Caspian Energy Announces Agreement to Acquire Remainder of Aral Petroleum

CALGARY, ALBERTA--(Marketwired - Aug. 1, 2014) - Caspian Energy Inc. (NEX BOARD:CKZ.H) ("Caspian" or the "Company") is pleased to announced that it has entered into an agreement dated today with, among others, Asia Sixth Energy Resources Limited ("Asia Sixth") pursuant to which Caspian will acquire all the remaining interests in Aral Petroleum Capital LLP ("Aral"), the operating entity of the East Zhagabulak oil field in Kazakhstan, not already owned by the Company. The transaction will be completed by the way of a share purchase agreement (the "Share Purchase Agreement") made among Caspian, its wholly-owned subsidiary Caspian Energy Limited, Asia Sixth, Groenzee B.V. ("Groenzee") a wholly-owned subsidiary of Asia Sixth, and four other parties ("Investors") who will be, in connection with the transaction, terminating their respective interests in previously executed agreements to acquire interests in Aral. Under the terms of the Share Purchase Agreement, the Company will acquire, in exchange for the issuance of Caspian common shares to Asia Sixth and the Investors, all of Asia Sixth's (and the Investors') interests in Aral (including through Groenzee) and the debt owed by Groenzee to Asia Sixth (being approximately US$139 million)(collectively the "Purchased Assets").

Immediately upon the completion of the transactions contemplated by the Share Purchase Agreement ("Closing"), Asia Sixth will own directly and indirectly 35.1% of all issued and outstanding shares of Caspian. Meridian Capital International Fund ("Meridian"), Firebird Global Master Fund Holdings, Ltd. and Firebird Avrora Fund, Ltd. (collectively, "Firebird") will own 26.0% and 8.2% of Caspian, respectively, and the Investors will own, in the aggregate, 24.9%.

The aggregate purchase price for the Purchased Assets is US$ 47,114,778. Assuming (i) the full draw down of the US$1.5 million convertible loan facility provided by Meridian and Firebird pursuant to a loan agreement dated July 7, 2014, (ii) the conversion of the convertible loan amount into common shares of Caspian, at Closing, and (iii) an exchange rate of $1.00 US dollar to $1.0677 Canadian dollars, it is expected that Asia Sixth will be issued 141,388,599 common shares and the Investors will be issued in the aggregate 100,301,314 common shares. The shares will be issued at an average price of C$0.21 per share.

The Share Purchase Agreement contains a condition precedent in favour of Caspian that Sixth Energy Limited ("Sixth Energy") (the majority shareholder of Asia Sixth) and Meridian will on closing provide a secured loan facility of up to US$21.5 million to Aral. The loan facility will be secured by share pledges over the entirety of the Company's Aral interests in favour of the lenders on a pro-rata basis.

Asia Sixth will also be granted convertible securities of Caspian at the date of closing. Such convertible securities are only exercisable by Asia Sixth upon the exercise or conversion of convertible securities previously issued by Caspian prior to the execution of the Share Purchase Agreement and will be subject to dilution following subsequent share issuances by the Company and other specified dilutive events post-closing. If all the convertible securities granted were exercised by Asia Sixth, Asia Sixth will hold a 35.9% interest in the Company.

The terms of the Share Purchase Agreement remain subject to the approval of the NEX, and consequently the terms of the agreement may be required to be amended. The closing of the transactions contemplated therein is also subject to certain conditions including but not limited to:

• Caspian having received the required shareholder approval;
  
  
• The approval by the Kazakh government for the acquisition of the Aral interests;
  
  
• The execution of the financing documents providing for the US$21.5 million secured facility;
  
  
• Meridian and Firebird having converted the balance outstanding on the loan facility of up to $1.5 million created in July 2014 into common shares of Caspian;
  
  
• The execution of a shareholders' agreement among Caspian, Asia Sixth and Meridian governing certain matters relating to Caspian;
  
  
• The termination of previous agreements made directly or directly by Asia Sixth and the Investors; and
  
  
• Customary regulatory approvals and other closing conditions.
  

Pursuant to the shareholders' agreement to be entered as a condition of closing, Asia Sixth and Meridian will each be entitled to nominate two nominees to Caspian's board of directors and will be entitled to agree on two independent nominees in consultation with management. A seventh member of the board of directors being a member of senior management may also be nominated.

A copy of the Share Purchase Agreement will be filled on Caspian's SEDAR profile at www.SEDAR.com.

Caspian expects to hold an annual and special meeting of its shareholders to seek the requisite shareholder approvals for the transactions contemplated by the Share Purchase Agreement in late September 2014.

Michael Nobbs, the Chairman of the Board of the Company, stated "the signing of the Share Purchase Agreement represents a significant milestone on the Company's journey back to eventual solvency and renewed activity on the North Block. In a short time, we have successfully eliminated the Company's past due debts at the corporate level by the conversion of approximately US$14 million in debentures to equity and we have arranged for the provision of short-term funding to satisfy historical liabilities and keep the Company moving forward. By entering into the Share Purchase Agreement, we have laid the foundation to consolidate the fragmented ownership and operation of Aral, our Kazakh subsidiary, into one publically listed company, Caspian. By completing the transactions contemplated by the Share Purchase Agreement, the Company will gain a substantial and experienced cornerstone investor in Asia Sixth, and Aral will gain access to a new US$21.5 million loan from Meridian and Sixth Energy on favourable terms which we believe will enable Aral to fund certain operating and capital expenditures. Operations have commenced to open up existing wells to production and anticipated future cash flow. We welcome our new investor, Asia Sixth which joins our existing cornerstone investors, Meridian and Firebird, and look forward to being able to make further announcements of activity as these are determined by the Board."

This news release contains "forward-looking information" within the meaning of applicable Canadian securities legislation which we refer to herein, collectively, as "forward-looking information". Generally, forward-looking information can be identified by the use of forward- looking terminology such as "plans", "expects", or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "does not anticipate", or "believes" or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might", or "will be taken", "occur", or "be achieved" and include statements relating to the completion of the transactions contemplated by the Share Purchase Agreement. Caspian's actual performance, developments and/or results may differ materially from any or all of the forward- looking statements. Further information which may cause results to differ materially from those projected in the forward-looking statements is contained in Caspian's filings with Canadian securities regulatory authorities. All material assumptions used in making forward-looking information including statements relating to receipt of regulatory approvals and the satisfaction of all other conditions to the Share Purchase Agreement are based on management's knowledge of current business conditions and expectations of future business conditions and trends. Although Caspian believes the assumptions used to make such statements are reasonable at this time and has attempted to identify in its continuous disclosure documents important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. The timing and completion of the transactions contemplated by the Share Purchase Agreement are subject to certain conditions, termination rights and other risks and uncertainties. Accordingly, there can be no assurance that the transaction will occur, or that it will occur on the timetable or on the terms and conditions contemplated. Accordingly, readers should not place undue reliance on forward-looking information. Caspian does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

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