  Condensate    RATE(1)    RATE(2)
                   -------------------------------------------------------
Year               ($Cdn/Bbl) ($Cdn/Bbl)  ($Cdn/Bbl)     %/Year ($US/$Cdn)
--------------------------------------------------------------------------
2011                    52.38      69.84       91.66        2.0       0.98
2012                    54.17      72.23       92.99        2.0       0.97
2013                    56.30      75.07       96.65        2.0       0.96
2014                    57.53      76.70       98.75        2.0       0.96
2015                    58.75      78.34      100.86        2.0       0.96
2016                    59.93      79.90      102.87        2.0       0.96
2017                    61.13      81.50      104.93        2.0       0.96
2018                    62.35      83.13      107.03        2.0       0.96
2019                    63.59      84.79      109.17        2.0       0.96
2020                    64.87      86.49      111.35        2.0       0.96
2021                    66.16      88.22      113.58        2.0       0.96
There-after          +2.0%/yr   +2.0%/yr    +2.0%/yr        2.0       0.96
Notes:
1.  Inflation rates for forecasting prices and costs. Cost inflation for
    2011 at 2.0%. 
2.  Exchange rates used to generate the benchmark reference prices in this
    table. 
The following is a summary of the revenues, royalties and operating expenses
for the periods indicated below with respect to the working interest in the
12-6 oil well currently held by Brit Oil Inc. and Red Mountain. The selected
financial information has been prepared in accordance with Canadian
generally accepted accounting principles and should be read in context with
the financial statements that will be included in the information circular
that will be mailed to shareholders and filed on SEDAR. All dollar amounts
are in Canadian dollars.
                                           YEAR ENDED            YEAR ENDED 
                                   SEPTEMBER 30, 2010    SEPTEMBER 30, 2009 
PERIOD                                       (audited)             (audited)
----------------------------------------------------------------------------
REVENUE                                                                     
 Petroleum and Natural Gas Sales         $    398,021          $    474,718 
 Royalties                               $    (60,696)         $    (69,314)
                                         $    337,325          $    405,404 
                                  ----------------------                    
OPERATING EXPENSES                       $     56,446          $    109,471 
OPERATING INCOME                         $    280,879          $    295,933 
                                  ----------------------                    

Ferrybank, Alberta

In the Ferrybank area of Alberta, the letter agreements with Admiral and Lakeridge contemplate Carmen entering into a lease agreement with Lakeridge to earn an aggregate 50% working interest in the property subject to the royalties disclosed above. It is currently contemplated that Carmen's commitment under the proposed agreements will include the drilling of one (1) well and a onetime lease payment of $50,000 for the Lakeridge Lease, and a $50,000 payment to earn the additional section. The Ferrybank assets include no producing wells and consist only of a lease over undeveloped land. There are no reserves associated with the Ferrybank assets.

A deep Upper Devonian test well was drilled in 1955 on one of the sections at 2-8-44-27W4. This well is located over 12 kilometres to the east of the oil bearing Westerose South Leduc field where the Upper Devonian Age Leduc formation is a porous carbonate reef build up. The 2-8 well encountered a nearly 20 metre thick carbonate zone in the predominately shale Upper Devonian Age Ireton Formation. This carbonate section appears to have been deposited in a sub basinal setting behind the Westerose South Leduc reef trend. A number of cores were cut over approximately half of this carbonate zone. The cores showed average porosities of nearly 3.5 percent. The core description indicates this section is fractured. Three drill stem tests were run over the carbonate zone with one test recovering nearly 1525 metres of oil. This carbonate section was perforated, stimulated and tested, but no recovery was reported (Source: Energy and Resource Conservation Board (ERCB) records).

Based on the above information, Carmen and Insite are of the opinion that the assets in the Ferrybank area represent a valid prospective geological play in the Leduc zone.

Work Plan for Jumpbush/Ferrybank properties

The following is the anticipated work plan, as recommended by Insite, for the properties to be acquired under the Acquisitions.

                                       Specific                             
Fiscal Year by Qtr        Location      Actions         Capital     Comments
----------------------------------------------------------------------------
                                                                      Spring
3rd Qtr ending June      Jumpbush/                                  Break up
 30, 2011                Ferrybank     Close QT             N/A     underway
----------------------------------------------------------------------------
4rd Qtr 2011 ending                                                    Post-
 September 30, 2011                                                  Harvest
                                                                    Purchase
                                                                        data
                        Ferry Bank  Drill Leduc    $  1,200,000     included
----------------------------------------------------------------------------
                                      Drill Bow                        Post-
                          Jumpbush       Island    $    475,000      Harvest
----------------------------------------------------------------------------
                                          Drill                        Post-
                          Jumpbush  Glauconitic    $    958,000      Harvest
----------------------------------------------------------------------------
                                          Drill                             
                                         Judith                        Post-
                          Jumpbush        River    $    800,000      Harvest
----------------------------------------------------------------------------
Sub-Total                                          $  3,433,000             
----------------------------------------------------------------------------
Year end September                     Drill 11                             
 30, 2013                           Shallow gas                        Post-
                          Jumpbush        wells    $  3,850,000      Harvest
----------------------------------------------------------------------------
TOTAL                                              $  7,283,000             
----------------------------------------------------------------------------

The Offerings

Macquarie Private Wealth Inc. (the "Agent") and Carmen have entered into an engagement letter dated March 25, 2011 whereby the Agent will act as lead agent on a commercially reasonable efforts basis to sell, on a private placement basis, a minimum of 10 million Units and a maximum of 14 million Units at a price of $0.25 per Unit for gross proceeds of a minimum of $2.5 million and a maximum of $3.5 million under the Brokered Offering. In addition, management of Carmen will place Units at a price of $0.25 per Units for gross proceeds of a minimum of $1.0 million and a maximum of $1.5 million on under the Non- Brokered Offering. Each Unit will consist of one common share of Carmen ("Common Share") and one half of one Common Share purchase warrant (each whole common share purchase warrant a "Warrant"). Each Warrant shall be exercisable for one Common Share at any time prior to the date that is 18 months from the closing date of the Offerings at an exercise price of $0.40 per Common Share.

Carmen will pay the Agent a cash commission equal to 7% of the gross proceeds of the Brokered Offering payable upon the closing of the Brokered Offering. In addition, Carmen will grant the Agent an option to acquire that number of Units equal to 7% of the total number of units sold under the Brokered Offering (the "Agent's Option"), exercisable at a price of $0.25 per Agent's Option for a period of 24 months from the closing date of the Brokered Offering. The Warrants forming part of the Agent's Option shall have the same terms as the Warrants issued under the Offerings and will expire 18 months from the date of the closing.

The net proceeds of the Offerings will be used to fund the aggregate purchase price of the Acquisitions and provide working capital to execute Carmen's proposed work plan for the acquired assets.

Completion of the Offerings is subject to certain conditions including the receipt of all regulatory approvals, including the approval of the TSXV. Carmen is also subject to the policies of the TSXV as they relate to sponsorship. Although Carmen has applied to the TSXV for a waiver from the requirement to retain a sponsor, there can be no assurance that this application will be granted. The Common Shares are posted for trading on the TSXV under the symbol CEI.P. Trading in Carmen's Common Shares is currently halted pending satisfactory receipt of all documents requested by the TSXV. Closing of the Offerings is also conditional upon the Company completing the Acquisitions. Closing of the Offerings and the Acquisitions is expected to occur in June of 2011.

Board of Directors and Management

Concurrent with the closing of the qualifying transaction, Carmen will appoint Mr. Tyler Rice as Carmen's Chief Financial Officer and Mr. Zeno Bereznicki as Carmen's Vice President, Operations and Chief Operating Officer. Mr. Archibald Nesbitt will resign as Carmen's Chief Financial Officer upon the appointment of Mr. Rice and will continue as a director of the Company. In addition, Mr. Steven Letwin will be appointed to the board of directors of the Company.

Upon the closing of the qualifying transaction the board and management of Carmen will consist of the following personnel:

Mr. Brian Doherty, President, CEO and Director

Brian Doherty, age 56, has over 30 years of experience in the oil and gas industry, specifically in the area of exploration and development. Most recently, prior to its acquisition by Taqa North Ltd., Mr. Doherty worked as the Southern business unit manager for PrimeWest Energy Trust ("PrimeWest"). During his time at PrimeWest (July 2006 to January 2008), Mr. Doherty was responsible for all operational aspects, including the geological, geophysical, engineering and capital efficiency concerns within the business unit which encompassed over 15,000 boe/d production and an annual capital budget of $100 million. Prior to his time at PrimeWest, Mr. Doherty acted as the Vice-President, Exploration for Signal Energy Inc. ("Signal") from January 2005 to April 2006. At Signal, Mr. Doherty was responsible for all exploration and development activities and directed a staff of four professional outside consultants. Mr. Doherty also acted as the Vice President, Exploration for Predator Exploration Ltd. ("Predator") from August 2003 to December 2004.

Mr. Doherty holds an Honours Bachelor of Science in Geology from the University of Windsor

Mr. Zeno Bereznicki, VP, Operations and COO

Mr Bereznicki, age 62, has over 37 years of oil and gas industry experience in various engineering capacities. Most of his experience has been in North America. However, he has work experience in the North Sea, Kazakhstan, Pakistan and various areas in the USA. In the early 80's Mr. Bereznicki gained experience in oil and gas asset evaluation working for James A. Lewis Engineering. Following that, he became a partner and an owner of Principal Petroleum Consultants in the late 80's. In the early 90's he became the Senior Partner and also an owner of Capital Engineering Ltd. which grew to a staff of over 30 people. Later, Mr. Bereznicki joined Mission Energy Ltd. where, as the sole engineer, he was responsible for all daily operations, including supervising all professional staff. In 1995, Mr Bereznicki supervised a staff of engineers and geo-scientists on the conceptual development of 2 oil fields in Kazakhstan for Hurricane Hydrocarbon Ltd. Mr. Bereznicki then joined Gulf Canada Ltd. in 1996. During the 3 years with the company, he evaluated over $6 billion worth of assets and was directly involved in the purchase of 2 major assets valued at approximately $1 billion and disposition of 1 major asset valued at approximately $450 million. In the late 90's Mr. Bereznicki was asked to join PrimeWest and was responsible for evaluation of all major assets and most of the acquisitions in the past 13 years. Mr Bereznicki was directly involved in acquisitions of over $3 billion worth of assets and disposition of over $300 million worth of assets. Mr. Bereznicki holds a degree in electrical engineering from the University of Alberta.

Mr. Randy Harrison, Chairman and Director

Mr. Randy Harrison, age 53, has over 30 years experience in the oil and gas industry. Mr. Harrison is currently the Chief Executive Officer of Red Mountain, a private oil and gas company. Mr. Harrison has previously served as the President and Chief Operating Officer of Endev Energy Ltd., a publicly traded oil and gas company listed on the Toronto Stock Exchange. Mr. Harrison has served as a director on boards of numerous publicly listed and private oil and gas companies including Hillcrest Resources Ltd. and Stallion Resources Ltd. His experience as a director of publicly listed oil and gas companies includes his directorships with Signal Energy Inc. and its predecessor Predator Exploration Ltd. Mr. Harrison holds a Bachelor of Commerce in marketing and finance from the University of Calgary.

Mr. Tyler Rice, CFO

Mr. Tyler Rice, age 30, has over 7 years of accounting experience with public and private corporations in a wide spectrum of industries. Specifically, Mr. Rice has over three years of experience in financial reporting for an international oil and gas exploration Company. Mr. Rice is currently the Chief Financial Officer of a private oil and gas company. Mr. Rice has previously served as the Controller for Shelton Canada Corp. prior to its acquisition by Shelton Petroleum Ltd. (August 2007 to January 2011), where he was responsible for managing all aspects of financial reporting, including the preparation of press releases, financial statements, MD&A and reported directly to the board of directors. In addition, Mr. Rice concurrently provided consulting services to several public and private oil and gas companies in numerous capacities, including International Financial Reporting Standards, Sarbanes-Oxley implementation and providing virtual CFO services. Prior to joining Shelton Canada Corp., Mr. Rice articled with YPM Chartered Accountants in Lethbridge, Alberta. Mr. Rice is a Chartered Account and earned his Bachelor of Management Degree, (Finance) from the University of Lethbridge and holds a Masters in Professional Accounting from the University of Saskatchewan.

Gerald D. Facciani, Director

Mr. Gerald D. Facciani, age 62, founded "Facciani & Company" in north-eastern Ohio in 1976. The firm was sold in 1991 to a public company listed on the London and New York stock exchanges. The firm provided consulting, actuarial and administrative services to single-employer and multi-employer clients in the United Stated and Canada. Mr. Facciani is a Member of the American Society of Pension Actuaries (ASPA) and the American Academy of Actuaries (AAA). He became a Treasury-Department Enrolled Actuary in 1976. He was also President of ASPA in 1982 and served on its board of directors from 1979-1986, including four years as Chairman of ASPA's Government Affairs Committee. Mr. Facciani has served on not-for-profit boards, including ASPA, the Employee Benefit Research Institute, the ERISA Advisory Council, and others; as well as a number of for-profit Boards, including Naneco Minerals Ltd., Southpoint Resources Ltd. (May 2001 to August, 2005), Gateway Gold Corp. (August 2006 to April 2007) and Northpine Energy Ltd., a private company (May 2009 to May 2010). Mr. Facciani earned a Bachelor's degree in History from Carleton College in Northfield, MN. He is currently a Master's degree candidate at Yale University in New Haven, CT.

Mr. Archibald J. Nesbitt, Director

Mr. Archibald J. Nesbitt, age 61, has been a member of the law Society of Alberta since 1978. Mr. Nesbitt was founder of Nesbitt Mining & Exploration Ltd. ("Nesbitt Mining"), and occupied various positions with Nesbitt Mining between 1969 and 2004, including Vice President, President and Chairman of the Board. Nesbitt Mining subsequently became Naneco Minerals Ltd., and then Southpoint Resources Ltd., which later merged with E4 Energy Inc. to become Twin Butte Energy Ltd. Mr. Nesbitt has been the founder of a number of private and public corporations and has held the position of President, CEO and CFO. He has acted as a director, and Chairman of a number of publicly traded companies. Mr. Nesbitt currently sits on the boards of Golden Band Resources Ltd. and Marksmen Energy Ltd which are trading on the TSX Venture Exchange. Mr. Nesbitt holds a Bachelor of Commerce with Honours from Queen's University and a Bachelor of Laws from the University of Western Ontario.

Mr. Steven Letwin, Director

Mr. Steve Letwin, age 52, was appointed President and Chief Executive Officer of IAMGOLD Corporation on November 1, 2010. Specializing in corporate finance, operational management, and merger and acquisitions, Mr Letwin brings over 30 years of experience from the highly-competitive resource sector. Prior to joining IAMGOLD, Steve was based in Houston, Texas, where he was the Executive Vice President, Gas Transportation & International, with Enbridge Inc. Steve was responsible for Enbridge's natural gas operations, including overall responsibility for Enbridge Energy Partners, as the partnership's Managing Director. In 1999, he joined Enbridge as President and Chief Operating Officer, Energy Services, based in Toronto, Canada. Before joining Enbridge, Steve served as President & Chief Operating Officer of TransCanada Energy and was Chief Financial Officer, TransCanada Pipelines Limited, Numac (Westcoast Energy), and Encor Energy. Mr. Letwin holds an MBA from the University of Windsor, is a Certified General Accountant, a graduate of McMaster University (B.Sc., Honours), and a graduate of the Harvard Advanced Management Program.

Grant of Additional Stock Options

As part of and in connection with the completion of the qualifying transaction, Carmen will issue additional incentive stock options (the "Additional Stock Options") to the incoming Directors and Officers, at an exercise price equal to the price of the securities issued under the Offerings or otherwise in accordance with the policies of the TSXV. The terms and conditions of the Additional Stock Options will be determined by the board of directors of Carmen, but will not exceed 10% of the issued and outstanding shares of Carmen, post completion of the qualifying transaction. Particulars regarding the Additional Stock Options will be provided in the information circular which will be mailed to all Carmen shareholders.

Effect of the Qualifying Transaction on Carmen

Carmen currently has 9,699,500 Common Shares issued and outstanding, and no stock options, warrants, anti-dilution or other rights to purchase Common Shares issued or outstanding, other than 725,000 stock options which are exercisable at a price of $0.10 per share and 300,000 agent options exercisable at $0.10 per share. Upon closing of the qualifying transaction, Carmen may have up to a maximum of 29,669,500 Common Shares issued and outstanding, up to a maximum of 11,280,000 Common Shares issuable pursuant to the Agent's Options and the Warrants issued under the Offerings (including the 300,000 agent options currently outstanding and assuming the issuance of a maximum of 20 million Units under the Offerings) and up to a maximum of 2,966,950 Common Shares reserved for the issuance of incentive stock options (calculated based on 10% of the estimated maximum number of issued and outstanding Common Shares upon closing of the qualifying transaction).

About Carmen Energy Inc.: Carmen is a junior capital pool company that completed its initial public offering and obtained a listing on the TSXV in January of 2011. Prior to entering into the letters of agreement for the Acquisitions, Carmen did not carry on any active business activity other than reviewing potential transactions that would qualify as Carmen's qualifying transaction.

ON BEHALF OF THE BOARD OF DIRECTORS

Mr. Brian Doherty, President, CEO and Director

Advisory Regarding Forward-Looking Information and 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 "will", "expects", "believe", "plans", "potential" and similar expressions are intended to identify forward-looking statements or information. More particularly and without limitation, this press release contains forward looking statements and information concerning: the Acquisitions, the timing of the Acquisitions, the Offerings, Carmen's anticipated work program and future operations, Carmen's planned capital expenditures, drilling and development and the timing thereof. In addition, this press release contains forward-looking statements and information regarding the proposed Qualifying Transaction, statements with regards to the estimated drilling commitments forming part of the Acquisitions, statements with respect to the characteristics and anticipated growth and development potential of the assets to be acquired; future drilling and development plans of Carmen with respect to the assets to be acquired; expectations regarding future production volumes from the acquired assets; the effect of the Qualifying Transaction on Carmen's share capital, the expected closing date of the Qualifying Transaction, the Acquisitions and the Offerings; the use of proceeds of the Offerings; and the size of the Offerings. In addition, statements relating to "reserves" are deemed to be forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions, which the reserves described, can be profitably produced in the future. Readers should be cautioned that the forgoing list of forward-looking statements and information contained herein should not be considered exhaustive.

The forward-looking statements and information in this press release are based on certain key expectations and assumptions made by Carmen, including the satisfaction of the conditions of closing of the Offerings and the Acquisitions on the timing planned, and the receipt, in a timely manner, of regulatory and other required approvals. Although Carmen believes 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 Carmen 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 and resource estimates; the uncertainty of estimates and projections relating to reserves, resources, 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 including the Acquisitions; ability to access sufficient capital from internal and external sources; changes in legislation, including but not limited to tax laws, royalties and environmental regulations, actual production from the acquired assets may be greater or less than estimates; failure to obtain the necessary regulatory approval, stock exchange and other regulatory approvals and on the timelines planned; risks that conditions to closing of the Acquisitions or the Offerings are not satisfied. Management has included the above summary of assumptions and risks related to forward-looking information provided in this press release in order to provide securityholders with a more complete perspective on Carmen's future operations and such information may not be appropriate for other purposes.

The forward-looking statements and information contained in this press release are made as of the date hereof and Carmen 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

Barrels of oil equivalent (boe) is calculated using the conversion factor of 6 Mcf (thousand cubic feet) of natural gas being equivalent to one barrel of oil. Boes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf:1 bbl (barrel) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Completion of the Acquisitions and the Offerings (collectively the "Transaction") is subject to a number of conditions, including but not limited to, TSXV acceptance and if applicable pursuant to TSXV requirements, majority of the minority shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular to be prepared in connection with the Transaction, any information released or received with respect to the Transaction 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 Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

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

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