Cobalt Energy Ltd.

Cobalt Energy Ltd.

April 13, 2009 06:05 ET

Cobalt Announces Proposed Corporate Sale

CALGARY, ALBERTA--(Marketwire - April 13, 2009) -


Cobalt Energy Ltd. ("Cobalt" or the "Company") (TSX VENTURE:CB.A)(TSX VENTURE:CB.B) is pleased to announce that it has entered into an agreement for the sale of Cobalt through a proposed plan of arrangement ("Plan of Arrangement" or "Plan") with Bonterra Oil & Gas Ltd. ("Bonterra") and Bonterra Energy Corp. to acquire all of the issued and outstanding shares of Cobalt on the following basis, subject to certain adjustments:

i.) Class A Cobalt shareholders will receive one Bonterra share (with a deemed value of $16.00 per share) per 71.05 Cobalt Class A shares; and

ii.) Class B Cobalt shareholders will receive one Bonterra share per 11.84 Cobalt Class B shares.

The total transaction value is approximately $5.5 million, including the assumption of Cobalt's net debt and other obligations. The Board of Directors of Cobalt have unanimously approved the proposed transaction and, subject to receipt of an independent fairness opinion, intend to recommend that the shareholders vote in favour of the proposed transaction. Cobalt has agreed to pay a non-completion fee not to exceed $400,000 to Bonterra under certain circumstances. The parties have targeted late April for completion of mutual due diligence and the execution of definitive transaction documents and confirmation of certain adjustments to the transaction price. A supplementary press release will be issued setting out further details of the terms of the proposed transaction.

Mickey Taylor, President and CEO of Cobalt stated, "This transaction will benefit Cobalt shareholders by being part of a larger corporation with the financial strength to capitalize on Cobalt's position at its Pembina core area and provides asset diversity by adding an extensive inventory of development opportunities and a long reserve life."

Shareholders of Cobalt will be asked to approve the Plan of Arrangement at a special meeting of shareholders expected to be scheduled in June 2009. An information circular detailing the Plan is anticipated to be mailed to Cobalt shareholders by mid-May. The Plan will require the approval of, amongst others, 66 2/3% of the votes cast by the shareholders and the approval of the Court of Queen's Bench of Alberta. The transaction may also be subject to TSX Venture Exchange and other regulatory approvals.

Cobalt is a junior oil and gas exploration and production company operating in western Canada with current production of approximately 100 boe/d. Cobalt's Class A and B shares trade on the TSX Venture Exchange under the symbols "CB.A" and "CB.B", respectively. At March 31, 2009, the Company had 12,309,598 Class A shares outstanding; 768,500 Class A options; 465,344 Class B shares and 2,143,001 Class A Warrants.

Reader Advisory - This news release contains certain forward-looking statements relating to completion of a transaction. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect. All such forward looking statements involve substantial known and unknown risks and uncertainties, certain of which are beyond the Company's control. Such risks and uncertainties include, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, tax treatment (including royalties), inability to retain drilling rigs and other services, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, the impact of general economic conditions in Canada, the United States and overseas, industry conditions, changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof, and obtaining required approvals of regulatory authorities. The Company's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits, including the amount of proceeds, that the Company will derive therefrom. Readers are cautioned that the foregoing list of factors is not exhaustive. All subsequent forward-looking statements, whether written or oral, attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws. BOE or boe/d may be misleading particularly if used in isolation. A BOE conversion of 6mcf:1bbl is based as an energy equivalency conversion method primarily applicable at the burner tip and does not necessarily represent a value equivalency at the well head.

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

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