Centric Energy Corp.

Centric Energy Corp.

May 12, 2008 15:16 ET

Centric Energy Corp.: Closing of Fund-Raising and Russia Divestment

LONDON, ENGLAND--(Marketwire - May 12, 2008) - Centric Energy Corp. ("Centric" or the "Company") (TSX VENTURE:CTE) is pleased to announce the closing on May 8, 2008 of its arrangement, announced on May 2, 2008, to raise funds of over C$4 million through the divestment of its interest in a project in southern Russia.

Pursuant to a Settlement Agreement with Arax Energy Inc. ("Arax") and its wholly-owned subsidiary, Arax Energy Ltd., Centric cancelled an option to acquire an indirect interest in two oil and gas leases in Russia for a payment by Arax of US$2,000,000 and the purchase, by way of private placement of 8,000,000 units of Centric at a price of C$0.25 a unit for proceeds of C$2,000,000. Each unit consists of one share and one-half of a transferable common share purchase warrant. Each whole warrant entitles the holder to purchase an additional common share at a price of C$0.45 per share for a period of one year. The common shares issued pursuant to this private placement and the common shares issuable upon exercise of the share purchase warrants are subject to a 4-month resale restriction that expires on September 8, 2008. As part of the private placement, Centric granted to Arax the right to purchase additional common shares, in certain circumstances, to maintain its 14.62% interest in the issued and outstanding shares of Centric in the event that Centric issues additional common shares during the 12 month period following the closing.

This settlement provides Centric with over C$4 million of fresh working capital to secure new oil and gas opportunities and build its business, at a time when raising funds in the financial markets is proving increasingly difficult.

Centric's management is very pleased with this settlement that recovers a substantial part of the Company's investment in the Russian project and provides additional financing with limited dilution to current investors.

Mali Update

Following the farming down of Centric's interests in Blocks 7 and 11 in the GaoGraben to Heritage Oil Limited, as discussed below, preparations for the seismic acquisition program are under way and work is expected to start in the last quarter of the year. The drilling of an exploratory well will start after the seismic data have been processed and interpreted.

Effective March 1, 2008, Centric farmed-out interests in its two permit areas in Mali, to subsidiaries of Heritage. Under the terms of the farm-out agreement, Heritage has the right to earn a 75 percent working interest in Block 7 and Block 11 from Mali Oil Development SARL, a wholly-owned subsidiary of Centric. To earn the working interests, Heritage will fund all costs of the required work programs for the First Exploration Periods, including the acquisition of 2D seismic data for a minimum cost of $5 million and the drilling of one exploration well to a minimum depth of 2000 meters for a minimum cost of $8 million.

Blocks 7 and 11 cover 72,000 square kilometers in the GaoGraben, a sparsely-explored Mesozoic basin that is considered to have geological similarities to other, highly-productive, Mesozoic interior-rift basins within North Africa, such as the Muglad Basin of Sudan and the Doba Basin of Chad, and Tertiary basins such as the Albert Basin in Uganda. Previous seismic data acquired on Blocks 7 and 11 in 1974 show the presence of tilted fault-blocks, and indicate a thickness of up to approximately 4 km of sediments. Data from a detailed aeromagnetic survey flown at the end of 2006 by Centric demonstrate the geometry of the graben and the areas of most interest for the 2D seismic acquisition.

Other Activities

Centric is already working actively on finding new projects, focusing primarily on near-production opportunities in sub-Saharan Africa although selected good investment opportunities in other areas are also being evaluated and a few longer-term exploration projects are under review.


Alec E. Robinson, President and CEO

This News Release does not constitute an offer to sell or a solicitation of an offer to sell any securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to a U.S. Person unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

Forward-Looking Statements:

Statements in this release that are forward-looking statements are subject to various risks and uncertainties concerning the specific factors identified in Centric's periodic filings with Canadian Securities Regulators. Such forward-looking information represents management's best judgment based on information currently available. No forward-looking statement can be guaranteed and actual future results may vary materially. Centric Energy Corp. does not assume the obligation to update any forward-looking statement except as required by applicable securities laws.

The TSX Venture Exchange does not accept responsibility for the adequacy or the accuracy of this release.

Contact Information

  • Centric Energy Corp.
    Brooke Cote
    Investor Relations
    Toll Free: 1-800-962-7189
    Website: www.centricenergy.com